EXHIBIT 99.1
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EXECUTION COPY
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CWABS, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller
COUNTRYWIDE LFT LLC,
Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
Master Servicer
THE BANK OF NEW YORK,
Trustee
and
BNY WESTERN TRUST COMPANY,
Co-Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2004
---------------------------------
ASSET-BACKED CERTIFICATES, SERIES 2004-5
Table of Contents
Page
ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms...................................................................................6
Section 1.02 Certain Interpretive Provisions................................................................46
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans...................................................................47
Section 2.02 Acceptance by Trustee of the Mortgage Loans....................................................51
Section 2.03 Representations, Warranties and Covenants of the Master Servicer and the Sellers...............54
Section 2.04 Representations and Warranties of the Depositor................................................72
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................74
Section 2.06 Authentication and Delivery of Certificates....................................................74
Section 2.07 Covenants of the Master Servicer...............................................................75
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans......................................................75
Section 3.02 Subservicing; Enforcement of the Obligations of Master Servicer................................77
Section 3.03 Rights of the Depositor, the Sellers, the Certificateholders, the NIM Insurer and the
Trustee in Respect of the Master Servicer......................................................77
Section 3.04 Trustee to Act as Master Servicer..............................................................78
Section 3.05 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account;
Seller Shortfall Interest Requirement..........................................................79
Section 3.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts............................82
Section 3.07 Access to Certain Documentation and Information Regarding the Mortgage Loans...................82
Section 3.08 Permitted Withdrawals from the Certificate Account, Distribution Account, Carryover
Reserve Fund and the Principal Reserve Fund....................................................83
Section 3.09 [Reserved].....................................................................................85
Section 3.10 Maintenance of Hazard Insurance................................................................85
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements......................................86
Section 3.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds and
Realized Losses; Repurchase of Certain Mortgage Loans..........................................87
Section 3.13 Co-Trustee to Cooperate; Release of Mortgage Files.............................................91
Section 3.14 Documents, Records and Funds in Possession of Master Servicer to be Held for the
Trustee........................................................................................92
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Section 3.15 Servicing Compensation.........................................................................92
Section 3.16 Access to Certain Documentation................................................................93
Section 3.17 Annual Statement as to Compliance..............................................................93
Section 3.18 Annual Independent Public Accountants' Servicing Statement; Financial Statements...............93
Section 3.19 The Corridor Contracts.........................................................................94
Section 3.20 Prepayment Charges.............................................................................94
ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01 Advances; Remittance Reports...................................................................95
Section 4.02 Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls..........97
Section 4.03 [Reserved].....................................................................................97
Section 4.04 Distributions..................................................................................97
Section 4.05 Monthly Statements to Certificateholders......................................................107
Section 4.06 [Reserved]....................................................................................110
Section 4.07 [Reserved]....................................................................................110
Section 4.08 Carryover Reserve Fund........................................................................110
ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates..............................................................................111
Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates...................112
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.............................................116
Section 5.04 Persons Deemed Owners.........................................................................116
Section 5.05 Access to List of Certificateholders' Names and Addresses.....................................116
Section 5.06 Book-Entry Certificates.......................................................................117
Section 5.07 Notices to Depository.........................................................................118
Section 5.08 Definitive Certificates.......................................................................118
Section 5.09 Maintenance of Office or Agency...............................................................118
ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
Section 6.01 Respective Liabilities of the Depositor, the Master Servicer and the Sellers..................119
Section 6.02 Merger or Consolidation of the Depositor, the Master Servicer or the Sellers..................119
Section 6.03 Limitation on Liability of the Depositor, the Sellers, the Master Servicer, the NIM
Insurer and Others............................................................................119
Section 6.04 Limitation on Resignation of Master Servicer..................................................120
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds................................................120
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ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01 Events of Default.............................................................................121
Section 7.02 Trustee to Act; Appointment of Successor......................................................123
Section 7.03 Notification to Certificateholders............................................................124
ARTICLE VIII.
CONCERNING THE TRUSTEE AND THE CO-TRUSTEE
Section 8.01 Duties of Trustee.............................................................................124
Section 8.02 Certain Matters Affecting the Trustee.........................................................126
Section 8.03 Trustee Not Liable for Mortgage Loans.........................................................127
Section 8.04 Trustee May Own Certificates..................................................................127
Section 8.05 Master Servicer to Pay Trustee's Fees and Expenses............................................127
Section 8.06 Eligibility Requirements for Trustee..........................................................128
Section 8.07 Resignation and Removal of Trustee............................................................128
Section 8.08 Successor Trustee.............................................................................129
Section 8.09 Merger or Consolidation of Trustee............................................................129
Section 8.10 Appointment of Co-Trustee or Separate Trustee.................................................130
Section 8.11 Tax Matters...................................................................................131
Section 8.12 Co-Trustee....................................................................................134
Section 8.13 Access to Records of the Trustee..............................................................137
Section 8.14 Suits for Enforcement.........................................................................137
ARTICLE IX.
TERMINATION
Section 9.01 Termination upon Liquidation or Repurchase of all Mortgage Loans..............................137
Section 9.02 Final Distribution on the Certificates........................................................138
Section 9.03 Additional Termination Requirements...........................................................139
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.....................................................................................140
Section 10.02 Recordation of Agreement; Counterparts........................................................142
Section 10.03 Governing Law.................................................................................142
Section 10.04 Intention of Parties..........................................................................142
Section 10.05 Notices.......................................................................................143
Section 10.06 Severability of Provisions....................................................................144
Section 10.07 Assignment....................................................................................144
Section 10.08 Limitation on Rights of Certificateholders....................................................144
Section 10.09 Inspection and Audit Rights...................................................................145
Section 10.10 Certificates Nonassessable and Fully Paid.....................................................145
Section 10.11 Rights of NIM Insurer.........................................................................145
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Exhibits
EXHIBIT A Forms of Certificates
EXHIBIT A-1 Form of Class 1-A Certificate
EXHIBIT A-2 Form of Class 2-A Certificate
EXHIBIT A-3 Form of Class 3-A Certificate
EXHIBIT A-4 Form of Class 4-A-1 Certificate
EXHIBIT A-5 Form of Class 4-A-2 Certificate
EXHIBIT A-6 Form of Class 4-A-3 Certificate
EXHIBIT A-7 Form of Class 4-A-4 Certificate
EXHIBIT A-8 Form of Class A Certificate
EXHIBIT A-9 Form of Class M-1 Certificate
EXHIBIT A-10 Form of Class M-2 Certificate
EXHIBIT A-11 Form of Class M-3 Certificate
EXHIBIT A-12 Form of Class M-4 Certificate
EXHIBIT A-13 Form of Class M-5 Certificate
EXHIBIT A-14 Form of Class M-6 Certificate
EXHIBIT A-15 Form of Class M-7 Certificate
EXHIBIT A-16 Form of Class B Certificate
EXHIBIT B Form of Class P Certificates
EXHIBIT C Form of Class C Certificates
EXHIBIT D Form of Class A-R Certificate
EXHIBIT E Form of Tax Matters Person Certificate (Class A-R)
EXHIBIT F Mortgage Loan Schedule
EXHIBIT F-1 List of Mortgage Loans
EXHIBIT F-2 Mortgage Loans for which All or a Portion of a Related Mortgage File is not
Delivered to the Trustee on or prior to the Closing Date
EXHIBIT G Forms of Certification of Trustee
EXHIBIT G-1 Form of Initial Certification of Trustee
EXHIBIT G-2 Form of Interim Certification of Trustee
EXHIBIT G-3 Forms of Delay Delivery Certification
EXHIBIT H Form of Final Certification of Trustee
EXHIBIT I-1 Transfer Affidavit for Class A-R Certificates
EXHIBIT J-1 Form of Transferor Certificate for Class A-R Certificates
EXHIBIT J-2 Form of Transferor Certificate for Private Certificates
EXHIBIT K Form of Investment Letter (Non-Rule 144A)
EXHIBIT L Form of Rule 144A Letter
EXHIBIT M Form of Trustee Notice with respect to REMIC Provisions
EXHIBIT N Request for Release (for Mortgage Loans Paid in Full, Repurchased or Replaced)
EXHIBIT O Copy of Depository Agreement
EXHIBIT P [Reserved]
EXHIBIT Q-1 Form of Class 1-A Corridor Contract
EXHIBIT Q-2 Form of Class 2-A Corridor Contract
EXHIBIT Q-3 Form of Class 3-A Corridor Contract
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EXHIBIT Q-4 Form of Class 4-A Corridor Contract
EXHIBIT Q-5 Form of Class A and Subordinate Corridor Contract
EXHIBIT R [Reserved]
EXHIBIT S Form of Corridor Contract Assignment Agreement
EXHIBIT T Officer's Certificate with respect to Prepayments
EXHIBIT U [Reserved]
SCHEDULE I Prepayment Charge Schedule and Prepayment Charge Summary
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POOLING AND SERVICING AGREEMENT, dated as of May 1, 2004, by
and among CWABS, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation, as seller ("CHL" or a
"Seller"), COUNTRYWIDE LFT LLC (the "Liquidity Trust" or a "Seller", and
together with CHL, the "Sellers"), COUNTRYWIDE HOME LOANS SERVICING LP, a
Texas limited partnership, as master servicer (the "Master Servicer"), THE
BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"),
and BNY WESTERN TRUST COMPANY, a California banking corporation, as co-trustee
(the "Co-Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed
to the Trustee in return for the Certificates. For federal income tax
purposes, the Trust Fund (excluding the Corridor Contracts and the Carryover
Reserve Fund), will consist of three real estate mortgage investment conduits
(each a "REMIC" or, in the alternative, "REMIC 1," "REMIC 2" and the "Master
REMIC," respectively). Each Certificate, other than the Class A-R Certificate,
will represent ownership of one or more regular interests in the Master REMIC
for purposes of the REMIC Provisions. The Class A-R Certificate represents
ownership of the sole class of residual interest in each of REMIC 1, REMIC 2
and the Master REMIC. The Master REMIC will hold as assets the several classes
of uncertificated REMIC 2 Interests (other than the Class R2-A-R Interest),
REMIC 2 will hold as assets the several classes of uncertificated REMIC 1
Interests (other than the Class R1-A-R Interest) and REMIC 1 will hold as
assets all property of the Trust Fund (excluding the Corridor Contracts and
the Carryover Reserve Fund). For federal income tax purposes, each REMIC 1
Interest (other than the Class R1-A-R Interest) is hereby designated as a
regular interest in REMIC 1 and each REMIC 2 Interest (other than the Class
R2-A-R Interest) is hereby designated as a regular interest in REMIC 2. The
latest possible maturity date of all REMIC regular interests created in this
Agreement shall be the Latest Possible Maturity Date.
REMIC 1:
The REMIC 1 Interests will have the initial balances, pass-through
rates and corresponding loan groups as set forth in the following table:
Corresponding Loan
The REMIC 1 Interests Initial Balance Pass-Through Rate Group
--------------------- --------------- ----------------- ------------------
R1-1-A (0.9% of SCB Gr. 1).................. (1) (2) 1
R1-1-B (0.1% of SCB Gr. 1).................. (1) (2) 1
R1-1-C (Excess of Gr. 1).................... (1) (2) 1
R1-2-A (0.9% of SCB Gr. 2).................. (1) (2) 2
R1-2-B (0.1% of SCB Gr. 2).................. (1) (2) 2
R1-2-C (Excess of Gr. 2).................... (1) (2) 2
R1-3-A (0.9% of SCB Gr. 3).................. (1) (2) 3
R1-3-B (0.1% of SCB Gr. 3).................. (1) (2) 3
R1-3-C (Excess of Gr. 3).................... (1) (2) 3
R1-4-A (0.9% of SCB Gr. 4).................. (1) (2) 4
R1-4-B (0.1% of SCB Gr. 4).................. (1) (2) 4
1
R1-4-C (Excess of Gr. 4).................... (1) (2) 4
R1-A-R...................................... (3) (3) N/A
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(1) Each Class A Interest will have a principal balance initially equal
to 0.9% of the Subordinate Component Balance ("SCB") of its
Corresponding Loan Group and each Class B Interest will have a
principal balance initially equal to 0.1% of the Subordinate
Component Balance of its Corresponding Loan Group. The initial
principal balance of each Class C Interest will equal the excess of
its corresponding Loan Group over the initial aggregate principal
balances of the Class A and Class B Interests corresponding to such
Loan Group.
(2) A Rate equal to the weighted average of the Adjusted Net Mortgage
Rates of the Mortgage Loans of the Corresponding Loan Group.
(3) The Class R1-A-R Interest is the sole class of residual interest in
REMIC 1. It has no principal balance and pays no principal or
interest.
On each Distribution Date, the Available Funds shall be distributed
with respect to the the REMIC 1 Interests in the following manner:
(1) Interest. Interest is to be distributed with respect to each REMIC 1
Interest at the rate, or according to the formulas, described above;
(2) Principal if no Cross-Over Situation Exists. If no Cross-Over
Situation exists with respect to any Class of Interests, then
Principal Amounts arising with respect to each Loan Group will be
allocated: first to cause the Loan Group's corresponding Class A,
Class B and Class C Interests to equal, respectively, 0.9% of the
SCB, 0.1% of the SCB and then to the Loan Group's corresponding Class
C Interest;
(3) Principal if a Cross-Over Situation Exists. If a Cross-Over Situation
exists with respect to the Class A and Class B Interests then:
(a) if the Calculation Rate in respect of the outstanding Class
A and Class B Interests is less than the Subordinate Net
Rate Cap, Principal Relocation Payments will be made
proportionately to the outstanding Class A Interests prior
to any other principal distributions from each such Loan
Group; and
(b) if the Calculation Rate in respect of the outstanding Class
A and Class B Interests is greater than the Subordinate Net
Rate Cap, Principal Relocation Payments will be made
proportionately to the outstanding Class B Interests prior
to any other principal distributions from each such Loan
Group.
In each case, Principal Relocation Payments will be made so as to
cause the Calculation Rate in respect of the outstanding Class A and Class B
Interests to equal the Subordinate Net Rate Cap. With respect to each Loan
Group, if (and to the extent that) the sum of (a) the principal payments
comprising the Principal Remittance Amount received during the Due Period and
(b) the Realized Losses, are insufficient to make the necessary reductions of
principal on the
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Class A and Class B Interests, then interest will be added to the Loan Group's
other Interests that are not receiving Principal Relocation Payments, in
proportion to their principal balances.
(c) The outstanding aggregate Class A and Class B Interests for
all Loan Groups will not be reduced below 1 percent of the
excess of (i) the aggregate outstanding Principal Balances
of all Loan Groups as of the end of any Due Period over (ii)
the Senior Certificates for all Loan Groups as of the
related Distribution Date (after taking into account
distributions of principal on such Distribution Date).
If (and to the extent that) the limitation in paragraph (c) prevents
the distribution of principal to the Class A and Class B Interests of a Loan
Group, and if the Loan Group's Class C Interest has already been reduced to
zero, then the excess principal from that Loan Group will be paid to the Class
C Interests of the other Loan Groups, the aggregate Class A and Class B
Interests of which are less than one percent of the Subordinated Portion. If
the Loan Group of the Class C Interest that receives such payment has a
weighted average Adjusted Net Mortgage Rate below the weighted average
Adjusted Net Mortgage Rate of the Loan Group making the payment, then the
payment will be treated by the REMIC 1 as a Realized Loss. Conversely, if the
Loan Group of the Class C Interest that receives such payment has a weighted
average Adjusted Net Mortgage Rate above the weighted average Adjusted Net
Mortgage Rate of the Loan Group making the payment, then the payment will be
treated by the REMIC 1 as a reimbursement for prior Realized Losses.
REMIC 2:
The REMIC 2 Interests will have the initial balances, pass-through
rates and corresponding class certificates as set forth in the following
table:
Corresponding Class
The REMIC 2 Interests Initial Balance Pass-Through Rate Certificate
--------------------- --------------- ----------------- ------------------
R2-1-A...................................... (1) (2) Class 1-A
R2-2-A...................................... (1) (3) Class 2-A
R2-3-A...................................... (1) (4) Class 3-A
R2-4-A-1.................................... (1) (5) Class 4-A-1
R2-4-A-2.................................... (1) (5) Class 4-A-2
R2-4-A-3.................................... (1) (5) Class 4-A-3
R2-4-A-4.................................... (1) (5) Class 4-A-4
R2-A........................................ (1) (6) Class A
R2-M-1...................................... (1) (6) Class M-1
R2-M-2...................................... (1) (6) Class M-2
R2-M-3...................................... (1) (6) Class M-3
R2-M-4...................................... (1) (6) Class M-4
R2-M-5...................................... (1) (6) Class M-5
R2-M-6...................................... (1) (6) Class M-6
R2-M-7...................................... (1) (6) Class M-7
R2-$100..................................... $100 (7) Class A-R
R2-B........................................ (1) (6) Class B
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R2-P........................................ $100 (7) Class P
R2-C........................................ (1) (6) Class C
R2-A-R...................................... (8) (8) N/A
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(1) On each Distribution Date, following the allocation of scheduled
principal, principal prepayments and Realized Losses, the Class
R2-1-A Interest, Class R2-2-A Interest, Class R2-3-A Interest, Class
R2-4-A-1 Interest, Class R2-4-A-2 Interest, Class R2-4-A-3 Interest,
Class R2-4-A-4 Interest, Class R2-A Interest, Class R2-M1 Interest,
Class R2-M-2 Interest, Class R2-M-3 Interest, Class R2-M-4 Interest,
Class R2-M-5 Interest, Class R2-M-6 Interest, Class R2-M-7 Interest
and Class R2-B Interest will each have a principal balance that is
equal to 100% of its corresponding Certificate Class issued by the
Master REMIC, and the Class R2-C Interest will have a principal
balance that is equal to the Overcollateralized Amount.
(2) On each Distribution Date, the Class 1-A Net Rate Cap.
(3) On each Distribution Date, the Class 2-A Net Rate Cap.
(4) On each Distribution Date, the Class 3-A Net Rate Cap.
(5) On each Distribution Date, the Class 4-A Net Rate Cap.
(6) On each Distribution Date, the Subordinate Net Rate Cap.
(7) The R2-$100 Interest and the Class R2-P Interest do not pay any
interest. All Prepayment Charges will be allocated to the Class R2-P
Interest.
(8) The Class R2-A-R Interest is the sole class of residual interest in
REMIC 2. It has no principal balance and pays no principal or
interest.
Master REMIC:
The Master REMIC Certificates will have the original
certificate principal initial balances and pass-through rates as set forth in
the following table:
Original Certificate Principal
Class Balance Pass-Through Rate
--------------------- ------------------------------ -----------------
Class 1-A....................................... $1,320,312,000 (1)
Class 2-A....................................... $964,656,000 (1)
Class 3-A....................................... $550,536,000 (1)
Class 4-A-1..................................... $291,420,000 (1)
Class 4-A-2..................................... $200,000,000 (1)
Class 4-A-3..................................... $103,483,000 (1)
Class 4-A-4..................................... $61,193,000 (1)
Class A......................................... $139,750,000 (1)
Class M-1....................................... $129,000,000 (1)
Class M-2....................................... $86,000,000 (1)
Class M-3....................................... $64,500,000 (1)
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Class M-4....................................... $75,250,000 (1)
Class M-5....................................... $64,500,000 (1)
Class M-6....................................... $53,750,000 (1)
Class M-7....................................... $64,500,000 (1)
Class B......................................... $53,750,000 (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. Any entitlement of any class of
Certificates to Net Rate Carryover will be treated as paid by the
Master REMIC to the Class C Certificates and then paid to such Class
of Certificates pursuant to a limited recourse cap contract as
described in Section 8.11 herein.
(2) The Class C Certificates have no Certificate Principal Balance.
(3) For each Accrual Period the Class C Certificates are entitled to a
specified portion of the interest on each of the REMIC 2 Regular
Interests (excluding the R2-P and R2-$100 Interests) in an amount
equal to the excess of the pass through rate in respect of such
interest over the pass through rate in respect of the Corresponding
Class Certificate of each such Class. In addition, the Class C
Certificates will be entitled to all accruals of interest and
collections of scheduled principal and principal prepayments
allocated to the Class R2-C Interest.
(4) For each Distribution Date the Class P Certificates are entitled to
all Prepayment Charges distributed with respect to the Class R2-P
Interests.
(5) The Class A-R Certificates represent the sole class of residual
interest in each REMIC created hereunder. The Class A-R Certificates
are not entitled to distributions of interest.
The foregoing REMIC structure is intended to cause all of
the cash from the Mortgage Loans to flow through to the Master REMIC as cash
flow on a REMIC regular interest, without creating any shortfall--actual or
potential (other than for credit losses) to any REMIC regular interest. To the
extent that the structure is believed to diverge from such intention the
Trustee will resolve ambiguities to accomplish such result and will to the
extent necessary rectify any drafting errors or seek clarification to the
structure without Certificateholder approval (but with guidance of Counsel) to
accomplish such intention.
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ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
Accrual Period: With respect to any Distribution Date and
each Class of Adjustable Rate Certificates, the period commencing on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately
preceding such Distribution Date. With respect to any Distribution Date and
the Class C Certificates, the calendar month preceding the month in which such
Distribution Date occurs. All calculations of interest on the Adjustable Rate
Certificates will be made on the basis of the actual number of days elapsed in
the related Accrual Period and on a 360 day year. All calculations of interest
on the Class C Certificates will be made on the basis of a 360-day year
consisting of twelve 30-day months.
Adjustable Rate Certificates: The Class 1-A, Class 2-A,
Class 3-A, Class 4-A, Class A and the Subordinate Certificates.
Adjustable Rate Mortgage Loans: The Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate which is
adjustable in accordance with the terms of the related Mortgage Note (for the
avoidance of doubt, excluding any Credit Comeback Loans).
Adjusted Net Mortgage Rate: As to each Mortgage Loan, the
Mortgage Rate less the related Expense Fee Rate.
Adjustment Date: As to each Adjustable Rate Mortgage Loan,
each date on which the related Mortgage Rate is subject to adjustment, as
provided in the related Mortgage Note.
Advance: The aggregate of the advances required to be made
by the Master Servicer with respect to any Distribution Date pursuant to
Section 4.01, the amount of any such advances being equal to the aggregate of
payments of principal and interest on the Mortgage Loans (net of the Servicing
Fees) that were due on the related Due Date and not received by the Master
Servicer as of the close of business on the related Determination Date
including an amount equivalent to interest on each Mortgage Loan as to which
the related Mortgaged Property is an REO Property; 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 Mortgage Loan related to such REO
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Property; provided, further, that for the avoidance of doubt no Advances shall
be required to be made in respect of any Liquidated 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, the sum of the Realized Losses with respect to the Mortgage
Loans which are to be applied in reduction of the Certificate Principal
Balances of the Class A Certificates or the Subordinate Certificates pursuant
to this Agreement, which shall equal the amount, if any, by which, the
aggregate Certificate Principal Balance of all Certificates (after all
distributions of principal on such Distribution Date) exceeds the Stated
Principal Balance of the Mortgage Loans for such Distribution Date.
Appraised Value: The appraised value of the Mortgaged
Property based upon the appraisal made for the originator of the related
Mortgage Loan by an independent fee appraiser at the time of the origination
of the related Mortgage Loan, or the sales price of the Mortgaged Property at
the time of such origination, whichever is less, or with respect to any
Mortgage Loan originated in connection with a refinancing, the appraised value
of the Mortgaged Property based upon the appraisal made at the time of such
refinancing.
Bankruptcy Code: Title 11 of the United States Code.
Book-Entry Certificates: Any of the Certificates that shall
be registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06). As of the Closing
Date, each Class of Adjustable Rate Certificates constitutes a Class of
Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday,
or (ii) a day on which banking institutions in the States of New York or
California are authorized or obligated by law or executive order to be closed.
Calculation Rate: With respect to any Distribution Date, in
the case of the Class A and Class B Interests, the product of (i) 10 and (ii)
the weighted average rate of the outstanding Class A and Class B Interests,
treating each Class A Interest as capped at zero or reduced by a fixed
percentage of 100% of the interest accruing on such Class.
7
Carryover Reserve Fund: The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section 4.08 in
the name of the Trustee for the benefit of the Certificateholders and
designated "The Bank of New York in trust for registered holders of CWABS,
Inc., Asset-Backed Certificates, Series 2004-5". Funds in the Carryover
Reserve Fund shall be held in trust for the Certificateholders for the uses
and purposes set forth in this Agreement.
Certificate: Any one of the certificates of any Class
executed and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A-1 through A-16, Exhibit B, Exhibit C and Exhibit D.
Certificate Account: The separate Eligible Account created
and initially maintained by the Master Servicer pursuant to Section 3.05(b)
with a depository institution in the name of the Master Servicer for the
benefit of the Trustee on behalf of the Certificateholders and designated
"Countrywide Home Loans Servicing LP in trust for registered holders of CWABS,
Inc., Asset-Backed Certificates, Series 2004-5". 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, and (ii) with respect to the Class A Certificates or any
Subordinate Certificates, any Applied Realized Loss Amounts allocated to such
Certificate on previous Distribution Dates pursuant to Section 4.04(h), and
(B) increased by, with respect to the Class A Certificates or any Subordinate
Certificates, any Subsequent Recoveries allocated to such Certificate pursuant
to Section 4.04(i) on such Distribution Date. References herein to the
Certificate Principal Balance of a Class of Certificates shall mean the
Certificate Principal Balances of all Certificates in such Class. The Class C
Certificates do not have a Certificate Principal Balance. With respect to any
Certificate (other than the Class C Certificates) of a Class and any
Distribution Date, the portion of the Certificate Principal Balance of such
Class represented by such Certificate equal to the product of the Percentage
Interest evidenced by such Certificate and the Certificate Principal Balance
of such Class.
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
8
Certificates, such Certificates shall be deemed to be Outstanding for purposes
of any provision hereof (other than the second sentence of Section 10.01
hereof) that requires the consent of the Holders of Certificates of a
particular Class as a condition to the taking of any action hereunder. The
Trustee is entitled to rely conclusively on a certification of the Depositor
or any affiliate of the Depositor in determining which Certificates are
registered in the name of an affiliate of the Depositor.
CHL: Countrywide Home Loans, Inc., a New York corporation,
and its successors and assigns.
CHL Mortgage Loans: The Mortgage Loans identified as such on
the Mortgage Loan Schedule for which CHL is the applicable Seller.
Class: All Certificates bearing the same Class designation
as set forth in Section 5.01 hereof.
Class 1-A Certificate: Any Certificate designated as a
"Class 1-A Certificate" on the face thereof, in the form of Exhibit A-1
hereto, representing the right to distributions as set forth herein.
Class 1-A Corridor Contract: The transaction evidenced by
the related Confirmation (as assigned to the Trustee pursuant to the Corridor
Contract Assignment Agreement), a form of which is attached hereto as Exhibit
Q-1.
Class 1-A Net Rate Cap: With respect to any Distribution
Date, the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in
Loan Group 1 for such Distribution Date, adjusted to an effective rate
reflecting the calculation of interest on the basis of the actual number of
days elapsed during the related Accrual Period and a 360-day year.
Class 1-A Principal Distribution Allocation Amount: With
respect to any Distribution Date, the product of (1) the excess of (x) the
aggregate of the Principal Distribution Amounts for all four Loan Groups for
such Distribution Date over (y) the Class A Principal Distribution Allocation
Amount for such Distribution Date, and (2) a fraction, the numerator of which
is the Principal Distribution Amount for Loan Group 1 for such Distribution
Date, and the denominator of which is the Principal Distribution Amounts for
all four Loan Groups for such Distribution Date.
Class 1-A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Senior Principal Distribution Target
Amount, (y) a fraction, the numerator of which is the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A and Class 4-A
Certificates immediately prior to such Distribution Date and the denominator
of which is the aggregate Certificate Principal Balance of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Certificates immediately prior to
such Distribution Date and (z) a fraction, the numerator of which is the Class
1-A Principal Distribution Target Amount and the denominator of which is the
sum of the Class 1-A, Class 2-A, Class 3-A and Class 4-A Principal
Distribution Target Amounts.
9
Class 1-A Principal Distribution Target Amount: With respect
to any Distribution Date, the excess of (1) the sum of (x) the Certificate
Principal Balance of the Class 1-A Certificates immediately prior to such
Distribution Date and (y) the product of (I) the Certificate Principal Balance
of the Class A Certificates immediately prior to such Distribution Date and
(II) a fraction, the numerator of which is the Certificate Principal Balance
of the Class 1-A Certificates immediately prior to such Distribution Date, and
the denominator of which is the aggregate Certificate Principal Balance of the
Class 1-A, Class 2-A, Class 3-A and Class 4-A Certificates immediately prior
to such Distribution Date, over (2) the lesser of (x) 68.90% of the aggregate
Stated Principal Balance of the Mortgage Loans in Loan Group 1 for such
Distribution Date and (y) the aggregate Stated Principal Balance of the
Mortgage Loans in Loan Group 1 for such Distribution Date minus 0.50% of the
aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 1 as of
the Cut-Off Date.
Class 2-A Certificate: Any Certificate designated as a
"Class 2-A Certificate" on the face thereof, in the form of Exhibit A-2
hereto, representing the right to distributions as set forth herein.
Class 2-A Corridor Contract: The transaction evidenced by
the related Confirmation (as assigned to the Trustee pursuant to the Corridor
Contract Assignment Agreement), a form of which is attached hereto as Exhibit
Q-2.
Class 2-A Net Rate Cap: With respect to any Distribution
Date, the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in
Loan Group 2 for such Distribution Date, adjusted to an effective rate
reflecting the calculation of interest on the basis of the actual number of
days elapsed during the related Accrual Period and a 360-day year.
Class 2-A Principal Distribution Allocation Amount: With
respect to any Distribution Date, the product of (1) the excess of (x) the
aggregate of the Principal Distribution Amounts for all four Loan Groups for
such Distribution Date over (y) the Class A Principal Distribution Allocation
Amount for such Distribution Date, and (2) a fraction, the numerator of which
is the Principal Distribution Amount for Loan Group 2 for such Distribution
Date, and the denominator of which is the Principal Distribution Amounts for
all four Loan Groups for such Distribution Date.
Class 2-A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Senior Principal Distribution Target
Amount, (y) a fraction, the numerator of which is the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A and Class 4-A
Certificates immediately prior to such Distribution Date and the denominator
of which is the aggregate Certificate Principal Balance of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Certificates immediately prior to
such Distribution Date and (z) a fraction, the numerator of which is the Class
2-A Principal Distribution Target Amount and the denominator of which is the
sum of the Class 1-A, Class 2-A, Class 3-A and Class 4-A Principal
Distribution Target Amounts.
Class 2-A Principal Distribution Target Amount: With respect
to any Distribution Date, the excess of (1) the sum of (x) the Certificate
Principal Balance of the Class 2-A Certificates immediately prior to such
Distribution Date and (y) the product of (I) the Certificate
10
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date and (II) a fraction, the numerator of which is the
Certificate Principal Balance of the Class 2-A Certificates immediately prior
to such Distribution Date, and the denominator of which is the aggregate
Certificate Principal Balance of the Class 1-A, Class 2-A, Class 3-A and Class
4-A Certificates immediately prior to such Distribution Date, over (2) the
lesser of (x) 68.90% of the aggregate Stated Principal Balance of the Mortgage
Loans in Loan Group 2 for such Distribution Date and (y) the aggregate Stated
Principal Balance of the Mortgage Loans in Loan Group 2 for such Distribution
Date minus 0.50% of the aggregate Stated Principal Balance of the Mortgage
Loans in Loan Group 2 as of the Cut-Off Date.
Class 3-A Certificate: Any Certificate designated as a
"Class 3-A Certificate" on the face thereof, in the form of Exhibit A-3
hereto, representing the right to distributions as set forth herein.
Class 3-A Corridor Contract: The transaction evidenced by
the related Confirmation (as assigned to the Trustee pursuant to the Corridor
Contract Assignment Agreement), a form of which is attached hereto as Exhibit
Q-3.
Class 3-A Net Rate Cap: With respect to any Distribution
Date, the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in
Loan Group 3 for such Distribution Date, adjusted to an effective rate
reflecting the calculation of interest on the basis of the actual number of
days elapsed during the related Accrual Period and a 360-day year.
Class 3-A Principal Distribution Allocation Amount: With
respect to any Distribution Date, the product of (1) the excess of (x) the
aggregate of the Principal Distribution Amounts for all four Loan Groups for
such Distribution Date over (y) the Class A Principal Distribution Allocation
Amount for such Distribution Date, and (2) a fraction, the numerator of which
is the Principal Distribution Amount for Loan Group 3 for such Distribution
Date, and the denominator of which is the Principal Distribution Amounts for
all four Loan Groups for such Distribution Date.
Class 3-A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Senior Principal Distribution Target
Amount, (y) a fraction, the numerator of which is the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A and Class 4-A
Certificates immediately prior to such Distribution Date and the denominator
of which is the aggregate Certificate Principal Balance of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Certificates immediately prior to
such Distribution Date and (z) a fraction, the numerator of which is the
Class 3-A Principal Distribution Target Amount and the denominator of which is
the sum of the Class 1-A, Class 2-A, Class 3-A and Class 4-A Principal
Distribution Target Amounts.
Class 3-A Principal Distribution Target Amount: With respect
to any Distribution Date, the excess of (1) the sum of (x) the Certificate
Principal Balance of the Class 3-A Certificates immediately prior to such
Distribution Date and (y) the product of (I) the Certificate Principal Balance
of the Class A Certificates immediately prior to such Distribution Date and
(II) a fraction, the numerator of which is the Certificate Principal Balance
of the Class 3-A Certificates immediately prior to such Distribution Date, and
the denominator of which is the
11
aggregate Certificate Principal Balance of the Class 1-A, Class 2-A, Class 3-A
and Class 4-A Certificates immediately prior to such Distribution Date, over
(2) the lesser of (x) 68.90% of the aggregate Stated Principal Balance of the
Mortgage Loans in Loan Group 3 for such Distribution Date and (y) the
aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 3 for
such Distribution Date minus 0.50% of the aggregate Stated Principal Balance
of the Mortgage Loans in Loan Group 3 as of the Cut-Off Date.
Class 4-A Certificate: The Class 4-A-1, Class 4-A-2, Class
4-A-3 and Class 4-A-4 Certificates.
Class 4-A-1 Certificate: Any Certificate designated as a
"Class 4-A-1 Certificate" on the face thereof, in the form of Exhibit A-4
hereto, representing the right to distributions as set forth herein.
Class 4-A-2 Certificate: Any Certificate designated as a
"Class 4-A-2 Certificate" on the face thereof, in the form of Exhibit A-5
hereto, representing the right to distributions as set forth herein.
Class 4-A-3 Certificate: Any Certificate designated as a
"Class 4-A-3 Certificate" on the face thereof, in the form of Exhibit A-6
hereto, representing the right to distributions as set forth herein.
Class 4-A-4 Certificate: Any Certificate designated as a
"Class 4-A-4 Certificate" on the face thereof, in the form of Exhibit A-7
hereto, representing the right to distributions as set forth herein.
Class 4-A Corridor Contract: The transaction evidenced by
the related Confirmation (as assigned to the Trustee pursuant to the Corridor
Contract Assignment Agreement), a form of which is attached hereto as Exhibit
Q-4.
Class 4-A Net Rate Cap: With respect to any Distribution
Date, the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in
Loan Group 4 for such Distribution Date, adjusted to an effective rate
reflecting the calculation of interest on the basis of the actual number of
days elapsed during the related Accrual Period and a 360-day year.
Class 4-A Principal Distribution Allocation Amount: With
respect to any Distribution Date, the product of (1) the excess of (x) the
aggregate of the Principal Distribution Amounts for all four Loan Groups for
such Distribution Date over (y) the Class A Principal Distribution Allocation
Amount for such Distribution Date, and (2) a fraction, the numerator of which
is the Principal Distribution Amount for Loan Group 4 for such Distribution
Date, and the denominator of which is the Principal Distribution Amounts for
all four Loan Groups for such Distribution Date.
Class 4-A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Senior Principal Distribution Target
Amount, (y) a fraction, the numerator of which is the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A and Class 4-A
Certificates immediately prior to such Distribution Date and the denominator
of which is the aggregate Certificate Principal Balance of the Class 1-A,
Class 2-A, Class 3-A,
12
Class 4-A and Class A Certificates immediately prior to such Distribution Date
and (z) a fraction, the numerator of which is the Class 4-A Principal
Distribution Target Amount and the denominator of which is the sum of the
Class 1-A, Class 2-A, Class 3-A and Class 4-A Principal Distribution Target
Amounts.
Class 4-A Principal Distribution Target Amount: With respect
to any Distribution Date, the excess of (1) the sum of (x) the aggregate
Certificate Principal Balance of the Class 4-A Certificates immediately prior
to such Distribution Date and (y) the product of (I) the Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution
Date and (II) a fraction, the numerator of which is the aggregate Certificate
Principal Balance of the Class 4-A Certificates immediately prior to such
Distribution Date, and the denominator of which is the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A and Class 4-A
Certificates immediately prior to such Distribution Date, over (2) the lesser
of (x) 68.90% of the aggregate Stated Principal Balance of the Mortgage Loans
in Loan Group 4 for such Distribution Date and (y) the aggregate Stated
Principal Balance of the Mortgage Loans in Loan Group 4 for such Distribution
Date minus 0.50% of the aggregate Stated Principal Balance of the Mortgage
Loans in Loan Group 4 as of the Cut-Off Date.
Class A-R Certificate: Any Certificate designated as a
"Class A-R Certificate" on the face thereof, in the form of Exhibit D hereto,
representing the right to distributions as set forth herein.
Class A Certificates: Any Certificate designated as a "Class
A Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing the right to distributions as set forth herein.
Class A and Subordinate Corridor Contract: The transaction
evidenced by the related Confirmation (as assigned to the Trustee pursuant to
the Corridor Contract Assignment Agreement), a form of which is attached
hereto as Exhibit Q-5.
Class A Net Rate Cap: With respect to any Distribution Date,
the weighted average of (a) the weighted average Adjusted Net Mortgage Rate of
the Mortgage Loans in Loan Group 1 (weighted by an amount equal to the
positive difference (if any) of the aggregate Stated Principal Balance of the
Mortgage Loans in Loan Group 1 over the outstanding Certificate Principal
Balance of the Class 1-A Certificates), (b) the weighted average Adjusted Net
Mortgage Rate of the Mortgage Loans in Loan Group 2 (weighted by an amount
equal to the positive difference (if any) of the aggregate Stated Principal
Balance of the Mortgage Loans in Loan Group 2 over the outstanding Certificate
Principal Balance of the Class 2-A Certificates), (c) the weighted average
Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 3 (weighted by
an amount equal to the positive difference (if any) of the aggregate Stated
Principal Balance of the Mortgage Loans in Loan Group 3 over the outstanding
Certificate Principal Balance of the Class 3-A Certificates) and (d) the
weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan
Group 4 (weighted by an amount equal to the positive difference (if any) of
the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 4
over the outstanding aggregate Certificate Principal Balance of the Class 4-A
Certificates), 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.
13
Class A Principal Distribution Amount: With respect to any
Distribution Date, the product of (x) the Senior Principal Distribution Target
Amount and (y) a fraction, the numerator of which is the Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution
Date and the denominator of which is the aggregate Certificate Principal
Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class A
Certificates immediately prior to such Distribution Date.
Class A Principal Distribution Allocation Amount: With
respect to any Distribution Date, the product of (1) the aggregate of the
Principal Distribution Amounts for all four Loan Groups for such Distribution
Date and (2) a fraction, the numerator of which is the Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution
Date and the denominator of which is the aggregate Certificate Principal
Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class A
Certificates immediately prior to such Distribution Date.
Class B Certificate: Any Certificate designated as a "Class
B Certificate" on the face thereof, in the form of Exhibit A-16 hereto,
representing the right to distributions as set forth herein.
Class B Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class
A Certificates (after taking into account distributions of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Principal Distribution Amounts for
such Distribution Date), (b) the Certificate Principal Balance of the Class
M-1 Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount on such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distribution of the Class M-2 Principal Distribution Amount on such
Distribution Date), (d) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account distribution of the Class M-3
Principal Distribution Amount on such Distribution Date), (e) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
distribution of the Class M-4 Principal Distribution Amount on such
Distribution Date), (f) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account distribution of the Class M-5
Principal Distribution Amount on such Distribution Date), (g) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account
distribution of the Class M-6 Principal Distribution Amount on such
Distribution Date), (h) the Certificate Principal Balance of the Class M-7
Certificates (after taking into account distribution of the Class M-7
Principal Distribution Amount on such Distribution Date and (i) the
Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (ii) the lesser of (x) 96.40% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class B
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class B Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all four Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
14
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-9
hereto, representing the right to distributions as set forth herein.
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class
A Certificates (after taking into account distributions of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Principal Distribution Amounts for
such Distribution Date) and (b) the Certificate Principal Balance of the Class
M-1 Certificates immediately prior to such Distribution Date, over (ii) the
lesser of (x) 74.90% of the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (y) the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date minus the OC Floor;
provided, however, that if the Class M-1 Certificates are the only Class of
Subordinate Certificates outstanding on such Distribution Date, the Class M-1
Certificates will be entitled to receive the entire remaining Principal
Distribution Amount for all four Loan Groups until the Certificate Principal
Balance thereof is reduced to zero.
Class M-2 Certificate: Any Certificate designated as a
"Class M-2 Certificate" on the face thereof, in the form of Exhibit A-10
hereto, representing the right to distributions as set forth herein.
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class
A Certificates (after taking into account distributions of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Principal Distribution Amounts for
such Distribution Date), (b) the Certificate Principal Balance of the Class
M-1 Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date) and (c) the
Certificate Principal Balance of the Class M-2 Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) 78.90% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class M-2
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class M-2 Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all four Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
Class M-3 Certificate: Any Certificate designated as a
"Class M-3 Certificate" on the face thereof, in the form of Exhibit A-11
hereto, representing the right to distributions as set forth herein.
15
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class
A Certificates (after taking into account distributions of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Principal Distribution Amounts for
such Distribution Date), (b) the Certificate Principal Balance of the Class
M-1 Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distribution of the Class M-2 Principal Distribution Amount for such
Distribution Date) (d) the Certificate Principal Balance of the Class M-3
Certificates immediately prior to such Distribution Date over (ii) the lesser
of (x) 81.90% of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date and (y) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus the OC Floor; provided,
however, that if the Class M-3 Certificates are the only Class of Subordinate
Certificates outstanding on such Distribution Date, the Class M-3 Certificates
will be entitled to receive the entire remaining Principal Distribution Amount
for all four Loan Groups until the Certificate Principal Balance thereof is
reduced to zero.
Class M-4 Certificate: Any Certificate designated as a
"Class M-4 Certificate" on the face thereof, in the form of Exhibit A-12
hereto, representing the right to distributions as set forth herein.
Class M-4 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class
A Certificates (after taking into account distributions of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Principal Distribution Amounts for
such Distribution Date), (b) the Certificate Principal Balance of the Class
M-1 Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distribution of the Class M-2 Principal Distribution Amount for such
Distribution Date), (d) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account distribution of the Class M-3
Principal Distribution Amount for such Distribution Date) and (e) the
Certificate Principal Balance of the Class M-4 Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) 85.40% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class M-4
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class M-4 Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all four Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
Class M-5 Certificate: Any Certificate designated as a
"Class M-5 Certificate" on the face thereof, in the form of Exhibit A-13
hereto, representing the right to distributions as set forth herein.
Class M-5 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class
A Certificates (after taking into account distributions
16
of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class A Principal
Distribution Amounts for such Distribution Date), (b) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account
distribution of the Class M-1 Principal Distribution Amount for such
Distribution Date), (c) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account distribution of the Class M-2
Principal Distribution Amount for such Distribution Date), (d) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (e) the Certificate Principal Balance of the Class M-4
Certificates (after taking into account distribution of the Class M-4
Principal Distribution Amount for such Distribution Date) and (f) the
Certificate Principal Balance of the Class M-5 Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) 88.40% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class M-5
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class M-5 Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all four Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
Class M-6 Certificate: Any Certificate designated as a
"Class M-6 Certificate" on the face thereof, in the form of Exhibit A-14
hereto, representing the right to distributions as set forth herein.
Class M-6 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class
A Certificates (after taking into account distributions of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Principal Distribution Amounts for
such Distribution Date), (b) the Certificate Principal Balance of the Class
M-1 Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distribution of the Class M-2 Principal Distribution Amount for such
Distribution Date), (d) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account distribution of the Class M-3
Principal Distribution Amount for such Distribution Date), (e) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
distribution of the Class M-4 Principal Distribution Amount for such
Distribution Date), (f) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account distribution of the Class M-5
Principal Distribution Amount for such Distribution Date) and (g) the
Certificate Principal Balance of the Class M-6 Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) 90.90% of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date and
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date minus the OC Floor; provided, however, that if the Class M-6
Certificates are the only Class of Subordinate Certificates outstanding on
such Distribution Date, the Class M-6 Certificates will be entitled to receive
the entire remaining Principal Distribution Amount for all four Loan Groups
until the Certificate Principal Balance thereof is reduced to zero.
17
Class M-7 Certificate: Any Certificate designated as a
"Class M-7 Certificate" on the face thereof, in the form of Exhibit A-15
hereto, representing the right to distributions as set forth herein.
Class M-7 Principal Distribution Amount: With respect to any
Distribution Date the excess of (i) the sum of (a) the aggregate Certificate
Principal Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class
A Certificates (after taking into account distributions of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Principal Distribution Amounts for
such Distribution Date), (b) the Certificate Principal Balance of the Class
M-1 Certificates (after taking into account distribution of the Class M-1
Principal Distribution Amount for such Distribution Date), (c) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account
distribution of the Class M-2 Principal Distribution Amount for such
Distribution Date), (d) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account distribution of the Class M-3
Principal Distribution Amount for such Distribution Date), (e) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account
distribution of the Class M-4 Principal Distribution Amount for such
Distribution Date), (f) the Certificate Principal Balance of the Class M-5
Certificates (after taking into account distribution of the Class M-5
Principal Distribution Amount for such Distribution Date), (g) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account
distribution of the Class M-6 Principal Distribution Amount for such
Distribution Date) and (h) the Certificate Principal Balance of the Class M-7
Certificates immediately prior to such Distribution Date over (ii) the lesser
of (x) 93.90% of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date and (y) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus the OC Floor; provided,
however, that if the Class M-7 Certificates are the only Class of Subordinate
Certificates outstanding on such Distribution Date, the Class M-7 Certificates
will be entitled to receive the entire remaining Principal Distribution Amount
for all four Loan Groups until the Certificate Principal Balance thereof is
reduced to zero.
Class P Certificate: Any Certificate designated as a "Class
P Certificate" on the face thereof, in the form of Exhibit B hereto,
representing the right to distributions as set forth herein.
Class P Principal Distribution Date: The first Distribution
Date that occurs after the end of the latest Prepayment Charge Period for all
Mortgage Loans that have a Prepayment Charge Period.
Closing Date: May 27, 2004.
Code: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage, the numerator of which is the sum of (x) the original principal
balance of the related Mortgage Loan and (y) the outstanding principal balance
at the date of origination of the Mortgage Loan of any senior mortgage loan
or, in the case of any open-ended senior morgage loan, the maximum available
line of credit with respect to such Mortgage Loan, regardless of any lessor
amount actually outstanding at the date of origination of the Mortgage Loan,
and the denominator of which is the Appraised Value of the related Mortgaged
Property.
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Compensating Interest: With respect to the Mortgage Loans
and any Distribution Date, an amount equal to the lesser of (x) one-half of
the Servicing Fee for the Mortgage Loans for the related Due Period and (y)
the aggregate Prepayment Interest Shortfalls for such Mortgage Loans for such
Distribution Date.
Confirmation: Any of the Confirmations dated May 24, 2004
evidencing a transaction between the Corridor Contract Counterparty and CHL
relating to the Corridor Contracts.
Corporate Trust Office: The designated office of the Trustee
in the State of New York where at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office at
the date of the execution of this Agreement is located at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (Attention: Corporate Trust MBS Administration),
telephone: (000) 000-0000, facsimile: (000) 000-0000.
Corridor Contract: The Class 1-A Corridor Contract, the
Class 2-A Corridor Contract, the Class 3-A Corridor Contract, the Class 4-A
Corridor Contract or the Class A and Subordinate Corridor Contract, as
applicable.
Corridor Contract Assignment Agreement: The assignment
agreement dated as of the Closing Date among CHL, the Trustee and the Corridor
Contract Counterparty, the form of which is attached hereto as Exhibit S.
Corridor Contract Counterparty: Bear Xxxxxxx Financial
Products Inc., and its successors.
Corridor Contract Termination Date: With respect to each
Corridor Contract, the Distribution Date in September 2010.
Co-Trustee: BNY Western Trust Company, a California banking
corporation, not in its individual capacity, but solely in its capacity as
co-trustee for the benefit of the Certificateholders under this Agreement, and
any successor thereto, and any corporation or national banking association
resulting from or surviving any consolidation or merger to which it or its
successors may be a party.
Credit Comeback Excess Amount: With respect to the Credit
Comeback Loans and any Master Servicer Advance Date, the portion of the sum of
the following (without duplication) attributable to the excess, if any, of the
actual mortgage rate on each Credit Comeback Loan and the Mortgage Rate on
such Credit Comeback Loan: (i) all scheduled interest collected during the
related Due Period with respect to the Credit Comeback Loans, (ii) all
Advances relating to interest with respect to the Credit Comeback Loans, (iii)
all Compensating Interest with respect to the Credit Comeback Loans and (iv)
Liquidation Proceeds with respect to the Credit Comeback Loans collected
during the related Due Period (to the extent such Liquidation Proceeds relate
to interest), less all Nonrecoverable Advances relating to interest reimbursed
during the related Due Period.
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Credit Comeback Loan: Any Mortgage Loan for which the
related Mortgage Rate is subject to reduction for good payment history of
Scheduled Payments by the related Mortgagor.
Cross-Over Situation: With respect to any Distribution Date
and for each Loan Group (after taking into account principal distributions on
such Distribution Date) with respect to the Class A and Class B Interests, the
Class A and Class B Interests corresponding to any Loan Group are in the
aggregate less than 1% of the Subordinate Component Balance of the Loan Group
to which they correspond.
Cumulative Loss Trigger Event: With respect to a
Distribution Date on or after the Stepdown Date the aggregate amount of
Realized Losses on the Mortgage Loans from (and including) the Cut-off Date
for each Mortgage Loan to (and including) the last day of the related Due
Period (reduced by the aggregate amount of any Subsequent Recoveries received
through the last day of that Due Period) exceeds the applicable percentage,
for such Distribution Date, of the aggregate Cut-off Date Principal Balance of
the Mortgage Loans, as set forth below:
Distribution Date Percentage
June 2007-- May 2008............................. 3.25% with respect to June 2007, plus an
additional 1/12th of 1.50% for each
month thereafter
June 2008-- May 2009............................. 4.75% with respect to June 2008, plus an
additional 1/12th of 1.25% for each
month thereafter
June 2009-- May 2010............................. 6.00% with respect to June 2009, plus an
additional 1/12th of 0.50% for each
month thereafter
June 2010 and thereafter......................... 6.50%
Current Interest: With respect to each Class of Adjustable
Rate Certificates and each Distribution Date, the interest accrued at the
applicable Pass-Through Rate for the applicable Accrual Period on the
Certificate Principal Balance of such Class immediately prior to such
Distribution Date, plus any amount previously distributed with respect to
interest for such Class that is recovered as a voidable preference by a
trustee in bankruptcy.
Cut-off Date: In the case of any Mortgage Loan, the later of
(x) May 1, 2004 and (y) the date of origination of such Mortgage Loan.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid principal balance thereof as of the close of business on the Cut-off
Date after application of all payments of principal due on or prior to the
Cut-off Date, whether or not received, and all Principal Prepayments received
on or prior to the Cut-off Date, but without giving effect to any installments
of principal received in respect of Due Dates after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled
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Payment for such Mortgage Loan that became final and non-appealable, except
such a reduction resulting from a Deficient Valuation or any other reduction
that results in a permanent forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under such Mortgage Loan,
or any reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court that is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06.
Delay Delivery Mortgage Loans: The Mortgage Loans identified
on the schedule of Mortgage Loans hereto set forth on Exhibit F-2 hereof for
which all or a portion of a related Mortgage File is not delivered to the
Co-Trustee on or prior to the Closing Date. The Depositor shall deliver (or
cause delivery of) the Mortgage Files to the Co-Trustee: (A) with respect to
at least 50% of the Mortgage Loans, not later than the Closing Date, (B) with
respect to at least an additional 40% of the Mortgage Loans, not later than 20
days after the Closing Date and (C) with respect to the remaining Mortgage
Loans, not later than thirty days after the Closing Date. To the extent that
Countrywide Home Loans, Inc. shall be in possession of any Mortgage Files with
respect to any Delay Delivery Loan, until delivery to of such Mortgage File to
the Co-Trustee as provided in Section 2.01, Countrywide Home Loans, Inc. shall
hold such files as agent and in trust for the Co-Trustee.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be
replaced by a Replacement Mortgage Loan.
Delinquency Trigger Event: With respect to a Distribution
Date on or after the Stepdown Date exists if (x) the product of: (1) 2.38 times
(2) the Rolling Sixty-Day Delinquency Rate for Outstanding Mortgage Loans
equals or exceeds (y) the Required Percentage for such Distribution Date.
Delinquent: A Mortgage Loan is "delinquent" if any payment
due thereon is not made pursuant to the terms of such Mortgage Loan by the
close of business on the day such payment is scheduled to be due. A Mortgage
Loan is "30 days delinquent" if such payment has not been received by the
close of business on the corresponding day of the month immediately succeeding
the month in which such payment was due, or, if there is no such corresponding
day (e.g., as when a 30-day month follows a 31-day month in which a payment
was due on the 31st day of such month), then on the last day of such
immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.
Denomination: With respect to each Certificate, the amount
set forth on the face thereof as the "Initial Certificate Balance of this
Certificate" or, if not the foregoing, the Percentage Interest appearing on
the face thereof, as applicable.
Depositor: CWABS, Inc., a Delaware corporation, or its
successor in interest.
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Depository: The initial Depository shall be The Depository
Trust Company, the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
O.
Depository Participant: A broker, dealer, bank or other
financial institution or other person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to any Distribution Date,
the 15th day of the month of such Distribution Date or, if such 15th day is
not a Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.05(c) in the name of the
Trustee for the benefit of the Certificateholders and designated "The Bank of
New York, in trust for registered holders of CWABS, Inc., Asset-Backed
Certificates, Series 2004-5". 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
June 2004.
Due Date: With respect to any Mortgage Loan and Due Period,
the due date for Scheduled Payments of interest and/or principal on that
Mortgage Loan occurring in such Due Period as provided in the related Mortgage
Note.
Due Period: With respect to any Distribution Date, the
period beginning on the second day of the calendar month preceding the
calendar month in which such Distribution Date occurs and ending on the Due
Date in the month in which such Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company, the long-term unsecured debt obligations and short-term unsecured
debt obligations of which (or, in the case of a depository institution or
trust company that is the principal subsidiary of a holding company, the debt
obligations of such holding company, if Xxxxx'x is not a Rating Agency) are
rated by each Rating Agency in one of its two highest long-term and its
highest short-term rating categories respectively, at the time any amounts are
held on deposit therein, or (ii) an account or accounts in a depository
institution or trust company in which such accounts are insured by the FDIC (to
the limits established by the
22
FDIC) and the uninsured deposits in which accounts are otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the Trustee and to
each Rating Agency, the Certificateholders have a claim with respect to the
funds in such account or a perfected first priority security interest against
any collateral (which shall be limited to Permitted Investments) securing such
funds that is superior to claims of any other depositors or creditors of the
depository institution or trust company in which such account is maintained,
or (iii) a trust account or accounts maintained with the corporate trust
department of a federal or state chartered depository institution or trust
company having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity or (iv) any other account acceptable to the Rating Agencies
without reduction or withdrawal of their then current ratings of the
Certificates as evidenced by a letter from each Rating Agency to the Trustee.
Eligible Accounts may bear interest, and may include, if otherwise qualified
under this definition, accounts maintained with the Trustee.
Eligible Repurchase Month: As defined in Section 3.12(d)
hereof.
ERISA: The Employee Retirement Income Security Act of 1974,
as amended.
ERISA-Qualifying Underwriting: A best efforts or firm
commitment underwriting or private placement that meets the applicable
requirements of the Underwriter's Exemption.
ERISA-Restricted Certificates: The Class A-R Certificates,
Class P Certificates, Class C Certificates and Certificates of any Class that
ceases to satisfy the applicable rating requirement under the Underwriter's
Exemption.
Escrow Account: As defined in Section 3.06.
Event of Default: As defined in Section 7.01 hereof.
Excess Cashflow: With respect to any Distribution Date the
sum of (x) the amount remaining as set forth in Section 4.04(a)(iv)(i) and (y)
the amount remaining as set forth in Section 4.04(b)(1)(C)(ix) or
4.04(b)(2)(J), as applicable.
Excess Proceeds: With respect to any Liquidated 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 Loan as of the date of liquidation of such Liquidated 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 Loan outstanding during each Due Period as to which such interest
was not paid or advanced.
Expense Fee Rate: With respect to any Mortgage Loan, the sum
of (i) the Servicing Fee Rate and (ii) the Trustee Fee Rate.
Extra Principal Distribution Amount: With respect to any
Distribution Date and any Loan Group, is the product of (a) the lesser of (1)
the Overcollateralization Deficiency Amount and (2) the Excess Cashflow
available for payment thereof and (b) a fraction,
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the numerator of which is the Principal Remittance Amount for such Loan Group
and the denominator of which is the sum of the Principal Remittance Amounts
for all four Loan Groups.
Xxxxxx Xxx: The Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and existing
under the Federal National Mortgage Association Charter Act, or any successor
thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Fitch: Fitch Ratings.
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.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under
Title III of the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Gross Margin: The percentage set forth in the related
Mortgage Note for the Adjustable Rate Mortgage Loans to be added to the Index
for use in determining the Mortgage Rate on each Adjustment Date, and which is
set forth in the Mortgage Loan Schedule for the Adjustable Rate Mortgage
Loans.
Group 1 Mortgage Loans: The group of Mortgage Loans
identified in the related Mortgage Loan Schedule as "Group 1 Mortgage Loans",
including in each case any Mortgage Loans delivered in replacement thereof.
Group 2 Mortgage Loans: The group of Mortgage Loans
identified in the related Mortgage Loan Schedule as "Group 2 Mortgage Loans",
including in each case any Mortgage Loans delivered in replacement thereof.
Group 3 Mortgage Loans: The group of Mortgage Loans
identified in the related Mortgage Loan Schedule as "Group 3 Mortgage Loans",
including in each case any Mortgage Loans delivered in replacement thereof.
Group 4 Mortgage Loans: The group of Mortgage Loans
identified in the related Mortgage Loan Schedule as "Group 4 Mortgage Loans",
including in each case any Mortgage Loans delivered in replacement thereof.
Index: As to any Adjustable Rate Mortgage Loan on any
Adjustment Date related thereto, the index for the adjustment of the Mortgage
Rate set forth as such in the related Mortgage Note, such index in general
being the average of the London interbank offered rates for six-month U.S.
dollar deposits in the London market, as set forth in The Wall Street Journal,
as most recently announced as of a date 45 days prior to such Adjustment Date
or, if the Index ceases to be published in The Wall Street Journal or becomes
unavailable for any reason, then
24
the Index shall be a new index selected by the Master Servicer, based on
comparable information.
Initial Adjustment Date: As to any Adjustable Rate Mortgage
Loan, the first Adjustment Date following the origination of such Mortgage
Loan.
Initial Certificate Account Deposit: An amount equal to the
aggregate of all amounts in respect of (i) principal of the Mortgage Loans due
on or after the Cut-off Date and received by the Master Servicer before the
Closing Date and not applied in computing the Cut-off Date Principal Balance
thereof and (ii) interest on the Mortgage Loans due on and after the Cut-off
Date and received by the Master Servicer before the Closing Date.
Initial Certificate Principal Balance: With respect to any
Certificate (other than the Class C Certificates) the Certificate Principal
Balance of such Certificate or any predecessor Certificate on the Closing
Date.
Initial Mortgage Rate: As to each Adjustable Mortgage
Loan, the Mortgage Rate in effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included
in the Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect with respect to such Mortgage Loan, including any
replacement policy or policies for any Insurance Policy.
Insurance Proceeds: Proceeds paid in respect of the Mortgage
Loans pursuant to any Insurance Policy or any other insurance policy covering
a Mortgage Loan, to the extent such proceeds are payable to the mortgagee
under the Mortgage, the Master Servicer or the trustee under the deed of trust
and are not applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account, in
each case other than any amount included in such Insurance Proceeds in respect
of Insured Expenses and received in connection with or prior to 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 Carry Forward Amount: With respect to each Class of
Adjustable Rate Certificates and each Distribution Date, the excess of (i) the
Current Interest for such Class with respect to prior Distribution Dates over
(ii) the amount actually distributed to such Class with respect to interest on
such prior Distribution Dates.
Interest Determination Date: With respect to the first
Accrual Period for the Adjustable Rate Certificates, May 25, 2004. With
respect to any Accrual Period for the Adjustable Rate Certificates thereafter,
the second LIBOR Business Day preceding the commencement of such Accrual
Period.
Interest Funds: With respect to any Distribution Date and
Loan Group, the Interest Remittance Amount for such Loan Group and
Distribution Date, less the portion of the Trustee Fee for such Distribution
Date allocable to such Loan Group.
25
Interest Remittance Amount: With respect to the Mortgage
Loans in each Loan Group and any Master Servicer Advance Date, (x) the sum,
without duplication, of (i) all scheduled interest collected during the
related Due Period (for the avoidance of doubt, other than Credit Comeback
Excess Amounts) with respect to the related Mortgage Loans less the related
Servicing Fee, (ii) all interest on prepayments, other than Prepayment
Interest Excess, (iii) all related Advances relating to interest with respect
to such Mortgage Loans, (iv) all related Compensating Interest with respect to
such Mortgage Loans, (v) Liquidation Proceeds with respect to such Mortgage
Loans collected during the related Due Period (to the extent such Liquidation
Proceeds relate to interest) and (vi) the related Seller Shortfall Interest
Requirement, less (y) all reimbursements to the Master Servicer during the
related Due Period for Advances of interest previously made allocable to such
Loan Group.
Investment Letter: As defined in Section 5.02(b).
Latest Possible Maturity Date: The Distribution Date
following the third anniversary of the scheduled maturity date of the Mortgage
Loan having the latest scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Any day on which banks in the City of
London, England and New York City, U.S.A. are open and conducting transactions
in foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as provided
by applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the Master Servicer has certified
(in accordance with Section 3.12) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such
liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of Mortgage
Loans, whether through trustee's 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, less the sum of related unreimbursed Advances,
Servicing Fees and Servicing Advances.
Liquidity Trust: Countrywide LFT LLC a Delaware limited
liability company, and its successors and assigns.
Liquidity Trust Mortgage Loans: The Mortgage Loans
identified as such on the Mortgage Loan Schedule for which the Liquidity Trust
is the applicable Seller.
Loan Group: Any of the Loan Group 1 Mortgage Loans, Loan
Group 2 Mortgage Loans, Loan Group 3 Mortgage Loans or Loan Group 4 Mortgage
Loans.
Loan Group 1: The Group 1 Mortgage Loans.
26
Loan Group 2: The Group 2 Mortgage Loans.
Loan Group 3: The Group 3 Mortgage Loans.
Loan Group 4: The Group 4 Mortgage Loans.
Loan-to-Value Ratio: The fraction, expressed as a
percentage, the numerator of which is the original principal balance of the
related Mortgage Loan and the denominator of which is the Appraised Value of
the related Mortgaged Property.
Majority Holder: The Holders of Certificates evidencing at
least 51% of the Voting Rights allocated to such Class of Certificates.
Margin: With respect to any Accrual Period and Class of
Adjustable Rate Certificates, the per annum rate indicated in the following
table:
Class Margin (1) Margin (2)
------------------------- ------------------------ ---------------------
Class 1-A............... 0.250% 0.500%
Class 2-A............... 0.250% 0.500%
Class 3-A............... 0.230% 0.460%
Class 4-A-1............. 0.110% 0.220%
Class 4-A-2............. 0.240% 0.480%
Class 4-A-3............. 0.320% 0.640%
Class 4-A-4............. 0.480% 0.960%
Class A................. 0.450% 0.900%
Class M-1............... 0.570% 0.855%
Class M-2............... 0.670% 1.005%
Class M-3............... 1.150% 1.725%
Class M-4............... 1.250% 1.875%
Class M-5............... 1.550% 2.325%
Class M-6............... 2.000% 3.000%
Class M-7............... 2.750% 4.125%
Class B................. 3.000% 4.500%
(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.
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
27
Master Servicer in respect of a remedy for the breach of the representation
made by CHL set forth in Section 3.20(c).
Maximum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan, the maximum rate of interest set forth as such in the related
Mortgage Note.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS
on the MERS(R)System.
MERS(R) System: The system of recording transfers of
mortgages electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS
Mortgage Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan, the minimum rate of interest set forth as such in the related
Mortgage Note.
MOM Loan: Any Mortgage Loan, as to which MERS is acting as
mortgagee, solely as nominee for the originator of such Mortgage Loan and its
successors and assigns.
Monthly 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, or creating a
second lien on or second priority ownership interest, as applicable, 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 Co-Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loan Schedule: The list of Mortgage Loans (as from
time to time amended by the Master Servicer to reflect the deletion of
Liquidated Loans and Deleted Mortgage Loans and the addition of Replacement
Mortgage Loans pursuant to the provisions of this Agreement) transferred to
the Trustee as part of the Trust Fund and from time to time subject to this
Agreement, attached hereto as Exhibit F-1, setting forth in the following
information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Loan Group;
(iii) the Appraised Value;
28
(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 or Combined
Loan-to-Value Ratio, as applicable, at origination;
(xi) a code indicating whether the residential
dwelling at the time of origination was represented to be
owner-occupied;
(xii) a code indicating whether the residential
dwelling is either (a) a detached single family dwelling,
(b) a two family residential property, (c) a three family
residential property, (d) a four family residential
property, (e) planned unit development, (f) a low rise
condominium unit, (g) a high rise condominium unit or (h)
manufactured housing;
(xiii) a code indicating whether such Mortgage Loan
is a Credit Comeback Loan;
(xiv) [Reserved];
(xv) [Reserved];
(xvi) the purpose of the Mortgage Loan;
(xvii) 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 Periodic Rate Cap;
(g) [Reserved];
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(h) the Gross Margin; and
(i) 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 whether the Mortgage
Loan is a CHL Mortgage Loan or a Liquidity
Trust Mortgage Loan; and
(xx) a code indicating whether the Mortgage
Loan is a first lien or a second lien on
the related Mortgaged Property.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans and for each Loan Group.
Mortgage Loans: Such of the Group 1 Mortgage Loans, Group 2
Mortgage Loans, Group 3 Mortgage Loans and Group 4 Mortgage Loans transferred
and assigned to the Trustee pursuant to the provisions hereof as from time to
time are held as part of the Trust Fund (including any REO Property), the
mortgage loans so held being identified in the Mortgage Loan Schedule,
notwithstanding foreclosure or other acquisition of title of the related
Mortgaged Property. Any mortgage loan that was intended by the parties hereto
to be transferred to the Trust Fund as indicated by such Mortgage Loan
Schedule which is in fact not so transferred for any reason, including a
breach of the representation contained in Section 2.02 hereof, shall continue
to be a Mortgage Loan hereunder until the Purchase Price with respect thereto
has been paid to the Trust Fund.
Mortgage Note: The original executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
Mortgage Pool: The aggregate of the Mortgage Loans
identified in the Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a
Mortgage Note from time to time; provided, however, the Mortgage Rate for each
Credit Comeback Loan shall be treated for all purposes of payments on the
Certificates, including the calculation of the Pass-Through Rates and the Net
Rate Cap, as reduced by 0.375% on the Due Date following the end of each of
the first four annual periods after the origination date, irrespective of
whether the Mortgagor qualifies for the reduction by having a good payment
history.
Mortgaged Property: The underlying property securing a
Mortgage Loan.
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.
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Net Rate Cap: (i) With respect to the Class 1-A
Certificates, the Class 1-A Net Rate Cap, (ii) with respect to the Class 2-A
Certificates, the Class 2-A Net Rate Cap, (iii) with respect to the Class 3-A
Certificates, the Class 3-A Net Rate Cap, (iv) with respect to the Class 4-A
Certificates, the Class 4-A Net Rate Cap, (v) with respect to the Class A
Certificates, the Class A Net Rate Cap and (vi) with respect to the
Subordinate Certificates, the Subordinate Net Rate Cap.
Net Rate Carryover: With respect to any Class of Adjustable
Rate 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.
NIM Insurer: Any insurer guarantying at the request of the
Seller certain payments under notes backed principally by the Class C and
Class P Certificates.
Non-Book-Entry Certificate: Any Certificate other than a
Book-Entry Certificate.
Nonrecoverable Advance: Any portion of an Advance previously
made or proposed to be made by the Master Servicer that, in the good faith
judgment of the Master Servicer, will not or, in the case of a current
delinquency, would not, be ultimately recoverable by the Master Servicer from
the related Mortgagor, related Liquidation Proceeds or otherwise.
Non-United States Person : A Person that is not a citizen or
resident of the United States, a corporation, partnership, or other entity
(treated as a corporation or a partnership for federal income tax purposes)
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more United States persons have authority to control
all substantial decisions of the trustor.
OC Floor: With respect to any Distribution Date, an amount
equal to 0.50% of the aggregate Cut-off Date Principal Balance of the Mortgage
Loans.
Officer's Certificate: A certificate (i) in the case of the
Depositor, signed by the Chairman of the Board, the Vice Chairman of the
Board, the President, a Managing Director, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or
one of the Assistant Treasurers or Assistant Secretaries of the Depositor,
(ii) in the case of the Master Servicer, signed by the President, an Executive
Vice President, a Vice President, an Assistant Vice President, the Treasurer,
or one of the Assistant Treasurers or Assistant Secretaries of Countrywide GP,
Inc., its general partner or (iii) if provided for in this Agreement,
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signed by a Servicing Officer, as the case may be, and delivered to the
Depositor and the Trustee, as the case may be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period for the
Adjustable Rate Certificates, the rate determined by the Trustee on the
related Interest Determination Date on the basis of the rate for U.S. dollar
deposits for one month that appears on Telerate Screen Page 3750 as of 11:00
a.m. (London time) on such Interest Determination Date; provided that the
parties hereto acknowledge that One-Month LIBOR calculated for the first
Accrual Period for the Adjustable Rate Certificates shall equal 1.090% per
annum. If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered,
such other service for displaying One-Month LIBOR or comparable rates as may
be reasonably selected by the Trustee), One-Month LIBOR for the applicable
Accrual Period for the Adjustable Rate Certificates will be the Reference Bank
Rate. If no such quotations can be obtained by the Trustee and no Reference
Bank Rate is available, One-Month LIBOR will be One-Month LIBOR applicable to
the preceding Accrual Period for the Adjustable Rate Certificates.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, reasonably acceptable to
each addressee of such opinion; provided that with respect to Section 6.04 or
10.01, or the interpretation or application of the REMIC Provisions, such
counsel must (i) in fact be independent of the Depositor and the Master
Servicer, (ii) not have any direct financial interest in the Depositor or the
Master Servicer or in any affiliate of either and (iii) not be connected with
the Depositor or the Master Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
Optional Termination: The termination of the Trust Fund
provided hereunder pursuant to the purchase of the Mortgage Loans pursuant to
the last sentence of Section 9.01 hereof.
Optional Termination Date: The first Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage Loans is less
than or equal to 10% of the aggregate Stated Principal Balance of the Mortgage
Loans as of the Cut-off Date.
Original Value: The value of the property underlying a
Mortgage Loan based, in the case of the purchase of the underlying Mortgaged
Property, on the lower of an appraisal satisfactory to the Master Servicer or
the sales price of such property or, in the case of a refinancing, on an
appraisal satisfactory to the Master Servicer.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of
any date of determination, all Certificates theretofore executed and
authenticated under this Agreement except:
(i) Certificates theretofore canceled by the
Trustee or delivered to the Trustee for cancellation; and
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(ii) Certificates in exchange for which or in lieu
of which other Certificates have been executed and delivered
by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a
Mortgage Loan with a Stated Principal Balance greater than zero that was not
the subject of a Principal Prepayment in full, and that did not become a
Liquidated Loan, prior to the end of the related Prepayment Period.
Overcollateralization Deficiency Amount: With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization
Target Amount exceeds the Overcollateralized Amount for such Distribution Date
(after giving effect to distributions in respect of the Principal Remittance
Amount for each Loan Group on such Distribution Date).
Overcollateralization Target Amount: With respect to (a)
each Distribution Date prior to the Stepdown Date, an amount equal to 1.80% of
the aggregate Cut-off Date Principal Balance of the Mortgage Loans and (b) for
any Distribution Date on or after the Stepdown Date, 3.60% of the aggregate
Stated Principal Balance of the Mortgage Loans for the current Distribution
Date, subject to a minimum amount equal to the OC Floor; provided that if a
Trigger Event is in effect on any Distribution Date, the Overcollateralization
Target Amount will be the Overcollateralization Target Amount as in effect for
the prior Distribution Date.
Overcollateralized Amount: With respect to any Distribution
Date the amount, if any, by which (x) the aggregate Stated Principal Balance
of the Mortgage Loans for such Distribution Date exceeds (y) the aggregate
Certificate Principal Balance of the Senior and Subordinate Certificates as of
such Distribution Date (after giving effect to distributions in respect of the
Principal Remittance Amounts on such Distribution Date).
Ownership Interest: As to any Certificate, any ownership
interest in such Certificate including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial.
Pass-Through Rate: With respect to any Accrual Period and
each Class of Adjustable Rate Certificates, the lesser of (x) One-Month LIBOR
for such Accrual Period plus the 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 Adjustable Rate
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.
Periodic Rate Cap: As to substantially all Adjustable Rate
Mortgage Loans and the related Mortgage Notes, the provision therein that
limits permissible increases and decreases in the Mortgage Rate on any
Adjustment Date to not more than two percentage points.
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Permitted Investments: At any time, any one or more
of the following obligations and securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations
guaranteed by any state of the United States or the District
of Columbia receiving the highest long-term debt rating of
each Rating Agency, or such lower rating as each Rating
Agency has confirmed in writing will not result in the
downgrading or withdrawal of the ratings then assigned to
the Certificates by such Rating Agency;
(iii) commercial or finance company paper which is
then receiving the highest commercial or finance company
paper rating of each Rating Agency, or such lower rating as
each Rating Agency has confirmed in writing will not result
in the downgrading or withdrawal of the ratings then
assigned to the Certificates by such Rating Agency;
(iv) certificates of deposit, demand or time
deposits, or bankers' acceptances issued by any depository
institution or trust company incorporated under the laws of
the United States or of any state thereof and subject to
supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long
term unsecured debt obligations of such depository
institution or trust company (or in the case of the
principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if Xxxxx'x is
not a Rating Agency) are then rated one of the two highest
long-term and the highest short-term ratings of each such
Rating Agency for such securities, or such lower ratings as
each Rating Agency has confirmed in writing will not result
in the downgrading or withdrawal of the rating then assigned
to the Certificates by such Rating Agency;
(v) repurchase obligations with respect to any
security described in clauses (i) and (ii) above, in either
case entered into with a depository institution or trust
company (acting as principal) described in clause (iv)
above;
(vi) securities (other than stripped bonds,
stripped coupons or instruments sold at a purchase price in
excess of 115% of the face amount thereof) bearing interest
or sold at a discount issued by any corporation incorporated
under the laws of the United States or any state thereof
which, at the time of such investment, have one of the two
highest long term ratings of each Rating Agency (except (x)
if the Rating Agency is Moody's, such rating shall be the
highest commercial paper rating of S&P for any such
securities) and (y), or such lower rating as each Rating
Agency has confirmed in writing will not result in the
downgrading or withdrawal of the rating then assigned to the
Certificates by such Rating Agency;
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(vii) interests in any money market fund which at
the date of acquisition of the interests in such fund and
throughout the time such interests are held in such fund has
the highest applicable long term rating by each Rating
Agency or such lower rating as each Rating Agency has
confirmed in writing will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates
by such Rating Agency;
(viii) short term investment funds sponsored by any
trust company or national banking association incorporated
under the laws of the United States or any state thereof
which on the date of acquisition has been rated by each
Rating Agency in their respective highest applicable rating
category or such lower rating as each Rating Agency has
confirmed in writing will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates
by such Rating Agency; and
(ix) such other relatively risk free investments
having a specified stated maturity and bearing interest or
sold at a discount acceptable to each Rating Agency as will
not result in the downgrading or withdrawal of the rating
then assigned to the Certificates by any Rating Agency, as
evidenced by a signed writing delivered by each Rating
Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no
such instrument shall be a Permitted Investment (A) if such instrument
evidences principal and interest payments derived from obligations underlying
such instrument and the interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price
below the purchase price (the foregoing clause (B) not to apply to investments
in units of money market funds pursuant to clause (vi) above); provided
further that no amount beneficially owned by any REMIC (including, without
limitation, any amounts collected by the Master Servicer but not yet deposited
in the Certificate Account) may be invested in investments (other than money
market funds) treated as equity interests for Federal income tax purposes,
unless the Master Servicer shall receive an Opinion of Counsel, at the expense
of Master Servicer, to the effect that such investment will not adversely
affect the status of any such REMIC as a REMIC under the Code or result in
imposition of a tax on any such REMIC. Permitted Investments that are subject
to prepayment or call may not be purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
International Organization or any agency or instrumentality of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives
described in section 521 of 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
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"electing large partnership" as defined in section 775 of the Code, (vi) a
Person that is not a citizen or resident of the United States, a corporation,
partnership, or other entity (treated as a corporation or a partnership for
federal income tax purposes) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, or an estate
whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States,
or a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
Persons have authority to control all substantial decisions of the trustor
unless such Person has furnished the transferor and the Trustee with a duly
completed Internal Revenue Service Form W-8ECI, and (vii) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the Transfer
of an Ownership Interest in a Class A-R Certificate to such Person may cause
any REMIC formed hereunder to fail to qualify as a REMIC at any time that any
Certificates are Outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and,
with the exception of the Federal Home Loan Mortgage Corporation, a majority
of its board of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Pool Stated Principal Balance: The aggregate of the Stated
Principal Balances of the Mortgage Loans which were Outstanding Mortgage
Loans.
Prepayment Assumption: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to the Certificates.
Prepayment Charge: With respect to any Mortgage Loan, the
charges or premiums, if any, due in connection with a full or partial
prepayment of such Mortgage Loan within the related Prepayment Charge Period
in accordance with the terms thereof (other than any Master Servicer
Prepayment Charge Payment Amount).
Prepayment Charge Period: With respect to any to any
Mortgage Loan, the period of time during which a Prepayment Charge may be
imposed.
Prepayment Charge Schedule: As of the Cut-off Date with
respect to each Mortgage Loan, a list attached hereto as Schedule I (including
the Prepayment Charge Summary attached thereto), setting forth the following
information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment
Charge;
(iii) the state of origination of the related
Mortgage Loan;
36
(iv) the date on which the first monthly payment
was due on the related Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage
Loan as of the Cut-off Date.
As of the Closing Date, the Prepayment Charge Schedule shall
contain the necessary information for each Mortgage Loan. The Prepayment
Charge Schedule shall be amended from time to time by the Master Servicer in
accordance with the provisions of this Agreement and a copy of each related
amendment shall be furnished by the Master Servicer to the Class P and Class C
Certificateholders and the NIM Insurer.
Prepayment Interest Excess: With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Principal Prepayment
during the period from the 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 Loan during
the related Due Period, the amount, if any, by which (i) one month's interest
at the applicable Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan immediately prior to such prepayment (or liquidation) or in the
case of a partial Principal Prepayment on the amount of such prepayment (or
Liquidation Proceeds) exceeds (ii) the amount of interest paid or collected in
connection with such Principal Prepayment or such Liquidation Proceeds.
Prepayment Period: As to any Distribution Date and related
Due Date, the period beginning with the opening of business on the sixteenth
day of the calendar month preceding the month in which such Distribution Date
occurs (or, with respect to the first Distribution Date, the period from May
1, 2004) 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 and (ii) the Extra
Principal Distribution Amount for such Loan Group for such Distribution Date.
37
Principal Prepayment: Any Mortgagor payment or other
recovery of (or proceeds with respect to) principal on a Mortgage Loan
(including loans purchased or repurchased under Sections 2.02, 2.03, 2.04,
3.12 and 9.01 hereof) that is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest due on any date or dates in any month or months subsequent to the
month of prepayment. Partial Principal Prepayments shall be applied by the
Master Servicer in accordance with the terms of the related Mortgage Note.
Principal Reduction: With respect to any Distribution Date
and for each Loan Group, the sum of the Principal Remittance Amount and any
Realized Losses from the Mortgage Loans in the related Loan Group, less any
Subsequent Recoveries from the Mortgage Loans in the related Loan Group.
Principal Reductions shall consist proportionately of principal allocations
comprising the Principal Remittance Amount and Realized Losses, and the REMIC
1 Interest allocated a principal payment shall receive such payment on such
Distribution Date and shall have its principal balance reduced by an
allocation of Realized Losses.
Principal Relocation Payment: A payment from any Loan Group
to a REMIC 1 Regular Interest other than a Regular Interest corresponding to
that Loan Group as provided in the Preliminary Statement. Principal Relocation
Payments shall be made of principal allocations comprising the Principal
Remittance Amount from a Loan Group and shall include a proportionate
allocation of Realized Losses from the Mortgage Loans of such Loan Group.
Principal Remittance Amount: With respect to the Mortgage
Loans in each Loan Group and any Distribution Date, (a) the sum, without
duplication, of: (i) the scheduled principal collected with respect to the
Mortgage Loans during the related Due Period or advanced on or before 1:00
p.m. Pacific time on the related Master Servicer Advance Date, (ii) 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 is less than the
aggregate unpaid principal balance of any Deleted Mortgage Loans delivered by
the Sellers in connection with a substitution of a Mortgage Loan and (v) all
Liquidation Proceeds (to the extent such Liquidation Proceeds related to
principal) and Subsequent Recoveries collected during the related Due Period;
less (b) all Nonrecoverable Advances relating to principal and certain
expenses reimbursable pursuant to Section 6.03 and reimbursed during the
related Due Period.
Principal Reserve Fund: The separate Eligible Account
created and initially maintained by the Trustee pursuant to Section 3.08 in
the name of the Trustee for the benefit of the Certificateholders and
designated "The Bank of New York in trust for registered holders of CWABS,
Inc., Asset-Backed Certificates, Series 2004-5". Funds in the Principal
Reserve Fund shall be held in trust for the Certificateholders for the uses
and purposes set forth in this Agreement.
Private Certificates: The Class C and Class P Certificates.
38
Prospectus Supplement: The Prospectus Supplement dated May
24, 2004, relating to the public offering of the certain Classes of
Certificates offered thereby.
PTCE 95-60: As defined in Section 5.02(b).
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x)
required to be (1) repurchased by a Seller or purchased by the Master
Servicer, as applicable, pursuant to Section 2.02, 2.03 or 3.12 hereof or (2)
repurchased by the Depositor pursuant to Section 2.04 hereof, or (y) that the
Master Servicer has a right to purchase pursuant to Section 3.12 hereof, an
amount equal to the sum of (i) 100% of the unpaid principal balance (or, if
such purchase or repurchase, as the case may be, is effected by the Master
Servicer, the Stated Principal Balance) of the Mortgage Loan as of the date of
such purchase, (ii) accrued interest thereon at the applicable Mortgage Rate
(or, if such purchase or repurchase, as the case may be, is effected by the
Master Servicer, at the Net Mortgage Rate) from (a) the date through which
interest was last paid by the Mortgagor (or, if such purchase or repurchase,
as the case may be, is effected by the Master Servicer, the date through which
interest was last advanced and not reimbursed by the Master Servicer) to (b)
the Due Date in the month in which the Purchase Price is to be distributed to
Certificateholders and (iii) any costs, expenses and damages incurred by the
Trust Fund resulting from any violation of any predatory or abusive lending
law in connection with such Mortgage Loan.
Rating Agency: Fitch, Xxxxx'x and S&P. If any such
organization or its successor is no longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization, or other
comparable Person, designated by the Depositor, notice of which designation
shall be given to the Trustee. References herein to a given rating category of
a Rating Agency shall mean such rating category without giving effect to any
modifiers.
Realized Loss: With respect to each Liquidated Loan, an
amount (not less than zero or more than the Stated Principal Balance of the
Mortgage Loan) as of the date of such liquidation, equal to (i) the Stated
Principal Balance of such Liquidated Loan as of the date of such liquidation,
minus (ii) the Liquidation Proceeds, if any, received in connection with such
liquidation during the month in which such liquidation occurs, to the extent
applied as recoveries of principal of the Liquidated Loan. With respect to
each Mortgage Loan that has become the subject of a Deficient Valuation, (i)
if the value of the related Mortgaged Property was reduced below the principal
balance of the related Mortgage Note, the amount by which the value of the
Mortgaged Property was reduced below the principal balance of the related
Mortgage Note, and (ii) if the principal amount due under the related Mortgage
Note has been reduced, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and
the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation. With respect to each Mortgage Loan that has become the subject of a
Debt Service Reduction and any Distribution Date, the amount, if any, by which
the related Scheduled Payment was reduced.
Record Date: With respect to any Distribution Date and the
Adjustable Rate Certificates, the Business Day immediately preceding such
Distribution Date, or if such
39
Certificates are no longer Book-Entry Certificates, the last Business Day of
the month preceding the month of such Distribution Date. With respect to the
Class A-R, Class C and Class P Certificates, the last Business Day of the
month preceding the month of a Distribution Date.
Reference Bank Rate: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple
of 0.03125%) of the offered rates for United States dollar deposits for one
month that are quoted by the Reference Banks as of 11:00 a.m., New York City
time, on the related Interest Determination Date to prime banks in the London
interbank market for a period of one month in amounts approximately equal to
the outstanding aggregate Certificate Principal Balance of the Adjustable Rate
Certificates on such Interest Determination Date, provided that at least two
such Reference Banks provide such rate. If fewer than two offered rates
appear, the Reference Bank Rate will be the arithmetic mean (rounded upwards,
if necessary, to the nearest whole multiple of 0.03125%) of the rates quoted
by one or more major banks in New York City, selected by the Trustee, as of
11:00 a.m., New York City time, on such date for loans in U.S. dollars to
leading European banks for a period of one month in amounts approximately
equal to the aggregate Certificate Principal Balance of the Adjustable Rate
Certificates on such Interest Determination Date.
Reference Banks: Barclays Bank PLC, Deutsche Bank and
NatWest, N.A., provided that if any of the foregoing banks are not suitable to
serve as a Reference Bank, then any leading banks selected by the Trustee
which are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) not controlling, under the control of or under common control
with the Depositor, CHL or the Master Servicer and (iii) which have been
designated as such by the Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
Regular Certificate: Any Certificate other than the Class
A-R Certificates.
Relief Act: The Servicemembers Civil Relief Act.
REMIC Provisions: Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
Remittance Report: A report prepared by the Master Servicer
and delivered to the Trustee and the NIM Insurer in accordance with Section
4.04.
REO Property: A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed-in-lieu of foreclosure in connection with
a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by
CHL for a Deleted Mortgage Loan which must, on the date of such substitution,
as confirmed in a Request for Release, substantially in the form of Exhibit N,
(i) have a Stated Principal Balance, after deduction of the principal portion
of the Scheduled Payment due in the month of substitution, not
40
in excess of, and not less than 90% of the Stated Principal Balance of the
Deleted Mortgage Loan; (ii) 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 and (c) have the same Index
and Periodic Rate Cap as 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 or Combined Loan-to-Value Ratio, as applicable, 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) constitute the same occupancy type and lien
priority as the Deleted Mortgage Loan; and (x) comply with each representation
and warranty set forth in Section 2.03 as of the date of substitution.
Representing Party: As defined in Section 2.03(d).
Request for Release: The Request for Release submitted by
the Master Servicer to the Trustee, substantially in the form of Exhibits M
and N, as appropriate.
Required Insurance Policy: With respect to any Mortgage
Loan, any insurance policy that is required to be maintained from time to time
under this Agreement.
Required Percentage: With respect to a Distribution Date on
and after the Stepdown Date, the fraction (expressed as a percentage) (1) the
numerator of which is the excess of (a) the aggregate Stated Principal Balance
of the Mortgage Loans for the preceding Distribution Date over (b) (i) before
the Certificate Principal Balances of the 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
preceding Master Servicer Advance Date and (2) the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans for the preceding
Distribution Date.
Required Secondary Carryover Reserve Fund Deposit: With
respect to any Distribution Date, an amount equal to the excess of (i) $10,000
over (ii) the amount of funds on deposit in the Carryover Reserve Fund.
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.
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Rolling Sixty-Day Delinquency Rate: With respect to any
Distribution Date on or after the Stepdown Date, the average of the Sixty-Day
Delinquency Rates for such Distribution Date and the two immediately preceding
Distribution Dates.
Rule 144A: Rule 144A under the Securities Act.
Rule 144A Letter: As defined in Section 5.02(b).
S&P: Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. and its successors.
Scheduled Payment: 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; (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, and the Liquidity Trust, in its capacity as seller of
the Liquidity Trust Mortgage Loans to the Depositor.
Seller Shortfall Interest Requirement: With respect to the
Master Servicer Advance Date in June 2004, the product of: (1) the excess of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-Off
Date, over the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-Off Date that have a scheduled payment of interest due in the related
Due Period, and (2) a fraction, the numerator of which is the weighted average
Net Mortgage Rate of the Mortgage Loans (weighted on the basis of the Stated
Principal Balances thereof for such Distribution Date) and the denominator of
which is 12.
Senior Certificates: The Class 1-A, Class 2-A, Class 3-A,
Class 4-A, Class A and Class A-R Certificates.
Senior Principal Distribution Allocation Amount: With
respect to any Distribution Date and, (a) the Class 1-A Certificates, the
Class 1-A Principal Distribution Amount, (b) the Class 2-A Certificates, the
Class 2-A Principal Distribution Amount, (c) the Class 3-A Certificates, the
Class 3-A Principal Distribution Amount, (d) the Class 4-A Certificates, the
Class 4-A Principal Distribution Amount and (e) the Class A Certificates, the
Class A Principal Distribution Amount.
Senior Principal Distribution Target Amount: With respect to
any Distribution Date, the excess of (i) the aggregate Certificate Principal
Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class A
Certificates immediately prior to such Distribution Date, over (ii) the lesser
of (A) 68.90% of the aggregate Stated Principal Balance of the Mortgage Loans
for
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such Distribution Date and (B) the aggregate Stated Principal Balance of
the Mortgage Loans for such Distribution Date minus the OC Floor.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations hereunder, including, but not limited
to, the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and
(iv) compliance with the obligations under Section 3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to one month's interest at the Servicing Fee Rate on the
Stated Principal Balance of such Mortgage Loan for the preceding Distribution
Date or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate
on the Stated Principal Balance of such Mortgage Loan for the period covered
by such payment of interest.
Servicing Fee Rate: With respect to each Mortgage Loan,
0.50% per annum.
Servicing Officer: Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and facsimile signature appear on a list of
servicing officers furnished to the Trustee by the Master Servicer on the
Closing Date pursuant to this Agreement, as such list may from time to time be
amended.
Sixty-Day Delinquency Rate: With respect to any Distribution
Date 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 Advance Date related to
such Distribution Date, (b) all Principal Prepayments with respect to such
Mortgage Loan received by the Master Servicer during each Prepayment Period
ending prior to such Distribution Date and (c) all Liquidation Proceeds
collected with respect to such Mortgage Loan during each Due Period ending
prior to such Distribution Date, to the extent
43
applied by the Master Servicer as recoveries of principal in accordance with
Section 3.12. The Stated Principal Balance of any Mortgage Loan that becomes a
Liquidated Loan will be zero on each date following the Due Period in which
such Mortgage Loan becomes a Liquidated Loan. References herein to the Stated
Principal Balance of the Mortgage Loans at any time shall mean the aggregate
Stated Principal Balance of all Mortgage Loans in the Trust Fund as of such
time, and references herein to the Stated Principal Balance of a Loan Group at
any time shall mean the aggregate Stated Principal Balance of all Mortgage
Loans in such Loan Group at such time.
Stepdown Date: The earlier to occur of (i) the Distribution
Date on which the aggregate Certificate Principal Balance of the Class 1-A,
Class 2-A, Class 3-A, Class 4-A and Class A Certificates is reduced to zero,
and (ii) the later to occur of (x) the Distribution Date in June 2007 and (y)
the first Distribution Date on which the aggregate Certificate Principal
Balance of the Class 1-A, Class 2-A, Class 3-A, Class 4-A and Class A
Certificates (after calculating anticipated distributions on such Distribution
Date) is less than or equal to 68.90% of the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date.
Subordinate Certificates: The Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5, Class M-6, Class M-7 and Class B Certificates.
Subordinate Component Balance: With respect to any
Distribution Date and for each Loan Group, the excess of the principal balance
of such Loan Group as of the first day of the related Due Period (after giving
effect to Principal Prepayments received in the Prepayment Period ending
during such Due Period) over the Certificate Principal Balance of the Class
1-A Certificates in the case of Loan Group 1, the Class 2-A Certificates in
the case of Loan Group 2, the Class 3-A Certificates in the case of Loan Group
3 and the Class 4-A Certificates in the case of Loan Group 4, in each case
immediately prior to such Distribution Date.
Subordinate Net Rate Cap: With respect to any Distribution
Date and each Class of Subordinate Certificates, the weighted average of (a)
the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan
Group 1 (weighted by an amount equal to the positive difference (if any) of
the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 1
over the outstanding Certificate Principal Balance of the Class 1-A
Certificates), (b) the weighted average Adjusted Net Mortgage Rate of the
Mortgage Loans in Loan Group 2 (weighted by an amount equal to the positive
difference (if any) of the aggregate Stated Principal Balance of the Mortgage
Loans in Loan Group 2 over the outstanding Certificate Principal Balance of
the Class 2-A Certificates), (c) the weighted average Adjusted Net Mortgage
Rate of the Mortgage Loans in Loan Group 3 (weighted by an amount equal to the
positive difference (if any) of the aggregate Stated Principal Balance of the
Mortgage Loans in Loan Group 3 over the outstanding Certificate Principal
Balance of the Class 3-A Certificates) and (d) the weighted average Adjusted
Net Mortgage Rate of the Mortgage Loans in Loan Group 4 (weighted by an amount
equal to the positive difference (if any) of the aggregate Stated Principal
Balance of the Mortgage Loans in Loan Group 4 over the outstanding aggregate
Certificate Principal Balance of the Class 4-A Certificates), and in the case
of all Adjustable Rate Certificates, adjusted to an effective rate reflecting
the calculation of interest on the basis of the actual number of days elapsed
during the related Accrual Period and a 360-day year.
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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.
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(d).
Substitution Amount: With respect to any Mortgage Loan
substituted pursuant to Section 2.03(d), the excess of (x) the principal
balance of the Mortgage Loan that is substituted for, over (y) the principal
balance of the related substitute Mortgage Loan, each balance being determined
as of the date of substitution.
Tax Matters Person: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss. 1.860F-4(d) and
temporary Treasury regulation ss. 301.6231(a)(7)-1T. Initially, this person
shall be the Trustee.
Tax Matters Person Certificate: With respect to the Master
REMIC, REMIC 1 and REMIC 2, the Class A-R Certificate with a Denomination of
$0.05.
Terminator: As defined in Section 9.01.
Three-Year Hybrid Mortgage Loan: A Mortgage Loan having a
Mortgage Rate that is fixed for 36 months after origination thereof before
such Mortgage Rate becomes subject to adjustment.
Transfer: Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: With respect to a Distribution Date on or
after the Stepdown Date, consists of either a Delinquency Trigger Event with
respect to that Distribution Date or a Cumulative Loss Trigger Event with
respect to that Distribution Date.
Trust Fund: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans (excluding any entitlement to Credit
Comeback Excess Amounts) and all interest and principal received on or with
respect thereto on and after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance thereof, exclusive of interest
not required to be deposited in the Certificate Account pursuant to Section
3.05(b)(2); (ii) the Certificate Account, the Distribution Account, the
Principal Reserve Fund, the Carryover
45
Reserve Fund and all amounts deposited therein pursuant to the applicable
provisions of this Agreement; (iii) the Corridor Contracts; (iv) property that
secured a Mortgage Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (v) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loan; and (vi) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or
other liquid property.
Trustee: The Bank of New York, a New York banking
corporation, not in its individual capacity, but solely in its capacity as
trustee for the benefit of the Certificateholders 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 Pool Stated Principal
Balance.
Trustee Fee Rate: With respect to each Mortgage Loan, the
per annum rate agreed upon in writing on or prior to the Closing Date by the
Trustee and the Depositor, which is 0.009% per annum.
Two-Year Hybrid Mortgage Loan: A Mortgage Loan having a
Mortgage Rate that is fixed for 24 months after origination thereof before
such Mortgage Rate becomes subject to adjustment.
Underwriter's Exemption: Prohibited Transaction Exemption
2002-41, 67 Fed. Reg. 54487 (2002), as amended (or any successor thereto), or
any substantially similar administrative exemption granted by the U.S.
Department of Labor.
Unpaid Realized Loss Amount: For the Class A Certificates or
any Class of Subordinate 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(i).
Voting Rights: The portion of the voting rights of all the
Certificates that is allocated to any Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 97% to the Certificates other than the Class A-R, Class C
and Class P Certificates (with the allocation among the Certificates to be in
proportion to the Certificate Principal Balance of each Class relative to the
Certificate Principal Balance of all other such Classes), and 1% to each of
the Class A-R, Class C and Class P Certificates. Voting Rights will be
allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests.
46
Section 1.02 Certain Interpretive Provisions.
All terms defined in this Agreement shall have the defined
meanings when used in any certificate, agreement or other document delivered
pursuant hereto unless otherwise defined therein. For purposes of this
Agreement and all such certificates and other documents, unless the context
otherwise requires: (a) accounting terms not otherwise defined in this
Agreement, and accounting terms partly defined in this Agreement to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles; (b) terms defined in Articles 8 and 9 of the
UCC and not otherwise defined in this Agreement are used as defined in those
Articles; (c) the words "hereof," "herein" and "hereunder" and words of
similar import refer to this Agreement (or the certificate, agreement or other
document in which they are used) as a whole and not to any particular
provision of this Agreement (or such certificate, agreement or document); (d)
references to any Section, Schedule or Exhibit are references to Sections,
Schedules and Exhibits in or to this Agreement, and references to any
paragraph, subsection, clause or other subdivision within any Section or
definition refer to such paragraph, subsection, clause or other subdivision of
such Section or definition; (e) the term "including" means "including without
limitation"; (f) references to any law or regulation refer to that law or
regulation as amended from time to time and include any successor law or
regulation; (g) references to any agreement refer to that agreement as amended
from time to time; and (h) references to any Person include that Person's
permitted successors and assigns.
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans.
(a) Each Seller hereby sells, transfers, assigns, sets over
and otherwise conveys to the Depositor, without recourse, all the right, title
and interest of such Seller in and to the applicable Mortgage Loans, including
all interest and principal received and receivable by such Seller on or with
respect to applicable Mortgage Loans after the Cut-off Date (to the extent not
applied in computing the Cut-off Date Principal Balance thereof) or deposited
into the Certificate Account by such Seller as a Certificate Account Deposit
as provided in this Agreement, other than principal due on the applicable
Mortgage Loans on or prior to the Cut-off Date and interest accruing prior to
the Cut-off Date. CHL confirms that, concurrently with the transfer and
assignment, it has deposited into the Certificate Account the Certificate
Account Deposit.
Immediately upon the conveyance of the Mortgage Loans
referred to in the preceding paragraph, the Depositor sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for benefit of the
Certificateholders, without recourse, all right title and interest in the
Mortgage Loans.
CHL further agrees to assign all of its right, title and
interest in and to the interest rate corridor transaction evidenced by each
Confirmation, and to cause all of its obligations in respect of such
transaction to be assumed by, the Trustee on behalf of the Trust Fund, on the
terms and conditions set forth in the Corridor Contract Assignment Agreement.
47
(b) [Reserved]
(c) Each Seller has entered into this Agreement in
consideration for the purchase of the Mortgage Loans by the Depositor and has
agreed to take the actions specified herein. The Depositor, concurrently with
the execution and delivery of this Agreement, hereby sells, transfers, assigns
and otherwise conveys to the Trustee for the use and benefit of the
Certificateholders, without recourse, all right title and interest in the
portion of the Trust Fund not otherwise conveyed to the Trustee pursuant to
Sections 2.01(a).
(d) [Reserved]
(e) [Reserved]
(f) [Reserved]
(g) In connection with the transfer and assignment of each
Mortgage Loan, the Depositor has delivered to, and deposited with, the
Co-Trustee (or, in the case of the Delay Delivery Mortgage Loans, will deliver
to, and deposit with, the Co-Trustee within the time periods specified in the
definition of Delay Delivery Mortgage Loans) (except as provided in clause
(vi) below) for the benefit of the Certificateholders, the following documents
or instruments with respect to each such Mortgage Loan so assigned (with
respect to each Mortgage Loan, clause (i) through (vi) below, together, the
"Mortgage File" for each such Mortgage Loan):
(i) the original Mortgage Note, endorsed by the
applicable Seller or the originator of such Mortgage Loan,
without recourse, in the following form: "Pay to the order
of ________________ without recourse", with all intervening
endorsements that show a complete chain of endorsement from
the originator to the applicable Seller, or, if the original
Mortgage Note has been lost or destroyed and not replaced, an
original lost note affidavit from the applicable Seller,
stating that the original Mortgage Note was lost or destroyed,
together with a copy of the related Mortgage Note;
(ii) in the case of each Mortgage Loan that is not a
MERS Mortgage Loan, the original recorded Mortgage, and in
the case of each MERS Mortgage Loan, the original Mortgage,
noting the presence of the MIN of the Mortgage Loan and
language indicating that the Mortgage Loan is a MOM Loan if
the Mortgage Loan is a MOM Loan, with evidence of recording
indicated thereon, or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been
recorded;
(iii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage to
"Asset-Backed Certificates, Series 2004-5, CWABS, Inc., by The
Bank of New York, a New York banking corporation, as trustee
under the Pooling and Servicing Agreement dated as of May 1,
2004, without recourse" (each such assignment, when duly and
validly completed, to be in recordable form and sufficient to
effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates);
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(iv) the original recorded assignment or assignments of
the Mortgage together with all interim recorded assignments
of such Mortgage (noting the presence of a MIN in the case of
each MERS Mortgage Loan);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement,
if any; and
(vi) the original or duplicate original lender's title
policy or a printout of the electronic equivalent and all
riders thereto 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
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
49
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 (a) the State of California or (b) any other jurisdiction under the
laws of which the recordation of the assignment specified in clause (iii)
above is not necessary to protect the Trustee's and the Certificateholders'
interest in the related Mortgage Loan, as evidenced by an Opinion of Counsel
delivered by CHL to the Trustee, and a copy to the Rating Agencies, in lieu of
recording the assignment specified in clause (iii) above, the applicable
Seller may deliver an unrecorded assignment in blank, in form otherwise
suitable for recording to the Co-Trustee; provided that if the related
Mortgage has not been returned from the applicable public recording office,
such assignment, or any copy thereof, of the Mortgage may exclude the
information to be provided by the recording office. As to any Mortgage Loan
other than a MERS Mortgage Loan, the procedures of the preceding sentence
shall be applicable only so long as the related Mortgage File is maintained in
the possession of the Co-Trustee in the State or jurisdiction described in
such sentence. In the event that with respect to Mortgage Loans other than
MERS Mortgage Loans (i) either Seller, the Depositor or the Master Servicer
gives written notice to the Trustee that recording is required to protect the
right, title and interest of the Trustee on behalf of the Certificateholders
in and to any Mortgage Loan, (ii) a court recharacterizes the sale of the
Mortgage Loans as a financing, or (iii) as a result of any change in or
amendment to the laws of the State or jurisdiction described in the first
sentence of this paragraph or any applicable political subdivision thereof, or
any change in official position regarding application or interpretation of
such laws, including a holding by a court of competent jurisdiction, such
recording is so required, the Co-Trustee shall complete the assignment in the
manner specified in clause (iii) of the second paragraph of this Section
2.01(g) and CHL shall submit or cause to be submitted for recording as
specified above or, should CHL fail to perform such obligations, the Trustee
shall cause the Master Servicer, at the Master Servicer's expense, to cause
each such previously unrecorded assignment to be submitted for recording as
specified above. In the event a Mortgage File is released to the Master
Servicer as a result of the Master Servicer's having completed a Request for
Release in the form of Exhibit M, the Trustee shall complete the assignment of
the related Mortgage in the manner specified in clause (iii) of the second
paragraph of this Section 2.01(g).
So long as the Co-Trustee or its agent maintains an office
in the State of California, the Co-Trustee or its agent shall maintain
possession of and not remove or attempt to remove from the State of California
any of the Mortgage Files as to which the related Mortgaged
50
Property is located in such State. In the event that a Seller fails to record
an assignment of a Mortgage Loan as herein provided within 90 days of notice
of an event set forth in clause (i), (ii) or (iii) of the above paragraph, the
Master Servicer shall prepare and, if required hereunder, file such
assignments for recordation in the appropriate real property or other records
office. Each Seller hereby appoints the Master Servicer (and any successor
servicer hereunder) as its attorney-in-fact with full power and authority
acting in its stead for the purpose of such preparation, execution and filing.
In the case of Mortgage Loans that become the subject of a
Principal Prepayment between the Closing Date and the Cut-off Date, CHL shall
deposit or cause to be deposited in the Certificate Account the amount
required to be deposited therein with respect to such payment pursuant to
Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement,
within thirty days after the Closing Date, CHL (on behalf of each Seller)
shall either (i) deliver to the Co-Trustee the Mortgage File as required
pursuant to this Section 2.01 for each Delay Delivery Mortgage Loan or (ii)
(A) repurchase the Delay Delivery Mortgage Loan or (B) substitute the Delay
Delivery Mortgage Loan for a Replacement Mortgage Loan, which repurchase or
substitution shall be accomplished in the manner and subject to the conditions
set forth in Section 2.03, provided that if CHL fails to deliver a Mortgage
File for any Delay Delivery Mortgage Loan within the period provided in the
prior sentence, the cure period provided for in Section 2.02 or in Section
2.03 shall not apply to the initial delivery of the Mortgage File for such
Delay Delivery Mortgage Loan, but rather CHL shall have five (5) Business Days
to cure such failure to deliver. CHL shall promptly provide each Rating Agency
with written notice of any cure, repurchase or substitution made pursuant to
the proviso of the preceding sentence. On or before the thirtieth (30th) day
(or if such thirtieth day is not a Business Day, the succeeding Business Day)
after the Closing Date, the Trustee shall, in accordance with the provisions
of Section 2.02, send a Delay Delivery Certification substantially in the form
annexed hereto as Exhibit G-3 (with any applicable exceptions noted thereon)
for all Delay Delivery Mortgage Loans delivered within thirty (30) days after
such date. The Trustee will promptly send a copy of such Delay Delivery
Certification to each Rating Agency.
The Trust Fund will not acquire or hold any Mortgage Loan
that would violate the representations made by CHL in Section 2.03(b)(70),
(76)(vii) or (76)(viii).
Section 2.02 Acceptance by Trustee of the Mortgage Loans.
(a) The Co-Trustee acknowledges receipt, subject to the
limitations contained in and any exceptions noted in the Initial Certification
in the form annexed hereto as Exhibit G-1 and in the list of exceptions
attached thereto, of the documents referred to in clauses (i) and (iii) of
Section 2.01(g) above with respect to the Mortgage Loans and all other assets
included in the Trust Fund and declares that it holds and will hold such
documents and the other documents delivered to it constituting the Mortgage
Files, and that it holds or will hold such other assets included in the Trust
Fund, in trust for the exclusive use and benefit of all present and future
Certificateholders.
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The Trustee agrees to execute and deliver on the Closing
Date to the Depositor, the Master Servicer and CHL (on behalf of each Seller)
an Initial Certification substantially in the form annexed hereto as Exhibit
G-1 to the effect that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), the documents described in Section 2.01(g)(i) and, in the case
of each Mortgage Loan that is not a MERS Mortgage Loan, the documents
described in Section 2.01(g)(iii) with respect to such Mortgage Loans as are
in the Co-Trustee's possession and based on its review and examination and
only as to the foregoing documents, such documents appear regular on their
face and relate to such Mortgage Loan. The Trustee agrees to execute and
deliver within 30 days after the Closing Date to the Depositor, the Master
Servicer and CHL (on behalf of each Seller) an Interim Certification
substantially in the form annexed hereto as Exhibit G-2 to the effect that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification) all documents
required to be delivered to the Co-Trustee pursuant to the Agreement with
respect to such Mortgage Loans are in its possession (except those documents
described in Section 2.01(g)(vi)) and based on its review and examination and
only as to the foregoing documents, (i) such documents appear regular on their
face and relate to such Mortgage Loan, and (ii) the information set forth in
items (i), (iv), (v), (vi), (viii), (xi) and (xiv) of the definition of the
"Mortgage Loan Schedule" accurately reflects information set forth in the
Mortgage File. On or before the thirtieth (30th) day after the Closing Date
(or if such thirtieth day is not a Business Day, the succeeding Business Day),
the Trustee shall deliver to the Depositor, the Master Servicer and CHL (on
behalf of each Seller) a Delay Delivery Certification with respect to the
Mortgage Loans substantially in the form annexed hereto as Exhibit G-3, with
any applicable exceptions noted thereon. The Co-Trustee or the Trustee, as
applicable, shall be under no duty or obligation to inspect, review or examine
such documents, instruments, certificates or other papers to determine that
the same are genuine, enforceable or appropriate for the represented purpose
or that they have actually been recorded in the real estate records or that
they are other than what they purport to be on their face.
Not later than 180 days after the Closing Date, the Trustee
shall deliver to the Depositor, the Master Servicer and CHL (on behalf of each
Seller), and to any Certificateholder that so requests, a Final Certification
with respect to the Mortgage Loans substantially in the form annexed hereto as
Exhibit H, with any applicable exceptions noted thereon.
In connection with the Trustee's completion and delivery of
such Final Certification, the Co-Trustee, at the Trustee's direction, shall
review each Mortgage File with respect to the Mortgage Loans to determine that
such Mortgage File contains the following documents:
(i) the original Mortgage Note, endorsed by the
applicable Seller or the originator of such Mortgage Loan,
without recourse, in the following form: "Pay to the order of
________________ without recourse", with all intervening
endorsements that show a complete chain of endorsement from
the originator to such Seller, or, if the original Mortgage
Note has been lost or destroyed and not replaced, an original
lost note affidavit from such Seller, stating that the
original
52
Mortgage Note was lost or destroyed, together with a copy of
the related Mortgage Note;
(ii) in the case of each Mortgage Loan that is not a
MERS Mortgage Loan, the original recorded Mortgage, and in
the case of each Mortgage Loan that is a MERS Mortgage Loan,
the original Mortgage, noting the presence of the MIN of the
Mortgage Loan and language indicating that the Mortgage Loan
is a MOM Loan if the Mortgage Loan is a MOM Loan, with
evidence of recording indicated thereon, or a copy of the
Mortgage certified by the public recording office in which
Mortgage has been recorded;
(iii) in the case of each Mortgage Loan that is not a
MERS Mortgage Loan, a duly executed assignment of the
Mortgage in the form permitted by Section 2.01;
(iv) the original recorded assignment or assignments
of the Mortgage together with all interim recorded
assignments of such Mortgage (noting the presence of a MIN
in the case of each MERS Mortgage Loan);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement,
if any; and
(vi) the original or duplicate original lender's title
policy or a printout of the electronic equivalent and all
riders thereto.
If, in the course of such review, the Co-Trustee finds any
document or documents constituting a part of such Mortgage File that do not
meet the requirements of clauses (i)-(iv) and (vi) above, the Trustee shall
include such exceptions in such Final Certification (and the Trustee shall
state in such Final Certification whether any Mortgage File does not then
include the original or duplicate original lender's title policy or a printout
of the electronic equivalent and all riders thereto). If the public recording
office in which a Mortgage or assignment thereof is recorded retains the
original of such Mortgage or assignment, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office, shall be deemed to satisfy the
requirements of clause (ii), (iii) or (iv) above, as applicable. CHL shall
promptly correct or cure such defect referred to above within 90 days from the
date it was so notified of such defect and, if CHL does not correct or cure
such defect within such period, CHL shall either (A) if the time to cure such
defect expires prior to the end of the second anniversary of the Closing Date,
substitute for the related Mortgage Loan a Replacement Mortgage Loan, which
substitution shall be accomplished in the manner and subject to the conditions
set forth in Section 2.03, or (B) purchase such Mortgage Loan from the Trust
Fund within 90 days from the date CHL was notified of such defect in writing
at the Purchase Price of such Mortgage Loan; provided that any such
substitution pursuant to (A) above or repurchase pursuant to (B) above shall
not be effected prior to the delivery to the Trustee of the Opinion of Counsel
required by Section 2.05 hereof and any substitution pursuant to (A) above
shall not be effected prior to the additional delivery to the Co-Trustee of a
Request for Release substantially in the form of Exhibit N. No substitution
will be made in any calendar month after the Determination Date for such
month. The Purchase Price for any such Mortgage
53
Loan shall be deposited by CHL in the Certificate Account and, upon receipt of
such deposit and certification with respect thereto in the form of Exhibit N
hereto, the Co-Trustee shall release the related Mortgage File to CHL and
shall execute and deliver at CHL's request such instruments of transfer or
assignment as CHL has prepared, in each case without recourse, as shall be
necessary to vest in CHL, or a designee, the Trustee's interest in any
Mortgage Loan released pursuant hereto. If pursuant to the foregoing
provisions CHL repurchases a Mortgage Loan that is a MERS Mortgage Loan, the
Master Servicer shall cause MERS to execute and deliver an assignment of the
Mortgage in recordable form to transfer the Mortgage from MERS to CHL and
shall cause such Mortgage to be removed from registration on the MERS(R)
System in accordance with MERS' rules and regulations.
The Co-Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions set
forth herein. Each Seller shall promptly deliver to the Co-Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File that come into the possession of
such Seller from time to time.
It is understood and agreed that the obligation of the
Sellers to substitute for or to purchase any Mortgage Loan that does not meet
the requirements of Section 2.02(a) above shall constitute the sole remedy
respecting such defect available to the Trustee, the Co-Trustee, the Depositor
and any Certificateholder against the Sellers.
It is understood and agreed that the obligation of a Seller
to substitute for or to purchase, pursuant to Section 2.02(a), any Mortgage
Loan whose Mortgage File contains any document or documents that does not meet
the requirements of clauses (i)-(iv) and (vi) above and which defect is not
corrected or cured by such Seller within 90 days from the date it was notified
of such defect, shall constitute the sole remedy respecting such defect
available to the Trustee, the Co-Trustee, the Depositor and any
Certificateholder against the Sellers.
Section 2.03 Representations, Warranties and Covenants of the
Master Servicer and the Sellers.
(a) The Master Servicer hereby represents and warrants to the
Depositor and the Trustee as follows, as of the date hereof with respect to
the Mortgage Loans:
(1) The Master Servicer is duly organized as a Texas
limited partnership and is validly existing and in good
standing under the laws of the State of Texas and is duly
authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Master
Servicer in any state in which a Mortgaged Property is located
or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the
doing business laws of any such state, to the extent necessary
to ensure its ability to enforce each Mortgage Loan, to service
the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
54
(2) The Master Servicer has the full partnership power
and authority to sell and service each Mortgage Loan, and to
execute, deliver and perform, and to enter into and consummate
the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on the part of the
Master Servicer the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against the Master Servicer in accordance
with its terms, except that (a) the enforceability hereof may
be limited by bankruptcy, insolvency, moratorium, receivership
and other similar laws relating to creditors' rights generally
and (b) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(3) The execution and delivery of this Agreement by the
Master Servicer, the servicing of the Mortgage Loans by the
Master Servicer under this Agreement, the consummation of any
other of the transactions contemplated by this Agreement, and
the fulfillment of or compliance with the terms hereof are in
the ordinary course of business of the Master Servicer and will
not (A) result in a material breach of any term or provision of
the certificate of limited partnership, partnership agreement
or other organizational document of the Master Servicer or (B)
materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument
to which the Master Servicer is a party or by which it may be
bound, or (C) constitute a material violation of any statute,
order or regulation applicable to the Master Servicer of any
court, regulatory body, administrative agency or governmental
body having jurisdiction over the Master Servicer; and the
Master Servicer is not in breach or violation of any material
indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may
materially impair the Master Servicer's ability to perform or
meet any of its obligations under this Agreement.
(4) The Master Servicer is an approved servicer of
conventional mortgage loans for Xxxxxx Xxx and Xxxxxxx Mac and
is a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to sections 203 and 211 of the National
Housing Act.
(5) No litigation is pending or, to the best of the
Master Servicer's knowledge, threatened, against the Master
Servicer that would materially and adversely affect the
execution, delivery or enforceability of this Agreement or the
ability of the Master Servicer to service the Mortgage Loans or
to perform any of its other obligations under this Agreement in
accordance with the terms hereof.
(6) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Master Servicer of,
or compliance by the Master Servicer with, this Agreement or
the
55
consummation of the transactions contemplated hereby, or if
any such consent, approval, authorization or order is required,
the Master Servicer has obtained the same.
(7) The Master Servicer is a member of MERS in good
standing, and will comply in all material respects with the
rules and procedures of MERS in connection with the servicing
of the Mortgage Loans for as long as such Mortgage Loans are
registered with MERS.
(b) CHL hereby represents and warrants to the Depositor and
the Trustee as follows, as of the Cut-off Date (unless otherwise indicated or
the context otherwise requires, percentages with respect to the Mortgage Loans
in the Trust Fund or in a Loan Group or Loan Group are measured by the Cut-off
Date Principal Balance of the Mortgage Loans in the Trust Fund or of the
Mortgage Loans in the related Loan Group or Loan Group, as applicable):
(1) CHL is duly organized as a New York corporation and
is validly existing and in good standing under the laws of the
State of New York and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to
be conducted by CHL in any state in which a Mortgaged Property
is located or is otherwise not required under applicable law to
effect such qualification and, in any event, is in compliance
with the doing business laws of any such state, to the extent
necessary to ensure its ability to enforce each Mortgage Loan,
to sell the CHL Mortgage Loans in accordance with the terms of
this Agreement and to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(2) CHL has the full corporate power and authority to sell
each CHL Mortgage Loan, and to execute, deliver and perform,
and to enter into and consummate the transactions contemplated
by this Agreement and has duly authorized by all necessary
corporate action on the part of CHL the execution, delivery and
performance of this Agreement; and this Agreement, assuming the
due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding
obligation of CHL, enforceable against CHL in accordance with
its terms, except that (a) the enforceability hereof may be
limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and
(b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought.
(3) The execution and delivery of this Agreement by CHL,
the sale of the CHL Mortgage Loans by CHL under this Agreement,
the consummation of any other of the transactions contemplated
by this Agreement, and the fulfillment of or compliance with
the terms hereof are in the ordinary course of business of CHL
and will not (A) result in a material breach of any term or
provision of the charter or by-laws of CHL or (B) materially
conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the
terms of any other material agreement or instrument to which
CHL is a party or by which it may be bound, or (C) constitute a
material violation of any statute, order or regulation
applicable to CHL of any court, regulatory body, administrative
agency or governmental body having jurisdiction over CHL; and
56
CHL is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair CHL's
ability to perform or meet any of its obligations under this
Agreement.
(4) CHL is an approved seller of conventional mortgage
loans for Xxxxxx Mae and Xxxxxxx Mac and is a mortgagee
approved by the Secretary of Housing and Urban Development
pursuant to sections 203 and 211 of the National Housing Act.
(5) No litigation is pending or, to the best of CHL's
knowledge, threatened, against CHL that would materially and
adversely affect the execution, delivery or enforceability of
this Agreement or the ability of CHL to sell the CHL Mortgage
Loans or to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(6) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by CHL of, or compliance by
CHL with, this Agreement or the consummation of the
transactions contemplated hereby, or if any such consent,
approval, authorization or order is required, CHL has obtained
the same.
(7) The information set forth on Exhibit F-1 hereto with
respect to each Mortgage Loan is true and correct in all
material respects as of the Closing Date.
(8) CHL will treat the transfer of the CHL Mortgage Loans
to the Depositor as a sale of the CHL Mortgage Loans for all
tax, accounting and regulatory purposes.
(9) None of the Mortgage Loans are delinquent in payment
of principal and interest.
(10) No Mortgage Loan that is secured by a first lien on
the related Mortgaged Property had a Loan-to-Value Ratio at
origination in excess of 100.00%. and no Mortgage Loan secured
by a second lien on the related Mortgaged Property had a
Combined Loan-to-Value Ratio at origination in excess of 100%.
(11) Each Mortgage Loan is secured by a valid and
enforceable first or second lien on the related Mortgaged
Property subject only to (1) the lien of non-delinquent current
real property taxes and assessments, (2) covenants, conditions
and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage,
such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically
reflected in the appraisal made in connection with the
origination of the related Mortgage Loan 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.
57
(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, to the best of CHL's
knowledge, each Mortgaged Property is free of material damage
and is in good repair.
(17) As of the Closing Date, neither CHL nor any prior
holder of any Mortgage has modified the Mortgage in any
material respect (except that a Mortgage Loan may have been
modified by a written instrument that has been recorded or
submitted for recordation, if necessary, to protect the
interests of the Certificateholders and the original or a copy
of which has been delivered to the Trustee); satisfied,
cancelled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part
from the lien of such Mortgage; or executed any instrument of
release, cancellation, modification (except as expressly
permitted above) or satisfaction with respect thereto.
(18) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date
Principal Balance of each such Mortgage Loan or a commitment
(binder) to issue the same was effective on the date of the
origination of each Mortgage Loan, each such policy is valid
and remains in full force and effect, and each such policy was
issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located and
acceptable to Xxxxxx Mae and Xxxxxxx Mac and is in a form
acceptable to Xxxxxx Mae and Xxxxxxx Mac, which policy insures
the Sellers and successor owners of indebtedness secured by the
insured Mortgage, as to the first priority lien, of the
Mortgage subject to the exceptions set forth in paragraph (11)
above; to the best of CHL's knowledge, no claims have been made
under such mortgage title insurance policy and no prior holder
of the related Mortgage, including either Seller, has done, by
act or omission, anything that would impair the coverage of
such mortgage title insurance policy.
58
(19) No Mortgage Loan was the subject of a Principal
Prepayment in full between the Closing Date and the Cut-off
Date.
(20) To the best of CHL's knowledge, all of the
improvements that were included for the purpose of determining
the Appraised Value of the Mortgaged Property lie wholly within
the boundaries and building restriction lines of such property,
and no improvements on adjoining properties encroach upon the
Mortgaged Property.
(21) To the best of CHL's knowledge, no improvement
located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation. To the
best of CHL's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect
to the use and occupancy of the same, including but not limited
to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material
adverse effect on the value of such Mortgaged Property, and the
Mortgaged Property is lawfully occupied under applicable law.
(22) The Mortgage Note and the related Mortgage are
genuine, and each is the legal, valid and binding obligation of
the maker thereof, enforceable in accordance with its terms and
under applicable law, except that (a) the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. To the best of
CHL's knowledge, all parties to the Mortgage Note and the
Mortgage had legal capacity to execute the Mortgage Note and
the Mortgage and each Mortgage Note and Mortgage have been duly
and properly executed by such parties.
(23) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances
thereunder, and any and all requirements as to completion of
any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making, or closing or recording
the Mortgage Loans were paid.
(24) The related Mortgage contains customary and
enforceable provisions that render the rights and remedies of
the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security, including,
(i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure.
(25) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve
as such, has been properly designated and currently so serves
and is named in such Mortgage, and no fees or expenses are or
will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor.
59
(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 76.66% of the Mortgage
Loans in Loan Group 1 are secured by single family detached
dwellings. No more than approximately 4.91% of the Mortgage
Loans in Loan Group 1 are secured by two- to four-family
dwellings. No more than approximately 5.41% of the Mortgage
Loans in Loan Group 1 are secured by condominium units. No more
than approximately 0.19% of the Mortgage Loans in Loan Group 1
are secured by high-rise condominium units. No more than
approximately 0.23% of the Mortgage Loans in Loan Group 1 are
secured by manufactured housing. No more than approximately
12.60% of the Mortgage Loans in Loan Group 1 are secured by
PUDs. No less than approximately 76.79% of the Mortgage Loans
in Loan Group 2 are secured by single family detached
dwellings. No more than approximately 4.01% of the Mortgage
Loans in Loan Group 2 are secured by two- to four-family
dwellings. No more than approximately 5.97% of the Mortgage
Loans in Loan Group 2 are secured by condominium units. No more
than approximately 0.17% Mortgage Loans in Loan Group 2 are
secured by high-rise condominium units. No more than
approximately 0.05% Mortgage Loans in Loan Group 2 are secured
by manufactured housing. No more than approximately 13.00% of
the Mortgage Loans in Loan Group 2 are secured by PUDs. No less
than approximately 77.36% of the Mortgage Loans in Loan Group 3
are secured by single family detached dwellings. No more than
approximately 3.24% of the Mortgage Loans in Loan Group 3 are
secured by two- to four-family dwellings. No more than
approximately 4.34% of the Mortgage Loans in Loan Group 3 are
secured by condominium units. No more than approximately 0.31%
of the Mortgage Loans in Loan Group 3 are secured by high-rise
condominium units. No more than approximately 0.07% of the
Mortgage Loans in Loan Group 3 are secured by manufactured
housing. No more than approximately 14.69% of the Mortgage
Loans in Loan Group 3 are secured by PUDs. No less than
approximately 78.07% of the
60
Mortgage Loans in Loan Group 4 are secured by single family
detached dwellings. No more than approximately 2.96% of the
Mortgage Loans in Loan Group 4 are secured by two- to four-
family dwellings. No more than approximately 4.90% of the
Mortgage Loans in Loan Group 4 are secured by condominium units.
No more than approximately 0.33% of the Mortgage Loans in Loan
Group 4 are secured by high-rise condominium units. No more than
approximately 0.05% of the Mortgage Loans in Loan Group 4 are
secured by manufactured housing. No more than approximately
13.69% of the Mortgage Loans in Loan Group 4 are secured by
PUDs.
(33) Each Mortgage Loan in Loan Group 1 was originated on
or after December 23, 2002, each Mortgage Loan in Loan Group 2
was originated on or after March 18, 2003, each Mortgage Loan
in Loan Group 3 was originated on or after March 11, 2003 and
each Mortgage Loan in Loan Group 4 was originated on or after
June 15, 1999.
(34) Each Mortgage Loan that is an Adjustable Rate
Mortgage Loan, other than a Two-Year Hybrid Mortgage Loan or a
Three-Year Hybrid Mortgage Loan, had an initial Adjustment Date
no later than November 11, 2004; each Two-Year Hybrid Mortgage
Loan had an initial Adjustment Date no later than May 1, 2006;
and each Three-Year Hybrid Mortgage Loan had an initial
Adjustment Date no later than June 1, 2007.
(35) Approximately 72.25% of the Mortgage Loans in Loan
Group 1, approximately 68.64% of the Mortgage Loans in Loan
Group 2, approximately 77.65% of the Mortgage Loans in Loan
Group 3 and approximately 76.24% of the Mortgage Loans in Loan
Group 4 provide for a prepayment penalty.
(36) On the basis of representations made by the
Mortgagors in their loan applications, no more than
approximately 2.26%, 1.41%, 2.86% and 1.36% of the Mortgage
Loans in Loan Group 1, Loan Group 2, Loan Group 3 and Loan
Group 4, respectively, are secured by investor properties, and
no less than approximately 97.13%, 98.01%, 96.71% and 97.72% of
the Mortgage Loans in Loan Group 1, Loan Group 2, Loan Group 3
and Loan Group 4 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
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successors in interest, as mortgagee, and the applicable Seller
has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance, including flood
insurance, at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor
from the Mortgagor.
(38) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency
as having special flood hazards, a flood insurance policy in a
form meeting the requirements of the current guidelines of the
Flood Insurance Administration is in effect with respect to
such Mortgaged Property with a generally acceptable carrier in
an amount representing coverage not less than the least of (A)
the original outstanding principal balance of the Mortgage
Loan, (B) the minimum amount required to compensate for damage
or loss on a replacement cost basis, or (C) the maximum amount
of insurance that is available under the Flood Disaster
Protection Act of 1973, as amended.
(39) To the best of CHL's knowledge, there is no
proceeding occurring, pending or threatened for the total or
partial condemnation of the Mortgaged Property.
(40) There is no material monetary default existing under
any Mortgage or the related Mortgage Note and, to the best of
CHL's knowledge, there is no material event that, with the
passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation
or event of acceleration under the Mortgage or the related
Mortgage Note; and neither Seller has waived any default,
breach, violation or event of acceleration.
(41) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units
and dwelling units in PUDs. To the best of CHL's knowledge, no
improvement to a Mortgaged Property includes a cooperative or a
mobile home or constitutes other than real property under state
law.
(42) Each Mortgage Loan is being serviced by the Master
Servicer.
(43) Any future advances made prior to the Cut-off Date
have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment
term reflected on the Mortgage Loan Schedule. The consolidated
principal amount does not exceed the original principal amount
of the Mortgage Loan. The Mortgage Note does not permit or
obligate the Master Servicer to make future advances to the
Mortgagor at the option of the Mortgagor.
(44) All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold
payments or ground rents that previously became due and owing
have been paid, or an escrow of funds has been established in
an amount sufficient to pay for every such item that remains
unpaid and that has been assessed, but is not yet due and
payable. Except for (A) payments in the nature of escrow
payments,
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and (B) interest accruing from the date of the Mortgage Note
or date of disbursement of the Mortgage proceeds, whichever is
later, to the day that precedes by one month the Due Date of
the first installment of principal and interest, including
without limitation, taxes and insurance payments, the Master
Servicer has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of
any amount required by the Mortgage.
(45) The Mortgage Loans originated by CHL were
underwritten in all material respects in accordance with CHL's
underwriting guidelines for credit blemished quality mortgage
loans or, with respect to Mortgage Loans purchased by CHL were
underwritten in all material respects in accordance with
customary and prudent underwriting guidelines generally used by
originators of credit blemished quality mortgage loans.
(46) Prior to the approval of the Mortgage Loan
application, an appraisal of the related Mortgaged Property was
obtained from a qualified appraiser, duly appointed by the
originator, who had no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof,
and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan; such appraisal is in a form
acceptable to Xxxxxx Xxx and Xxxxxxx Mac.
(47) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan, and no
Mortgage Loan is subject to a buydown or similar arrangement.
(48) The Mortgage Rates borne by the Mortgage Loans in
Loan Group 1 as of the Cut-off Date ranged from 3.875% per
annum to 13.000% per annum and the weighted average Mortgage
Rate as of the Cut-off Date was 6.805% per annum. The Mortgage
Rates borne by the Mortgage Loans in Loan Group 2 as of the
Cut-off Date ranged from 3.975% per annum to 14.000% per annum
and the weighted average Mortgage Rate as of the Cut-off Date
was 6.970% per annum. The Mortgage Rates borne by the Mortgage
Loans in Loan Group 3 as of the Cut-off Date ranged from 4.250%
per annum to 13.250% per annum and the weighted average
Mortgage Rate as of the Cut-off Date was 6.823% per annum. The
Mortgage Rates borne by the Mortgage Loans in Loan Group 4 as
of the Cut-off Date ranged from 3.875% per annum to 12.250% per
annum and the weighted average Mortgage Rate as of the Cut-off
Date was 6.734% per annum.
(49) [Reserved].
(50) The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in the Master
Servicer's portfolio at the Closing Date as to which the
representations and warranties made as to the Mortgage Loans
set forth in this Section 2.03(b) can be made. No selection was
made in a manner that would adversely affect the interests of
Certificateholders.
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(51) The Gross Margins on the Adjustable Rate Mortgage
Loans in Loan Group 1 range from approximately 1.172% to
8.000%, and the weighted average Gross Margin was approximately
6.230%. The Gross Margins on the Adjustable Rate Mortgage Loans
in Loan Group 2 range from approximately 2.500% to 12.000%, and
the weighted average Gross Margin was approximately 6.553%. The
Gross Margins on the Adjustable Rate Mortgage Loans in Loan
Group 3 range from approximately 2.875% to 12.950%, and the
weighted average Gross Margin was approximately 6.486%. The
Gross Margins on the Adjustable Rate Mortgage Loans in Loan
Group 4 range from approximately 2.625% to 11.750%, and the
weighted average Gross Margin was approximately 6.384%.
(52) Each of the Mortgage Loans in the Mortgage Pool has a
Due Date on or before July 1, 2004.
(53) The Mortgage Loans, individually and in the
aggregate, conform in all material respects to the descriptions
thereof in the Prospectus Supplement.
(54) There is no obligation on the part of either Seller
under the terms of the Mortgage or related Mortgage Note to
make payments in addition to those made by the Mortgagor.
(55) Any leasehold estate securing a Mortgage Loan has a
term of not less than five years in excess of the term of the
related Mortgage Loan.
(56) Each Mortgage Loan represents a "qualified mortgage"
within the meaning of Section 860(a)(3) of the Code (but
without regard to the rule in Treasury Regulation ss.
1.860G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any substantially similar successor
provision) and applicable Treasury regulations promulgated
thereunder.
(57) No Mortgage Loan was either a "consumer credit
contract" or a "purchase money loan" as such terms are defined
in 16 C.F.R. ss. 433 nor is any Mortgage Loan a "mortgage" as
defined in 15 U.S.C. ss. 1602(aa).
(58) To the extent required under applicable law, each
originator and subsequent mortgagee or servicer of the Mortgage
Loan complied with all licensing requirements and was
authorized to transact and do business in the jurisdiction in
which the related Mortgaged Property is located at all times
when it held or serviced the Mortgage Loan. Any and all
requirements of any federal, state or local laws or
regulations, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer
credit protection, anti-predatory lending, fair credit
reporting, unfair collection practice, equal credit
opportunity, fair housing and disclosure laws and regulations,
applicable to the solicitation, origination, collection and
servicing of such Mortgage Loan have been complied with in all
material respects; and any obligations of the holder of the
Mortgage Note, Mortgage and other loan documents have been
complied with in all material respects; servicing of each
Mortgage Loan has been in accordance with prudent mortgage
servicing standards, any applicable laws, rules and
64
regulations and in accordance with the terms of the Mortgage
Notes, Mortgage and other loan documents, whether such
origination and servicing was done by Seller, its affiliates,
or any third party which originated the Mortgage Loan on behalf
of, or sold the Mortgage Loan to, any of them, or any servicing
agent of any of the foregoing;
(59) The methodology used in underwriting the extension of
credit for the each Mortgage Loan employs objective
mathematical principles which relate the borrower's income,
assets and liabilities to the proposed payment and such
underwriting methodology does not rely on the extent of the
borrower's equity in the collateral as the principal
determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of
origination (application/approval) the borrower had a
reasonable ability to make timely payments on the Mortgage
Loan;
(60) No borrower was required to purchase any credit life,
disability, accident or health insurance product as a condition
of obtaining the extension of credit. No borrower obtained a
prepaid single-premium credit life, disability, accident or
health insurance policy in connection with the origination of
the Mortgage Loan;
(61) If the Mortgage Loan provides that the interest rate
on the principal balance of the related Mortgage Loan may be
adjusted, all of the terms of the related Mortgage pertaining
to interest rate adjustments, payment adjustments and
adjustments of the outstanding principal balance have been made
in accordance with the terms of the related Mortgage Note and
applicable law and are enforceable and such adjustments will
not affect the priority of the Mortgage lien;
(62) The Mortgaged Property complies with all applicable
laws, rules and regulations relating to environmental matters,
including but not limited to those relating to radon, asbestos
and lead paint and neither Seller nor, to the CHL's, the
Mortgagor, has received any notice of any violation or
potential violation of such law;
(63) There is no action, suit or proceeding pending, or to
the best of Seller's knowledge, threatened or likely to be
asserted with respect to the Mortgage Loan against or affecting
Seller before or by any court, administrative agency,
arbitrator or governmental body;
(64) No action, inaction, or event has occurred and no
state of fact exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage
under any applicable hazard insurance policy, irrespective of
the cause of such failure of coverage. In connection with the
placement of any such insurance, no commission, fee, or other
compensation has been or will be received by Seller or any
designee of Seller or any corporation in which Seller or any
officer, director, or employee had a financial interest at the
time of placement of such insurance;
(65) Each Mortgage Loan has a fully assignable life of
loan tax service contract which may be assigned without the
payment of any fee;
(66) No Mortgagor has notified CHL, and CHL has no
knowledge, of any relief requested or allowed to a Mortgagor
under the Relief Act;
65
(67) Each Mortgage Loan was originated by a savings and
loan association, savings bank, commercial bank, credit union,
insurance company, or mortgage banking company which is
supervised and examined by a federal or state authority, or by
a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 2.03 and 2.11 of the National
Housing Act;
(68) Each Mortgage Loan was (A) originated no earlier than
six months prior to the time the Seller purchased such Mortgage
Loan pursuant to a mortgage loan purchase agreement or other
similar agreement and (B) underwritten or reunderwritten by the
Seller in accordance with the Seller's underwriting guidelines
in effect at the time the loan was underwritten or
reunderwritten, as applicable;
(69) Each Mortgage Loan, at the time it was originated and
as of the Closing Date, complied in all material respects with
applicable local, state and federal laws, including, but not
limited to, all predatory and abusive lending laws;
(70) None of the Mortgage Loans are "high cost" loans as
defined by applicable federal, state and local predatory and
abusive lending laws;
(71) Each Prepayment Charge is enforceable and was
originated in compliance with all applicable federal, state and
local laws;
(72) 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;
(73) 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;
(74) No Mortgage Loan in the Trust Fund is a "high cost
home," "covered," "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);
(75) Each Mortgage Loan is secured by a "single family
residence" within the meaning of Section 25(e)(10) of the
Internal Revenue Code of 1986 (as amended) (the "Code"). The
fair market value of the manufactured home securing each
Mortgage Loan was at least equal to 80% of the adjusted issue
price of the contract at either (i) the time the contract was
originated (determined pursuant to the REMIC Provisions) or
(ii) the time the contract is transferred to the purchaser.
Each Mortgage Loan is a "qualified mortgage" under Section
860G(a)(3) of the Code; and
(76) Representations and Warraties relating to the Group 1
Mortgage Loans:
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(i) Each Group 1 Mortgage Loan is in compliance with
the anti-predatory lending eligibility for purchase
requirements of Xxxxxx Mae's Selling Guide.
(ii) No Group 1 Mortgage Loan is subject to the
requirements of the Home Ownership and Equity Protection
Act of 1994.
(iii) No Group 1 Mortgage Loan is a "High-Cost Home
Loan" as defined in the Georgia Fair Lending Act, as
amended (the "Georgia Act"). No Group 1 Mortgage Loan
subject to the Georgia Act and secured by owner occupied
real property or an owner occupied manufactured home
located in the State of Georgia was originated (or
modified) on or after October 1, 2002 through and
including March 6, 2003.
(iv) No Group 1 Mortgage Loan is a "High-Cost Home
Loan" as defined in New York Banking Law 6-1.
(v) No Group 1 Mortgage Loan is a "High-Cost Home
Loan" as defined in the Arkansas Home Loan Protection Act
effective July 16, 2003 (Act 1340 of 2003).
(vi) No Group 1 Mortgage Loan is a "High-Cost Home
Loan" as defined in the Kentucky high-cost home loan
statute effective June 24, 2003 (Ky. Rev. Stat. Section
360.100).
(vii) No Group 1 Mortgage Loan is a "High-Cost Home
Loan" as defined in the New Jersey Home Ownership Act
effective November 27, 2003 (N.J.S.A. 46:10B-22 et seq.).
(viii) No Group 1 Mortgage Loan is a "High-Cost Home
Loan" as defined in the New Mexico Home Loan Protection
Act effective January 1, 2004 (N.M. Stat. Xxx. xx.xx.
58-21A-1 et seq.).
(ix) No Group 1 Mortgage Loan is a "High-Risk Home
Loan" as defined in the Illinois High-Risk Home Loan Act
effective January 1, 2004 (815 Ill. Comp. Stat. 137/1 et
seq.).
(x) No borrower was encouraged or required to select
a Group 1 Mortgage Loan product offered by the Mortgage
Loan's originator which is a higher cost product designed
for less creditworthy borrowers, unless at the time of
such Mortgage Loan's origination, such borrower did not
qualify taking into account credit history and
debt-to-income ratios for a lower-cost credit product then
offered by such Mortgage Loan's originator or any
affiliate of such Mortgage Loan's originator. If, at the
time of loan application, the borrower may have qualified
for a for a lower-cost credit product then offered by any
mortgage lending affiliate of such Mortgage Loan's
originator, such Mortgage Loan's originator referred the
borrower's application to such affiliate for underwriting
consideration.
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(xi) With respect to any Group 1 Mortgage Loan that
contains a provision permitting imposition of a premium
upon a prepayment prior to maturity: (i) prior to the
loan's origination, the borrower agreed to such premium in
exchange for a monetary benefit, including but not limited
to a rate or fee reduction, (ii) prior to the loan's
origination, the borrower was offered the option of
obtaining a mortgage loan that did not require payment of
such a premium, (iii) the prepayment premium is disclosed
to the borrower in the loan documents pursuant to
applicable state and federal law and (iv) notwithstanding
any state or federal law to the contrary, the 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.
(xii) No proceeds from any Group 1 Mortgage Loan were
used to purchase single premium credit insurance policies
as part of the origination of, or as a condition to
closing, such Mortgage Loan.
(xiii) All points and fees related to each Group 1
Mortgage Loan were disclosed in writing to the borrower in
accordance with applicable state and federal law and
regulation. Except in the case of a Group 1 Mortgage Loan
in an original principal amount of less than $60,000 which
would have resulted in an unprofitable origination, no
borrower in respect of a Group 1 Mortgage Loan was charged
"points and fees" (whether or not financed) in an amount
greater than 5% of the principal amount of such loan, such
5% limitation is calculated in accordance with Xxxxxx
Mae's anti-predatory lending requirements as set forth in
the Xxxxxx Mae Selling Guide.
(xiv) All fees and charges (including finance
charges) and whether or not financed, assessed, collected
or to be collected in connection with the origination and
servicing of each Group 1 Mortgage Loan has been disclosed
in writing to the borrower in accordance with applicable
state and federal law and regulation; and
(xv) The Master Servicer will transmit full-file
credit reporting data for each Group 1 Mortgage Loan
pursuant to Xxxxxx Xxx Guide Announcement 95-19 and that
for each Group 1 Mortgage Loan, Servicer agrees it shall
report one of the following statuses each month as
follows: new origination, current, delinquent (30-, 60-,
90-days, etc.), foreclosed, or charged-off.
(77) Representations and Warranties relating to the Group
2 Mortgage Loans:
(i) No Group 2 Mortgage Loan is covered by the Home
Ownership and Equity Protection Act of 1994 ("HOEPA");
(ii) No proceeds from any Group 2 Mortgage Loan were
used to finance single-premium credit insurance policies;
68
(iii) No Group 2 Mortgage Loan originated on or after
October 1, 2002 will impose a prepayment premium for a
term in excess of three years after origination and no
Group 2 Mortgage Loans originated prior to such date will
impose prepayment penalties for a term in excess of five
years;
(iv) The Master Servicer for each Group 2 Mortgage
Loan has fully furnished, 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;
(v) The Master Servicer for each Group 2 Mortgage
Loan 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;
and
(vi) The original principal balance of each Group 2
Mortgage Loan is within Xxxxxxx Mac's dollar amount limits
for conforming one- to four-family mortgage loans.
(c) The Liquidity Trust hereby represents and warrants to the
Depositor and the Trustee as follows, as of the Cut-off Date:
(1) The Liquidity Trust is duly organized as a Delaware
limited liability company and is validly existing and in good
standing under the laws of the State of Delaware and is duly
authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Liquidity
Trust in any state in which a Mortgaged Property securing a
Liquidity Trust Mortgage Loan is located or is otherwise not
required under applicable law to effect such qualification and,
in any event, is in compliance with the doing business laws of
any such state, to the extent necessary to ensure its ability
to enforce each Liquidity Trust Mortgage Loan, to sell the
Liquidity Trust Mortgage Loans in accordance with the terms of
this Agreement and to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(2) The Liquidity Trust has the full company power and
authority to sell each Liquidity Trust Mortgage Loan, and to
execute, deliver and perform, and to enter into and consummate
the transactions contemplated by this Agreement and has duly
authorized by all necessary company action on the part of the
Liquidity Trust the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the
Liquidity Trust, enforceable against the Liquidity Trust in
accordance with its terms, except that (a) the enforceability
hereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to
69
equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(3) The execution and delivery of this Agreement by the
Liquidity Trust, the sale of the Liquidity Trust Mortgage Loans
by the Liquidity Trust under this Agreement, the consummation
of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms
hereof are in the ordinary course of business of the Liquidity
Trust and will not (A) result in a material breach of any term
or provision of the certificate of formation or limited
liability company agreement of the Liquidity Trust or (B)
materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument
to which the Liquidity Trust is a party or by which it may be
bound, or (C) constitute a material violation of any statute,
order or regulation applicable to the Liquidity Trust of any
court, regulatory body, administrative agency or governmental
body having jurisdiction over the Liquidity Trust; and the
Liquidity Trust is not in breach or violation of any material
indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may
materially impair the Liquidity Trust's ability to perform or
meet any of its obligations under this Agreement.
(4) No litigation is pending or, to the best of the
Liquidity Trust's knowledge, threatened, against the Liquidity
Trust that would materially and adversely affect the execution,
delivery or enforceability of this Agreement or the ability of
the Liquidity Trust to sell the Liquidity Trust Mortgage Loans
or to perform any of its other obligations under this Agreement
in accordance with the terms hereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Liquidity Trust of,
or compliance by the Liquidity Trust with, this Agreement or
the consummation of the transactions contemplated hereby, or if
any such consent, approval, authorization or order is required,
the Liquidity Trust has obtained the same.
(6) The Liquidity Trust will treat the transfer of the
Liquidity Trust Mortgage Loans to the Depositor as a sale of
the Liquidity Trust Mortgage Loans for all tax, accounting and
regulatory purposes.
(7) Immediately prior to the assignment of each Liquidity
Trust Mortgage Loan to the Depositor, the Liquidity Trust had
good title to, and was the sole owner of, such the Liquidity
Trust Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest and had full right and
authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign the same
pursuant to this Agreement.
(d) Upon discovery by any of the parties hereto of a breach
of a representation or warranty set forth in Section 2.03(a) or (b) that
materially and adversely affects the interests of the Certificateholders in
any Mortgage Loan, the party discovering such breach shall give prompt
70
notice thereof to the other parties and the NIM Insurer. Each of the Master
Servicer and the Sellers (each, a "Representing Party") hereby covenants with
respect to the representations and warranties set forth in Sections 2.03(a)
and (b) that within 90 days of the earlier of the discovery by such
Representing Party or receipt of written notice by such Representing Party
from any party of a breach of any representation or warranty set forth herein
made that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, it shall cure such breach in all
material respects and, if such breach is not so cured, shall, (i) if such
90-day period expires prior to the second anniversary of the Closing Date,
remove such Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund and
substitute in its place a Replacement Mortgage Loan, in the manner and subject
to the conditions set forth in this Section; or (ii) repurchase the affected
Mortgage Loan or Mortgage Loans from the Trustee at the Purchase Price in the
manner set forth below; provided that (a) any such substitution pursuant to
(i) above or repurchase pursuant to (ii) above shall not be effected prior to
the delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof, (b) any such substitution pursuant to (i) above shall not be effected
prior to the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit M and (c) any such substitution pursuant
to (i) above shall include a payment by the applicable Representing Party of
any amount as calculated under item (iii) of the definition of "Purchase
Price". Any Representing Party liable for a breach under this Section 2.03
shall promptly reimburse the Master Servicer or the Trustee for any expenses
reasonably incurred by the Master Servicer or the Trustee in respect of
enforcing the remedies for such breach. To enable the Master Servicer to amend
the Mortgage Loan Schedule, any Representing Party liable for a breach under
this Section 2.03 shall, unless it cures such breach in a timely fashion
pursuant to this Section 2.03, promptly notify the Master Servicer whether
such Representing Party intends either to repurchase, or to substitute for,
the Mortgage Loan affected by such breach. With respect to the representations
and warranties described in this Section that are made to the best of the
Representing Party's knowledge, if it is discovered by any of the Depositor,
the Master Servicer, the Sellers or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan, notwithstanding the
Representing Party's lack of knowledge with respect to the substance of such
representation or warranty, such inaccuracy shall be deemed a breach of the
applicable representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, the
applicable Seller delivering such Replacement Mortgage Loan shall deliver to
the Trustee for the benefit of the Certificateholders the related Mortgage
Note, Mortgage and assignment of the Mortgage, and such other documents and
agreements as are required by Section 2.01, with the Mortgage Note endorsed
and the Mortgage assigned as required by Section 2.01. No substitution will be
made in any calendar month after the Determination Date for such month.
Scheduled Payments due with respect to Replacement Mortgage Loans in the Due
Period related to the Distribution Date on which such proceeds are to be
distributed shall not be part of the Trust Fund and will be retained by the
applicable Seller delivering such Replacement Loan on such Distribution Date.
For the month of substitution, distributions to Certificateholders will
include the Scheduled Payment due on any Deleted Mortgage Loan for the related
Due Period and thereafter the applicable Seller shall be entitled to retain
all amounts received in respect of such Deleted Mortgage Loan. The Master
Servicer shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and
the substitution of the Replacement Mortgage Loan or Loans and the Master
Servicer shall deliver the amended
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Mortgage Loan Schedule to the Trustee. Upon such substitution, the Replacement
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the applicable Seller delivering such Replacement Mortgage Loan
shall be deemed to have made with respect to such Replacement Mortgage Loan or
Loans, as of the date of substitution, the representations and warranties set
forth in Section 2.03(b) with respect to such Mortgage Loan. Upon any such
substitution and the deposit to the Certificate Account of the amount required
to be deposited therein in connection with such substitution as described in
the following paragraph, the Co-Trustee shall release to the Representing
Party the Mortgage File relating to such Deleted Mortgage Loan and held for
the benefit of the Certificateholders and shall execute and deliver at the
Master Servicer's direction such instruments of transfer or assignment as have
been prepared by the Master Servicer, in each case without recourse, as shall
be necessary to vest in the applicable Seller, or its respective designee,
title to the Trustee's interest in any Deleted Mortgage Loan substituted for
pursuant to this Section 2.03.
For any month in which either Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Replacement Mortgage Loans as of the date of substitution
is less than the Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) of all such
Deleted Mortgage Loans. An amount equal to the aggregate of the deficiencies
described in the preceding sentence (such amount, the "Substitution Adjustment
Amount") shall be forwarded by the applicable Seller to the Master Servicer
and deposited by the Master Servicer into the Certificate Account not later
than the Determination Date for the Distribution Date relating to the
Prepayment Period during which the related Mortgage Loan became required to be
purchased or replaced hereunder.
In the event that a Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited in the Certificate
Account pursuant to Section 3.05 on the Determination Date for the
Distribution Date in the month following the month during which such Seller
became obligated to repurchase or replace such Mortgage Loan and upon such
deposit of the Purchase Price, the delivery of the Opinion of Counsel required
by Section 2.05, if any, and the receipt of a Request for Release in the form
of Exhibit N hereto, the Co-Trustee shall release the related Mortgage File
held for the benefit of the Certificateholders to such Seller, and the Trustee
shall execute and deliver at such Person's direction the related instruments
of transfer or assignment prepared by such Seller, in each case without
recourse, as shall be necessary to transfer title from the Trustee for the
benefit of the Certificateholders and transfer the Trustee's interest to such
Seller to any Mortgage Loan purchased pursuant to this Section 2.03. It is
understood and agreed that the obligation under this Agreement of the Sellers
to cure, repurchase or replace any Mortgage Loan as to which a breach has
occurred and is continuing shall constitute the sole remedy against the
Sellers respecting such breach available to Certificateholders, the Depositor
or the Trustee.
(e) The representations and warranties set forth in this
Section 2.03 shall survive delivery of the respective Mortgage Files to the
Co-Trustee for the benefit of the Certificateholders with respect to each
Mortgage Loan.
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Section 2.04 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master
Servicer and the Trustee as follows, as of the date hereof:
(1) The Depositor is duly organized and is validly
existing as a corporation in good standing under the laws of
the State of Delaware and has full power and authority
(corporate and other) necessary to own or hold its properties
and to conduct its business as now conducted by it and to enter
into and perform its obligations under this Agreement.
(2) The Depositor has the full corporate power and
authority to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by, this Agreement
and has duly authorized, by all necessary corporate action on
its part, the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with
its terms, subject, as to enforceability, to (i) bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and (ii) general
principles of equity, regardless of whether enforcement is
sought in a proceeding in equity or at law.
(3) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by
this Agreement, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of the
Depositor and will not (A) result in a material breach of any
term or provision of the charter or by-laws of the Depositor or
(B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument
to which the Depositor is a party or by which it may be bound
or (C) constitute a material violation of any statute, order or
regulation applicable to the Depositor of any court, regulatory
body, administrative agency or governmental body having
jurisdiction over the Depositor; and the Depositor is not in
breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order
or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which
breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this
Agreement.
(4) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that
would materially and adversely affect the execution, delivery
or enforceability of this Agreement or the ability of the
Depositor to perform its obligations under this Agreement in
accordance with the terms hereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Depositor of, or
compliance by the Depositor with, this Agreement or the
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consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, the
Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee
with respect to each Mortgage Loan as of the Closing Date, as applicable, and
following the transfer of the Mortgage Loans to it by the Sellers, the
Depositor had good title to the Mortgage Loans, and the related Mortgage Notes
were subject to no offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and
warranties set forth in the two immediately preceding paragraphs shall survive
delivery of the Mortgage Files to the Co-Trustee. Upon discovery by the
Depositor or the Trustee, of a breach of any of the foregoing representations
and warranties set forth in the immediately preceding paragraph (referred to
herein as a "breach"), which breach materially and adversely affects the
interest of the Certificateholders, the party discovering such breach shall
give prompt written notice to the others and to each Rating Agency and the NIM
Insurer. The Depositor hereby covenants with respect to the representations
and warranties made by it in this Section 2.04 that within 90 days of the
earlier of the discovery it or receipt of written notice by it from any party
of a breach of any representation or warranty set forth herein made that
materially and adversely affects the interests of the Certificateholders in
any Mortgage Loan, it shall cure such breach in all material respects and, if
such breach is not so cured, shall repurchase or replace the affected Mortgage
Loan or Loans in accordance with the procedure set forth in Section 2.03(d).
Section 2.05 Delivery of Opinion of Counsel in Connection
with Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this Agreement,
with respect to any Mortgage Loan that is not in default or as to which
default is not imminent, no repurchase or substitution pursuant to Sections
2.02, 2.03 or 2.04 shall be made unless the Representing Party making such
repurchase or substitution delivers to the Trustee an Opinion of Counsel,
addressed to the Trustee to the effect that such repurchase or substitution
would not (i) result in the imposition of the tax on "prohibited transactions"
of the Trust Fund or contributions after the Closing Date, as defined in
sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the
any REMIC formed hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding. Any Mortgage Loan as to which repurchase or
substitution was delayed pursuant to this paragraph shall be repurchased or
the substitution therefor shall occur (subject to compliance with Sections
2.02, 2.03 or 2.04) upon the earlier of (a) the occurrence of a default or
imminent default with respect to such loan and (b) receipt by the Trustee of
an Opinion of Counsel to the effect that such repurchase or substitution, as
applicable, will not result in the events described in clause (i) or clause
(ii) of the preceding sentence.
(b) Upon discovery by the Depositor, either Seller, the
Master Servicer or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of section 860G(a)(3) of the Code, the
party discovering such fact shall promptly (and in any event within 5 Business
Days of discovery) give written notice thereof to the other parties and the
NIM Insurer. In connection therewith, the Trustee shall require CHL, at CHL's
option, to either (i) substitute, if the conditions in Section 2.03(d) with
respect to substitutions are satisfied, a Replacement Mortgage Loan for the
affected Mortgage Loan, or (ii) repurchase the affected
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Mortgage Loan within 90 days of such discovery in the same manner as it would
a Mortgage Loan for a breach of representation or warranty contained in
Section 2.03. The Trustee shall reconvey to CHL the Mortgage Loan to be
released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.
Section 2.06 Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it
of the Trust Fund and, concurrently with such transfer and assignment, has
executed, authenticated and delivered, to or upon the order of the Depositor,
the Certificates in authorized denominations evidencing the entire ownership
of the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform the duties set forth in this Agreement to the
best of its ability, to the end that the interests of the Holders of the
Certificates may be adequately and effectively protected.
Section 2.07 Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Depositor and
the Trustee as follows:
(a) the Master Servicer shall comply in the performance of
its obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance Policy; and
(b) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the Depositor,
any affiliate of the Depositor or the Trustee and prepared by the Master
Servicer pursuant to this Agreement will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
information, certificate, statement or report not misleading.
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master
Servicer shall service and administer the Mortgage Loans in accordance with
customary and usual standards of practice of prudent mortgage loan lenders in
the respective states in which the Mortgaged Properties are located, including
taking all required and appropriate actions under each Required Insurance
Policy. In connection with such servicing and administration, the Master
Servicer shall have full power and authority, acting alone and/or through
subservicers as provided in Section 3.02 hereof, subject to the terms hereof
(i) to execute and deliver, on behalf of the Certificateholders and the
Trustee, customary consents or waivers and other instruments and documents,
(ii) to consent to transfers of any Mortgaged Property and assumptions of the
Mortgage Notes and related Mortgages (but only in the manner provided in this
Agreement), (iii) to collect any Insurance Proceeds, 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
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Property securing any Mortgage Loan; provided that the Master Servicer shall
take no action that is inconsistent with or prejudices the interests of the
Trustee or the Certificateholders in any Mortgage Loan or the rights and
interests of the Depositor and the Trustee under this Agreement. The Master
Servicer shall represent and protect the interest of the Trustee in the same
manner as it currently protects its own interest in mortgage loans in its own
portfolio in any claim, proceeding or litigation regarding a Mortgage Loan and
shall not make or permit any modification, waiver or amendment of any term of
any Mortgage Loan which would (i) cause any REMIC formed hereunder to fail to
qualify as a REMIC or (ii) result in the imposition of any tax under section
860(a) or 860(d) of the Code, but in any case the Master Servicer shall not
act in any manner that is a lesser standard than that provided in the first
sentence of this Section 3.01. Without limiting the generality of the
foregoing, the Master Servicer, in its own name or in the name of the
Depositor and the Trustee, is hereby authorized and empowered by the Depositor
and the Trustee, when the Master Servicer believes it appropriate in its
reasonable judgment, to execute and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and
all other comparable instruments, with respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Master Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery
by any or all of them as are necessary or appropriate to enable the Master
Servicer to service and administer the Mortgage Loans. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Master Servicer. The Master Servicer further is authorized
and empowered by the Trustee, on behalf of the Certificateholders and the
Trustee, in its own name or in the name of the Subservicer, when the Master
Servicer or the Subservicer, as the case may be, believes it appropriate in
its best judgment to register any Mortgage Loan on the MERS(R) System, or
cause the removal from the registration of any Mortgage Loan on the MERS(R)
System, to execute and deliver, on behalf of the Trustee and the
Certificateholders or any of them, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording
of a Mortgage in the name of MERS, solely as nominee for the Trustee and its
successors and assigns.
In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary
for the purpose of effecting the payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to Section
3.06, and further as provided in Section 3.08. All costs incurred by the
Master Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balance under the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.
The Master Servicer shall deliver a list of Servicing
Officers to the Trustee by the Closing Date.
In connection with its activities as Master Servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself,
the Trustee and the Certificateholders, claims to the insurer under any
primary insurance policies and, in this regard, to take any reasonable action
necessary to permit recovery under any primary insurance policies respecting
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defaulted Mortgage Loans. Any amounts collected by the Master Servicer under
any primary insurance policies shall be deposited in the Certificate Account.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, 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 shall be entitled to terminate any Subservicing Agreement and the
rights and obligations of any Subservicer pursuant to any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement. Notwithstanding the provisions of any subservicing agreement, any
of the provisions of this Agreement relating to agreements or arrangements
between the Master Servicer or a subservicer or reference to actions taken
through a Master Servicer or otherwise, the Master Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the Mortgage Loans in accordance with
the provisions of this Agreement without diminution of such obligation or
liability by virtue of such subservicing agreements or arrangements or by
virtue of indemnification from the subservicer and to the same extent and
under the same terms and conditions as if the Master Servicer alone were
servicing and administering the Mortgage Loans. Every subservicing agreement
entered into by the Master Servicer shall contain a provision giving the
successor Master Servicer the option to terminate such agreement in the event
a successor Master Servicer is appointed. All actions of each subservicer
performed pursuant to the related subservicing agreement shall be performed as
an agent of the Master Servicer with the same force and effect as if performed
directly by the Master Servicer.
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(b) For purposes of this Agreement, the Master Servicer shall
be deemed to have received any collections, recoveries or payments with
respect to the Mortgage Loans that are received by a subservicer regardless of
whether such payments are remitted by the subservicer to the Master Servicer.
Section 3.03 Rights of the Depositor, the Sellers, the
Certificateholders, the NIM Insurer and the
Trustee in Respect of the Master Servicer.
None of the Trustee, the Seller, the Certificateholders, the
NIM Insurer or the Depositor shall have any responsibility or liability for
any action or failure to act by the Master Servicer, and none of them is
obligated to supervise the performance of the Master Servicer hereunder or
otherwise. The Master Servicer shall afford (and any Subservicing Agreement
shall provide that each Subservicer shall afford) the Depositor, the NIM
Insurer and the Trustee, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer (and any such
Subservicer) in respect of the Master Servicer's rights and obligations
hereunder and access to officers of the Master Servicer (and those of any such
Subservicer) responsible for such obligations. Upon request, the Master
Servicer shall furnish to the Depositor, the NIM Insurer and the Trustee its
(and any such Subservicer's) most recent financial statements and such other
information relating to the Master Servicer's capacity to perform its
obligations under this Agreement that it possesses. To the extent such
information is not otherwise available to the public, the Depositor, the NIM
Insurer and the Trustee shall not disseminate any information obtained
pursuant to the preceding two sentences without the Masters Servicer's (or any
such Subservicer's) written consent, except as required pursuant to this
Agreement or to the extent that it is necessary to do so (i) in working with
legal counsel, auditors, taxing authorities or other governmental agencies,
rating agencies or reinsurers or (ii) pursuant to any law, rule, regulation,
order, judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Depositor, the Trustee, the NIM Insurer
or the Trust Fund, and in either case, the Depositor, the NIM Insurer or the
Trustee, as the case may be, shall use its best efforts to assure the
confidentiality of any such disseminated non-public information. The Depositor
may, but is not obligated to, enforce the obligations of the Master Servicer
under this Agreement and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer under
this Agreement or exercise the rights of the Master Servicer under this
Agreement; provided by virtue of such performance by the Depositor of its
designee. The Depositor shall not have any responsibility or liability for any
action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
Section 3.04 Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason
no longer be the Master Servicer hereunder (including by reason of an Event of
Default), the Trustee or its designee shall thereupon assume all of the rights
and obligations of the Master Servicer hereunder arising thereafter (except
that the Trustee shall not be (i) liable for losses of the Master Servicer
pursuant to Section 3.10 hereof or any acts or omissions of the predecessor
Master Servicer hereunder, (ii) obligated to make Advances if it is prohibited
from doing so by applicable law, (iii) obligated to effectuate repurchases or
substitutions of Mortgage Loans hereunder, including pursuant to Section 2.02
or 2.03 hereof, (iv) responsible for expenses of the Master Servicer pursuant
to
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Section 2.03 or (v) deemed to have made any representations and warranties
hereunder, including pursuant to Section 2.03 or the first paragraph of
Section 6.02 hereof). If the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of any Event of Default), the Trustee
(or any other successor servicer) may, at its option, succeed to any rights
and obligations of the Master Servicer under any subservicing agreement in
accordance with the terms thereof; provided that the Trustee (or any other
successor servicer) shall not incur any liability or have any obligations in
its capacity as servicer under a subservicing agreement arising prior to the
date of such succession unless it expressly elects to succeed to the rights
and obligations of the Master Servicer thereunder; and the Master Servicer
shall not thereby be relieved of any liability or obligations under the
subservicing agreement arising prior to the date of such succession.
The Master Servicer shall, upon request of the Trustee, but
at the expense of the Master Servicer, deliver to the assuming party all
documents and records relating to each subservicing agreement and the Mortgage
Loans then being serviced thereunder and an accounting of amounts collected
held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of the subservicing agreement to the assuming party.
Section 3.05 Collection of Mortgage Loan Payments;
Certificate Account; Distribution Account;
Seller Shortfall Interest Requirement.
(a) The Master Servicer shall make reasonable efforts in
accordance with customary and usual standards of practice of prudent mortgage
lenders in the respective states in which the Mortgaged Properties are located
to collect all payments called for under the terms and provisions of the
Mortgage Loans to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any related Required Insurance
Policy. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or, subject to Section 3.20, any
Prepayment Charge or penalty interest in connection with the prepayment of a
Mortgage Loan and (ii) extend the due dates for payments due on a Mortgage
Note for a period not greater than 270 days. In the event of any such
arrangement, the Master Servicer shall make Advances on the related Mortgage
Loan during the scheduled period in accordance with the amortization schedule
of such Mortgage Loan without modification thereof by reason of such
arrangements. In addition, the NIM Insurer's prior written consent shall be
required for any waiver of Prepayment Charges or for the extension of the due
dates for payments due on a Mortgage Note, if the aggregate number of
outstanding Mortgage Loans that have been granted such waivers or extensions
exceeds 5% of the aggregate number of Mortgage Loans. The Master Servicer
shall not be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note or
otherwise or against any public or governmental authority with respect to a
taking or condemnation) if it reasonably believes that enforcing the provision
of the Mortgage or other instrument pursuant to which such payment is required
is prohibited by applicable law.
(b) The Master Servicer shall establish and maintain a
Certificate Account into which the Master Servicer shall deposit or cause to
be deposited on a daily basis within two Business Days of receipt, except as
otherwise specifically provided herein, the following payments and collections
remitted by Subservicers or received by it in respect of Mortgage Loans
subsequent to the Cut-off Date (other than in respect of principal and
interest due on the
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Mortgage Loans before the Cut-off Date) and the following amounts required to
be deposited hereunder:
(1) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(2) all payments on account of interest on the Mortgage
Loans (net of the related Servicing Fee permitted under Section
3.15 to the extent not previously paid to or withheld by the
Master Servicer);
(3) all Insurance Proceeds;
(4) all Liquidation Proceeds 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;
(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.
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(c) The Trustee shall establish and maintain, on behalf of
the Certificateholders, the Distribution Account. The Trustee shall, promptly
upon receipt, deposit in the Distribution Account and retain therein the
following:
(1) the aggregate amount remitted by the Master Servicer
pursuant to the second paragraph of Section 3.08(a); and
(2) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any
losses on Permitted Investments.
The foregoing requirements for remittance by the Master
Servicer and deposit by the Trustee into the Distribution Account shall be
exclusive. In the event that the Master Servicer shall remit any amount not
required to be remitted and not otherwise subject to withdrawal pursuant to
Section 3.08 hereof, it may at any time direct the Trustee to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering a written
notice to the Trustee that describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08.
In no event shall the Trustee incur liability for withdrawals from the
Distribution Account at the direction of the Master Servicer.
(d) [Reserved].
(e) Each institution that maintains the Certificate Account
or the Distribution Account shall invest the funds in each such account, as
directed by the Master Servicer, in Permitted Investments, which shall mature
not later than (x) in the case of the Certificate Account, the second Business
Day next preceding the related Distribution Account Deposit Date (except that
if such Permitted Investment is an obligation of the institution that
maintains such Certificate Account, then such Permitted Investment shall
mature not later than the Business Day next preceding such Distribution
Account Deposit Date) and (y) in the case of the Distribution Account, the
Business Day immediately preceding the first Distribution Date that follows
the date of such investment (except that if such Permitted Investment is an
obligation of the institution that maintains such Distribution Account, then
such Permitted Investment shall mature not later than such Distribution Date),
in each case, shall not be sold or disposed of prior to its maturity. All such
Permitted Investments shall be made in the name of the Trustee, for the
benefit of the Certificateholders. In the case of the Certificate Account and
the Distribution Account, all income and gain net of any losses realized from
any such investment shall be for the benefit of the Master Servicer as
servicing compensation and shall be remitted to it monthly as provided herein.
The amount of any losses incurred in the Certificate Account or the
Distribution Account in respect of any such investments shall be deposited by
the Master Servicer in the Certificate Account or paid to the Trustee for
deposit into the Distribution Account out of the Master Servicer's own funds
immediately as realized. The Trustee shall not be liable for the amount of any
loss incurred in respect of any investment or lack of investment of funds held
in the Certificate Account or the Distribution Account and made in accordance
with this Section 3.05.
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(f) The Master Servicer shall give at least 30 days advance
notice to the Trustee, each Seller, each Rating Agency and the Depositor of
any proposed change of location of the Certificate Account prior to any change
thereof. The Trustee shall give at least 30 days advance notice to the Master
Servicer, each Seller, each Rating Agency and the Depositor of any proposed
change of the location of the Distribution Account or the Carryover Reserve
Fund prior to any change thereof.
(g) Except as otherwise expressly provided in this Agreement,
if any default occurs under any Permitted Investment, the Trustee may and,
subject to Section 8.01 and 8.02(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.
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Upon reasonable advance notice in writing if required by
federal regulation, the Master Servicer will provide to each Certificateholder
or Certificate Owner that is a savings and loan association, bank or insurance
company certain reports and reasonable access to information and documentation
regarding the Mortgage Loans sufficient to permit such Certificateholder or
Certificate Owner to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates;
provided that the Master Servicer shall be entitled to be reimbursed by each
such Certificateholder or Certificate Owner for actual expenses incurred by
the Master Servicer in providing such reports and access.
Section 3.08 Permitted Withdrawals from the Certificate
Account, Distribution Account, Carryover Reserve
Fund and the Principal Reserve Fund.
(a) The Master Servicer may from time to time make
withdrawals from the Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not
previously paid to or withheld by the Master Servicer), as
servicing compensation in accordance with Section 3.15, that
portion of any payment of interest that equals the Servicing
Fee for the period with respect to which such interest payment
was made, and, as additional servicing compensation to the
Master Servicer, those other amounts set forth in Section 3.15;
(ii) to reimburse each of the Master Servicer and the
Trustee for Advances made by it with respect to the Mortgage
Loans, such right of reimbursement pursuant to this subclause
(ii) being limited to amounts received on particular Mortgage
Loan(s) (including, for this purpose, Liquidation Proceeds,
Insurance Proceeds and Subsequent Recoveries) 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) to pay to the applicable Seller any Credit Comeback
Excess Amount;
(iv) to reimburse each of the Master Servicer and the
Trustee for any Nonrecoverable Advance previously made;
(v) to reimburse the Master Servicer from Insurance
Proceeds for Insured Expenses covered by the related Insurance
Policy;
(vi) to pay the Master Servicer any unpaid Servicing Fees
and to reimburse it for any unreimbursed Servicing Advances,
the Master Servicer's right to reimbursement of Servicing
Advances pursuant to this subclause (vi) with respect to any
Mortgage Loan being limited to amounts received on particular
Mortgage Loan(s) (including, for this purpose, Liquidation
Proceeds, 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;
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(vii) to pay to the applicable Seller, the Depositor or
the Master Servicer, as applicable, with respect to each
Mortgage Loan or property acquired in respect thereof that has
been purchased pursuant to Section 2.02, 2.03 or 3.12, all
amounts received thereon and not taken into account in
determining the related Stated Principal Balance of such
repurchased Mortgage Loan;
(viii) to reimburse the applicable Seller, the Master
Servicer, the NIM Insurer or the Depositor for expenses
incurred by any of them in connection with the Mortgage Loans
or Certificates and reimbursable pursuant to Section 6.03
hereof; provided that such amount shall only be withdrawn
following the withdrawal from the Certificate Account for
deposit into the Distribution Account pursuant to the following
paragraph;
(ix) to pay any lender-paid primary mortgage insurance
premiums;
(x) to withdraw pursuant to Section 3.05 any amount
deposited in the Certificate Account and not required to be
deposited therein; and
(xi) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 1:00 p.m. Pacific time on the
Distribution Account Deposit Date, the Master Servicer shall withdraw from the
Certificate Account and remit to the Trustee the Interest Remittance Amount
and Principal Remittance Amount for each Loan Group, and the Trustee shall
deposit such amount in the Distribution Account
The Trustee shall establish and maintain, on behalf of the
Certificateholders, a Principal Reserve Fund in the name of the Trustee. On
the Closing Date, CHL shall deposit into the Principal Reserve Fund $12,531.
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. Amounts on deposit in the Principal Reserve Fund shall
not be invested.
On the Business Day before the June 2004 Distribution Date,
the Trustee shall transfer $12,431 from the Principal Reserve Fund to the
Distribution Account and shall distribute such amount to the Certificates on
the Distribution Date pursuant to Section 4.04(b).
On the Business Day before the Class P Principal
Distribution Date, the Trustee shall transfer from the Principal Reserve Fund
to the Distribution Account $100.00 and shall distribute such amount to the
Class P Certificates on the Class P Principal Distribution Date. Following the
distributions to be made in accordance with the preceding sentence, the
Trustee shall then terminate the Principal Reserve Fund.
The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Certificate Account pursuant to subclauses
(i), (ii), (iv), (v) and (vi) above. Prior to making any withdrawal from the
Certificate Account pursuant to subclause (iii), the Master Servicer shall
deliver to the Trustee an Officer's Certificate of a Servicing Officer
indicating the amount of any previous
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Advance determined by the Master Servicer to be a Nonrecoverable Advance and
identifying the related Mortgage Loan(s), and their respective portions of
such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution
Account for distribution to the Certificateholders in the manner specified in
this Agreement (and to withhold from the amounts so withdrawn, the amount of
any taxes that it is authorized to retain pursuant to the last paragraph of
Section 8.11). In addition, the Trustee may from time to time make withdrawals
from the Distribution Account for the following purposes:
(i) to pay the Trustee the Trustee Fee on each
Distribution Date;
(ii) to pay to the Master Servicer, as additional
servicing compensation, earnings on or investment income with
respect to funds in or credited to the Distribution Account;
(iii) to withdraw pursuant to Section 3.05 any amount
deposited in the Distribution Account and not required to be
deposited therein;
(iv) to reimburse the Trustee for any unreimbursed
Advances made by it pursuant to Section 4.01(d) hereof, such
right of reimbursement pursuant to this subclause (v) being
limited to (x) amounts received on the related Mortgage Loan(s)
in respect of which any such Advance was made and (y) amounts
not otherwise reimbursed to the Trustee pursuant to Section
3.08(a)(ii) hereof;
(v) to reimburse the Trustee for any Nonrecoverable
Advance previously made by the Trustee pursuant to Section
4.01(d) hereof, such right of reimbursement pursuant to this
subclause (vi) being limited to amounts not otherwise
reimbursed to the Trustee pursuant to Section 3.08(a)(iv)
hereof; and
(vi) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
(c) The Trustee shall withdraw funds from the Carryover
Reserve Fund for distribution to the Certificateholders in the manner
specified in this Agreement (and to withhold from the amounts so withdrawn,
the amount of any taxes that it is authorized to retain pursuant to the last
paragraph of Section 8.11). In addition, the Trustee may from time to time
make withdrawals from the Carryover Reserve Fund for the following purposes:
(1) to withdraw any amount deposited in the Carryover
Reserve Fund and not required to be deposited therein; and
(2) to clear and terminate the Carryover Reserve Fund upon
termination of the Agreement pursuant to Section 9.01 hereof.
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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.
Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a),
when any property subject to a Mortgage has been or is about to be conveyed by
the Mortgagor, the Master Servicer shall to the extent that it has knowledge
of such conveyance, enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will
not adversely affect or jeopardize coverage under any Required Insurance
Policy. Notwithstanding the foregoing, the Master Servicer is not required to
exercise such rights with respect to a Mortgage Loan if the Person to whom the
related Mortgaged Property has been conveyed or is proposed to be conveyed
satisfies the terms and conditions contained in the Mortgage Note and Mortgage
related thereto and the consent of the mortgagee under such Mortgage Note or
Mortgage is not otherwise so required under such Mortgage Note or Mortgage as
a condition to such transfer. In
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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
Periodic Rate Cap, the Adjustment Date and any other term affecting the amount
or timing of payment on the Mortgage Loan) may be changed. In addition, the
substitute Mortgagor and the Mortgaged Property must be acceptable to the
Master Servicer in accordance with its underwriting standards as then in
effect. The Master Servicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in
the case of the original shall be added to the related Mortgage File and
shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Master Servicer for entering into an
assumption or substitution of liability agreement will be retained by the
Master Servicer as additional servicing compensation.
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Section 3.12 Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds and Realized
Losses; Repurchase of Certain Mortgage Loans.
(a) The Master Servicer may agree to a modification of any
Mortgage Loan (the "Modified Mortgage Loan") if (i) the modification is in
lieu of a refinancing and (ii) the Mortgage Rate on the Modified Mortgage Loan
is approximately a prevailing market rate for newly-originated mortgage loans
having similar terms and (iii) the Master Servicer purchases the Modified
Mortgage Loan from the Trust Fund as described below. Effective immediately
after the modification, and, in any event, on the same Business Day on which
the modification occurs, all interest of the Trustee in the Modified Mortgage
Loan shall automatically be deemed transferred and assigned to the Master
Servicer and all benefits and burdens of ownership thereof, including the
right to accrued interest thereon from the date of modification and the risk
of default thereon, shall pass to the Master Servicer. The Master Servicer
shall promptly deliver to the Trustee a certification of a Servicing Officer
to the effect that all requirements of this paragraph have been satisfied with
respect to the Modified Mortgage Loan. For federal income tax purposes, the
Trustee shall account for such purchase as a prepayment in full of the
Modified Mortgage Loan. The Master Servicer shall deposit the Purchase Price
for any Modified Mortgage Loan in the Certificate Account pursuant to Section
3.05 within one Business Day after the purchase of the Modified Mortgage Loan.
Upon receipt by the Trustee of written notification of any such deposit signed
by a Servicing Officer, the Trustee shall release to the Master Servicer the
related Mortgage File and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be necessary
to vest in the Master Servicer any Modified Mortgage Loan previously
transferred and assigned pursuant hereto. The Master Servicer covenants and
agrees to indemnify the Trust Fund against any liability for any "prohibited
transaction" taxes and any related interest, additions, and penalties imposed
on the Trust Fund established hereunder as a result of any modification of a
Mortgage Loan effected pursuant to this subsection (b), any holding of a
Modified Mortgage Loan by the Trust Fund or any purchase of a Modified
Mortgage Loan by the Master Servicer (but such obligation shall not prevent
the Master Servicer or any other appropriate Person from in good faith
contesting any such tax in appropriate proceedings and shall not prevent the
Master Servicer from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings). The Master Servicer shall have no
right of reimbursement for any amount paid pursuant to the foregoing
indemnification, except to the extent that the amount of any tax, interest,
and penalties, together with interest thereon, is refunded to the Trust Fund
or the Master Servicer.
(b) The Master Servicer shall use reasonable efforts to
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments. In connection with such foreclosure or other conversion,
the Master Servicer shall follow such practices and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities and the requirements of the insurer under any
Required Insurance Policy; provided that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or towards
the restoration of any property unless it shall determine (i) that such
restoration and/or foreclosure will increase the proceeds of liquidation of
the Mortgage Loan after reimbursement to itself of such expenses and (ii) that
such expenses will be recoverable to it through Liquidation
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Proceeds (respecting which it shall have priority for purposes of withdrawals
from the Certificate Account pursuant to Section 3.08 hereof). The Master
Servicer shall be responsible for all other costs and expenses incurred by it
in any such proceedings; provided that it shall be entitled to reimbursement
thereof from the proceeds of liquidation of the related Mortgaged Property and
any related Subsequent Recoveries, as contemplated in Section 3.08 hereof. If
the Master Servicer has knowledge that a Mortgaged Property that the Master
Servicer is contemplating acquiring in foreclosure or by deed-in-lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Master Servicer, the Master Servicer
will, prior to acquiring the Mortgaged Property, consider such risks and only
take action in accordance with its established environmental review
procedures.
With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such
REO Property solely as the Trustee hereunder and not in its individual
capacity. The Master Servicer shall ensure that the title to such REO Property
references this Agreement and the Trustee's capacity thereunder. Pursuant to
its efforts to sell such REO Property, the Master Servicer shall either itself
or through an agent selected by the Master Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Master Servicer and the Certificateholders for the period
prior to the sale of such REO Property. The Master Servicer shall prepare for
and deliver to the Trustee a statement with respect to each REO Property that
has been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO
Property at such times as is necessary to enable the Trustee to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Certificate
Account no later than the close of business on each Determination Date. The
Master Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as
specified by Sections 1445, 6050J and 6050P of the Code by preparing and
filing such tax and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Master Servicer shall dispose of such
Mortgaged Property as soon as practicable in a manner that maximizes the
Liquidation Proceeds, but in no event later than three years after its
acquisition by the Trust Fund or, at the expense of the Trust Fund, the Master
Servicer shall request, more than 60 days prior to the day on which such
three-year period would otherwise expire, an extension of the three-year grace
period. In the event the Trustee shall have been supplied with an Opinion of
Counsel (such opinion not to be an expense of the Trustee) to the effect that
the holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in section 860F of the Code or
cause any REMIC formed hereunder to fail to qualify as a REMIC at any time
that any Certificates are outstanding, and the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion
of Counsel) after the expiration of such three-year period. Notwithstanding
any other provision of this Agreement, no Mortgaged
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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 Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income from
an REO Property, will be applied in the following order of priority: first, to
reimburse the Master Servicer for any related unreimbursed Servicing Advances
and Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12;
second, to reimburse the Master Servicer for any unreimbursed Advances,
pursuant to Section 3.08(a)(ii) or this Section 3.12; third, to accrued and
unpaid interest (to the extent no Advance has been made for such amount) on
the Mortgage Loan or related REO Property, at the Net Mortgage Rate to the Due
Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.
(c) [Reserved]
(d) The Master Servicer, in its sole discretion, shall have
the right to elect (by written notice sent to the Trustee) to purchase for its
own account from the Trust Fund any Mortgage Loan that is 150 days or more
delinquent at a price equal to the Purchase Price; provided, however, that the
Master Servicer may only exercise this right on or before the last day
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of the calendar month in which such Mortgage Loan became 150 days delinquent
(such month, the "Eligible Repurchase Month"); provided further, that any such
Mortgage Loan which becomes current but thereafter becomes delinquent may be
purchased by the Master Servicer pursuant to this Section in any ensuing
Eligible Repurchase Month. The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited in the Certificate Account. Any purchase of a
Mortgage Loan pursuant to this Section 3.12(d) shall be accomplished by
remittance to the Master Servicer for deposit in the Certificate Account of
the Purchase Price. The Trustee, upon receipt of certification from the Master
Servicer of such deposit and a Request for Release from the Master Servicer in
the form of Exhibit N hereto, shall release or cause to be released to the
purchaser of such Mortgage Loan the related Mortgage File and shall execute
and deliver such instruments of transfer or assignment prepared by the
purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Trustee's right, title and interest in and to such Mortgage Loan
and all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free
of any further obligation to the Trustee or the Certificateholders with
respect thereto.
(e) [Reserved]
Section 3.13 Co-Trustee to Cooperate; Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Master Servicer will
promptly notify the Co-Trustee by delivering a Request for Release
substantially in the form of Exhibit N. Upon receipt of such request, the
Co-Trustee shall promptly release the related Mortgage File to the Master
Servicer, and the Co-Trustee shall at the Master Servicer's direction execute
and deliver to the Master Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Mortgage in each case provided by the Master
Servicer, together with the Mortgage Note with written evidence of
cancellation thereon. The Master Servicer is authorized to cause the removal
from the registration on the MERS(R) System of such Mortgage and to execute
and deliver, on behalf of the Trust Fund and the Certificateholders or any of
them, any and all instruments of satisfaction or cancellation or of partial or
full release. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Certificate
Account, the Distribution Account, the Carryover Reserve Fund or the related
subservicing account. From time to time and as shall be appropriate for the
servicing or foreclosure of any Mortgage Loan, including for such purpose,
collection under any policy of flood insurance any fidelity bond or errors or
omissions policy, or for the purposes of effecting a partial release of any
Mortgaged Property from the lien of the Mortgage or the making of any
corrections to the Mortgage Note or the Mortgage or any of the other documents
included in the Mortgage File, the Co-Trustee shall, upon delivery to the
Co-Trustee of a Request for Release in the form of Exhibit N signed by a
Servicing Officer, release the Mortgage File to the Master Servicer. Subject
to the further limitations set forth below, the Master Servicer shall cause
the Mortgage File or documents so released to be returned to the Co-Trustee
when the need therefor by the Master Servicer no longer exists, unless the
Mortgage Loan is liquidated and the proceeds
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thereof are deposited in the Certificate Account, in which case the Co-Trustee
shall deliver the Request for Release to the Master Servicer.
If the Master Servicer at any time seeks to initiate a
foreclosure proceeding in respect of any Mortgaged Property as authorized by
this Agreement, the Master Servicer shall deliver or cause to be delivered to
the Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity. Notwithstanding the foregoing, the
Master Servicer shall cause possession of any Mortgage File or of the
documents therein that shall have been released by the Co-Trustee to be
returned to the Co-Trustee within 21 calendar days after possession thereof
shall have been released by the Co-Trustee unless (i) the Mortgage Loan has
been liquidated and the Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the Certificate Account, and the Master Servicer shall
have delivered to the Co-Trustee a Request for Release in the form of Exhibit
N or (ii) the Mortgage File or document shall have been delivered to an
attorney or to a public trustee or other public official as required by law
for purposes of initiating or pursuing legal action or other proceedings for
the foreclosure of the Mortgaged Property and the Master Servicer shall have
delivered to the Trustee an Officer's Certificate of a Servicing Officer
certifying as to the name and address of the Person to which the Mortgage File
or the documents therein were delivered and the purpose or purposes of such
delivery.
Section 3.14 Documents, Records and Funds in Possession of
Master Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the
Master Servicer shall transmit to the Co-Trustee as required by this Agreement
all documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or that otherwise
are collected by the Master Servicer as Liquidation Proceeds, Insurance
Proceeds or Subsequent Recoveries in respect of any Mortgage Loan. All
Mortgage Files and funds collected or held by, or under the control of, the
Master Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds or
Subsequent Recoveries, including but not limited to, any funds on deposit in
the Certificate Account, shall be held by the Master Servicer for and on
behalf of the Trust Fund and shall be and remain the sole and exclusive
property of the Trust Fund, subject to the applicable provisions of this
Agreement. The Master Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Certificate
Account, the Distribution Account, the Carryover Reserve Fund or in any Escrow
Account (as defined in Section 3.06), or any funds that otherwise are or may
become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy,
writ of attachment or other encumbrance, or assert by legal action or
otherwise any claim or right of set off against any Mortgage File or any funds
collected on, or in connection with, a Mortgage Loan, except, however, that
the Master Servicer shall be entitled to set off against and deduct from any
such funds any amounts that are properly due and payable to the Master
Servicer under this Agreement.
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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.
The Master Servicer shall deliver to the Depositor and the
Trustee on or before the 80th day after the end of the Master Servicer's
fiscal year, commencing with its 2004 fiscal year, an Officer's Certificate
stating, as to the signer thereof, that (i) a review of the activities of the
Master Servicer during the preceding calendar year and of the performance of
the Master Servicer under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and (iii) to the best of such
officer's knowledge, each Subservicer has fulfilled all its obligations under
its Subservicing Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation specifying each such default
known to such officer and the nature and status thereof. The Trustee shall
forward a copy of each such statement to each Rating Agency. Copies of such
statement shall be provided by the Trustee to
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any Certificateholder or Certificate Owner upon request at the Master
Servicer's expense, provided such statement is delivered by the Master
Servicer to the Trustee.
Section 3.18 Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before the later of (i) the 80th day after the end of
the Master Servicer's fiscal year, commencing with its 2004 fiscal year or
(ii) within 30 days of the issuance of the annual audited financial statements
beginning with the audit for the period ending in 2004, the Master Servicer at
its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Master Servicer, CHL or
any affiliate thereof) that is a member of the American Institute of Certified
Public Accountants to furnish a report to the Trustee, the Depositor and CHL
in compliance with the Uniform Single Attestation Program for Mortgage
Bankers. Copies of such report shall be provided by the Trustee to any
Certificateholder or Certificate Owner upon request at the Master Servicer's
expense, provided such report is delivered by the Master Servicer to the
Trustee. Upon written request, the Master Servicer shall provide to the
Certificateholders or Certificate Owners its publicly available annual
financial statements (or the Master Servicer's parent company's publicly
available annual financial statements, as applicable), if any, promptly after
they become available.
Section 3.19 The Corridor Contracts.
CHL shall assign all of its right, title and interest in and
to the interest rate corridor transactions evidenced by the Corridor Contracts
to, and shall cause all of its obligations in respect of such transactions to
be assumed by, the Trustee on behalf of the Trust Fund, on the terms and
conditions set forth in the Corridor Contract Assignment Agreement. The
Corridor Contracts will be assets of the Trust Fund but will not be an asset
of any REMIC. The Master Servicer, on behalf of the Trustee, shall deposit any
amounts received from time to time with respect to any Corridor Contract into
the Carryover Reserve Fund.
The Master Servicer, on behalf of the Trustee, shall prepare
and deliver any notices required to be delivered under each Corridor Contract.
The Master Servicer, on behalf of the Trustee, shall act as
calculation agent and/or shall terminate a Corridor Contract, in each case
upon the occurrence of certain events of default or termination events to the
extent specified thereunder. Upon any such termination, the Corridor Contract
Counterparty will be obligated to pay the Trustee or the Master Servicer for
the benefit of the Trust Fund an amount in respect of such termination. Any
amounts received by the Trustee or the Master Servicer for the benefit of the
Trust Fund, as the case may be, in respect of such termination shall be
deposited and held in the Carryover Reserve Fund to pay Net Rate Carryover for
the applicable Classes of Certificates as provided in Section 4.04(e) on the
Distribution Dates following such termination to and including the Corridor
Contract Termination Date, but shall not be available for distribution to the
Class C Certificates pursuant to Section 4.08(c) until the Corridor Contract
Termination Date. On the Corridor Contract Termination Date, after all other
distributions on such date, if any amounts in respect of early termination of
a Corridor Contract remain in the Carryover Reserve Fund, such amounts shall
be distributed by the Trustee to the Class C Certificates.
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Section 3.20 Prepayment Charges.
(a) Notwithstanding anything in this Agreement to the
contrary, in the event of a Principal Prepayment in full or in part of a
Mortgage Loan, the Master Servicer may not waive any Prepayment Charge or
portion thereof required by the terms of the related Mortgage Note unless (i)
the Master Servicer determines that such waiver would maximize recovery of
Liquidation Proceeds for such Mortgage Loan, taking into account the value of
such Prepayment Charge, or (ii) (A) the enforceability thereof is limited (1)
by bankruptcy, insolvency, moratorium, receivership, or other similar law
relating to creditors' rights generally or (2) due to acceleration in
connection with a foreclosure or other involuntary payment, or (B) the
enforceability is otherwise limited or prohibited by applicable law. In the
event of a Principal Prepayment in full or in part with respect to any
Mortgage Loan, the Master Servicer shall deliver to the Trustee an Officer's
Certificate substantially in the form of Exhibit T no later than the third
Business Day following the immediately succeeding Determination Date with a
copy to the Class P Certificateholders. If the Master Servicer has waived or
does not collect all or a portion of a Prepayment Charge relating to a
Principal Prepayment in full or in part due to any action or omission of the
Master Servicer, other than as provided above, the Master Servicer shall
deliver to the Trustee, together with the Principal Prepayment in full or in
part, the amount of such Prepayment Charge (or such portion thereof as had
been waived) for deposit into the Certificate Account (not later than 1:00
p.m. Pacific time on the immediately succeeding Master Servicer Advance Date,
in the case of such Prepayment Charge) for distribution in accordance with the
terms of this Agreement.
(b) Upon discovery by the Master Servicer or a Responsible
Officer of the Trustee of a breach of the foregoing subsection (a), the party
discovering the breach shall give prompt written notice to the other parties.
(c) CHL represents and warrants to the Depositor and the
Trustee, as of the Closing Date, 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.
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ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01 Advances; Remittance Reports.
(a) Within two Business Days after each Determination Date,
the Master Servicer shall deliver to the Trustee by telecopy or electronic
mail (or by such other means as the Master Servicer and the Trustee, as the
case may be, may agree from time to time) a Remittance Report with respect to
the related Distribution Date. The Trustee shall not be responsible to
recompute, recalculate or verify any information provided to it by the Master
Servicer.
(b) Subject to the conditions of this Article IV, the Master
Servicer, as required below, shall make an Advance and deposit such Advance in
the Certificate Account. Each such Advance shall be remitted to the
Certificate Account no later than 1:00 p.m. Pacific time on the Master
Servicer Advance Date in immediately available funds. The Trustee will provide
notice to the Master Servicer by telecopy by the close of business on any
Master Servicer Advance Date in the event that the amount remitted by the
Master Servicer to the Trustee on the Distribution Account Deposit Date is
less than the Advances required to be made by the Master Servicer for such
Distribution Date. The Master Servicer shall be obligated to make any such
Advance only to the extent that such advance would not be a Nonrecoverable
Advance. If the Master Servicer shall have determined that it has made a
Nonrecoverable Advance or that a proposed Advance or a lesser portion of such
Advance would constitute a Nonrecoverable Advance, the Master Servicer shall
deliver (i) to the Trustee for the benefit of the Certificateholders funds
constituting the remaining portion of such Advance, if applicable, and (ii) to
the Depositor, each Rating Agency and the Trustee an Officer's Certificate
setting forth the basis for such determination.
(c) In lieu of making all or a portion of such Advance from
its own funds, the Master Servicer may (i) cause to be made an appropriate
entry in its records relating to the Certificate Account that any Amount Held
for Future Distributions has been used by the Master Servicer in discharge of
its obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required
to be distributed pursuant to this Agreement. The Master Servicer shall be
entitled to be reimbursed from the Certificate Account for all Advances of its
own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or the related Mortgaged Property or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trustee pursuant to any applicable
provision of this Agreement, except as otherwise provided in this Section
4.01.
(d) If the Master Servicer determines that it will be unable
to comply with its obligation to make the Advances as and when described in
paragraphs (b) and (c) immediately above, it shall use its best efforts to
give written notice thereof to the Trustee (each such notice a "Trustee
Advance Notice"; and such notice may be given by telecopy), not later than
3:00 P.M., New York time, on the Business Day immediately preceding the
related Master Servicer
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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) On or before 5:00 p.m. Pacific time on the fifth Business
Day following each Determination Date (but in no event later than 5:00 p.m.
Pacific time on the third Business Day before the related Distribution Date)
the Master Servicer shall deliver to the Trustee a report (in form and
substance reasonably satisfactory to the Trustee) that indicates (i) the
Mortgage Loans with respect to which the Master Servicer has determined that
the related Scheduled Payments should be advanced and (ii) the amount of the
related Scheduled Payments. The Master Servicer shall deliver to the Trustee
on the related Master Servicer Advance Date an Officer's Certificate of a
Servicing Officer indicating the amount of any proposed Advance determined by
the Master Servicer to be a Nonrecoverable Advance.
Section 4.02 Reduction of Servicing Compensation in
Connection with Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a
Prepayment Interest Shortfall, the Master Servicer shall remit any related
Compensating Interest as part of the related Interest Remittance Amount as
provided in this Agreement. The Master Servicer shall not be entitled to any
recovery or reimbursement for Compensating Interest from the Depositor, the
Trustee, either Seller, the Trust Fund or the Certificateholders.
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Section 4.03 [Reserved]
Section 4.04 Distributions.
(a) On each Distribution Date, the Interest Funds for such
Distribution Date with respect to each Loan Group shall be allocated by the
Trustee from the Distribution Account in the following order of priority:
(i) concurrently:
(1) from Interest Funds for Loan Group 1, to the
Class 1-A Certificates, the Current Interest and Interest
Carry Forward Amount for each such Class and such
Distribution Date,
(2) from Interest Funds for Loan Group 2 to the Class
2-A Certificates, the Current Interest and Interest Carry
Forward Amount for such Class and such Distribution Date,
(3) from Interest Funds for Loan Group 3 to the Class
3-A Certificates, the Current Interest and Interest Carry
Forward Amount for such Class and such Distribution Date,
(4) from Interest Funds for Loan Group 4,
concurrently to each Class of Class 4-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, and
(ii) from the remaining Interest Funds for all four Loan
Groups to the Class A Certificates, the Current Interest and
Interest Carry Forward Amount for such Class and such
Distribution Date, and
(iii) from the remaining Interest Funds for all Loan
Groups to each Class of Senior Certificates (other than the
Class A Certificates), any remaining Current Interest and
Interest Carry Forward Amount not paid pursuant to clauses
(a)(i)(1), (a)(i)(2), (a)(i)(3) and (a)(i)(4) of this Section
4.04, pro rata, based on the Certificate Principal Balances
thereof, to the extent needed to pay any Current Interest and
Interest Carry Forward Amount 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 Senior 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,
(iv) from the remaining Interest Funds for all four Loan
Groups in the following order of priority:
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(a) to the Class M-1 Certificates, the Current
Interest for such Class and such Distribution Date
(b) to the Class M-2 Certificates, the Current
Interest for such Class and such Distribution Date,
(c) to the Class M-3 Certificates, the Current
Interest for such Class and such Distribution Date,
(d) to the Class M-4 Certificates, the Current
Interest for such Class and such Distribution Date,
(e) to the Class M-5 Certificates, the Current
Interest for such Class and such Distribution Date,
(f) to the Class M-6 Certificates, the Current
Interest for such Class and such Distribution Date,
(g) to the Class M-7 Certificates, the Current
Interest for such Class and such Distribution Date,
(h) to the Class B Certificates, the Current Interest
for such Class and such Distribution Date, and
(i) any remainder, as part of the Excess Cashflow.
(b) On each Distribution Date, the Principal Distribution
Amounts for such Distribution Date with respect to the Loan Groups shall be
allocated by the Trustee from the Distribution Account in the following order
of priority:
(1) with respect to any Distribution Date prior to the
Stepdown Date or on which a Trigger Event is in effect:
(A) from the Principal Distribution Amounts for all
four Loan Groups, concurrently:
(i) to the Class A-R and Class 1-A Certificates,
sequentially in that order, the Class 1-A Principal
Distribution Allocation Amount for such Distribution Date,
until the Certificate Principal Balance of each such Class
is reduced to zero,
(ii) to the Class 2-A Certificates, the Class 2-A
Principal Distribution Allocation Amount for such
Distribution Date, until the Certificate Principal Balance
of the Class 2-A Certificates is reduced to zero,
(iii) to the Class 3-A Certificates, the Class 3-A
Principal Distribution Allocation Amount for such
Distribution Date, until the Certificate Principal Balance
of the Class 3-A Certificates is reduced to zero,
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(iv) to the Class 4-A Certificates (to be allocated
among the Class 4-A Certificates in the order and
priorities described in Section 4.04(c) below), the Class
4-A Principal Distribution Allocation Amount for such
Distribution Date, until the Certificate Principal Balance
of each such Class is reduced to zero, and
(v) to the Class A Certificates, the Class A
Principal Distribution Allocation Amount, until the
Certificate Principal Balance of the Class A Certificates
is reduced to zero,
(B) from any remaining Principal Distribution Amount
for all four Loan Groups, pro rata based on the
Certificate Principal Balances thereof, concurrently to
(I) the Class 1-A Certificates (after the distribution of
the Class 1-A Principal Distribution Allocation Amount as
provided in clause (1)(A)(i) above) until the Certificate
Principal Balance thereof is reduced to zero, (II) the
Class 2-A Certificates (after the distribution of the
Class 2-A Principal Distribution Allocation Amount as
provided in clause (1)(A)(ii) above), until the
Certificate Principal Balance thereof is reduced to zero,
(III) the Class 3-A Certificates (after the distribution
of the Class 3-A Principal Distribution Allocation Amount
as provided in clause (1)(A)(iii) above), until the
Certificate Principal Balance thereof is reduced to zero
and (IV) each class of Class 4-A Certificates (after the
distribution of the Class 4-A Principal Distribution
Allocation Amount as provided in clause (1)(A)(iv) above)
in the order and priorities described in Section 4.04(c)
below, until the Certificate Principal Balances thereof
are reduced to zero,
(C) from the remaining Principal Distribution Amounts
for all four Loan Groups in the following order of
priority:
(i) to the Class M-1 Certificates, until the
Certificate Principal Balance thereof is reduced to zero,
(ii) to the Class M-2 Certificates, until the
Certificate Principal Balance thereof is reduced to zero,
(iii) to the Class M-3 Certificates, until the
Certificate Principal Balance thereof is reduced to zero,
(iv) to the Class M-4 Certificates, until the
Certificate Principal Balance thereof is reduced to zero,
(v) to the Class M-5 Certificates, until the
Certificate Principal Balance thereof is reduced to zero,
(vi) to the Class M-6 Certificates, until the
Certificate Principal Balance thereof is reduced to zero,
(vii) to the Class M-7 Certificates, until the
Certificate Principal Balance thereof is reduced to zero,
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(viii) to the Class B Certificates, until the
Certificate Principal Balance thereof is reduced to zero,
and
(ix) any remainder as part of the Excess Cashflow.
(2) For each Distribution Date on or after the Stepdown
Date and so long as a Trigger Event is not in effect, from the
Principal Distribution Amounts for all four Loan Groups,
sequentially:
(A) in an amount up to the Senior Principal
Distribution Target Amount, pro rata based on the related
Senior Principal Distribution Allocation Amount for each
such Class of Certificates, concurrently, to (I) the Class
1-A Certificates in an amount up to the Class 1-A
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero, (II) the
Class 2-A Certificates in an amount up to the Class 2-A
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero, (III) the
Class 3-A Certificates in an amount up to the Class 3-A
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero, (IV) the
Class 4-A Certificates in an amount up to the Class 4-A
Principal Distribution Amount, in the order and priorities
set forth in Section 4.04(c) below, until the Certificate
Principal Balances thereof are reduced to zero and (V) the
Class A Certificates in an amount up to the Class A
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero; provided,
however, that any remaining unpaid Senior Principal
Distribution Target Amount will be distributed pro rata to
each Class of remaining Senior Certificates (other than
the Class A Certificates) based on their remaining
respective Certificate Principal Balances (in the case of
the Class 4-A Certificates, applied in the order and
priorities set forth in Section 4.04(c) below) after
distributions from (I), (II), (III), (IV) and (V) above,
(B) to the Class M-1 Certificates, the Class M-1
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero,
(C) to the Class M-2 Certificates, the Class M-2
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero,
(D) to the Class M-3 Certificates, the Class M-3
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero,
(E) to the Class M-4 Certificates, the Class M-4
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero,
(F) to the Class M-5 Certificates, the Class M-5
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero,
(G) to the Class M-6 Certificates, the Class M-6
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero,
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(H) to the Class M-7 Certificates, the Class M-7
Principal Distribution Amount until the Certificate
Principal Balance thereof is reduced to zero,
(I) to the Class B Certificates, the Class B
Principal Distribution Amount, until the Certificate
Principal Balance thereof is reduced to zero, and
(J) any remainder as part of the Excess Cashflow.
(c) On each Distribution Date on which any amounts are to be
distributed to the Class 4-A Certificates, pursuant to Section 4.04(b) above,
such amounts are required to be further allocated by the Trustee to each Class
of Class 4-A Certificates in the following order of priority:
(1) to the Class 4-A-1 Certificates, until the Certificate
Principal Balance thereof is reduced to zero, and
(2) any remainder, pro rata, based on the Certificate
Principal Balance of the Class 4-A-3 Certificates and the
aggregate Certificate Principal Balance of the Class 4-A-2 and
Class 4-A-4 Certificates (1) to the Class 4-A-3 Certificates,
until the Certificate Principal Balance thereof is reduced to
zero, and (2) sequentially, to the Class 4-A-2 and Class 4-A-4
Certificates, in that order, in each case until the Certificate
Principal Balance thereof is reduced to zero.
provided that, on any Distribution Date on which (x) the aggregate Certificate
Principal Balance of the Senior Certificates is greater than the Stated
Principal Balances of all Mortgage Loans in the Mortgage Pool and (y) the
aggregate Certificate Principal Balance of the Class 4-A Certificates is
greater than the Stated Principal Balances of all Mortgage Loans in Loan Group
4, any Principal Distribution Amount for Loan Group 4 that is to be
distributed to each Class of Class 4-A Certificates will be distributed pro
rata, based on the Certificate Principal Balances thereof, and not as
described above.
Notwithstanding the foregoing priority of distributions,
distributions made to the Class 1-A, Class 2-A, Class 3-A and Class 4-A
Certificates pursuant to clauses (b)(1)(A)(i), (b)(1)(A)(ii), (b)(1)(A)(iii),
(b)(1)(A)(iv) and (b)(2)(A) shall be deemed to have been made from collections
in respect of Loan Group 1, Loan Group 2, Loan Group 3 and Loan Group 4,
respectively.
(d) On each Distribution Date, any Excess Cashflow will be
paid to the Classes of Certificates in the following order of priority, in
each case to the extent of remaining Excess Cashflow:
(1) to the Certificateholders of the Class 1-A, Class 2-A,
Class 3-A, Class 4-A, Class A, Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7 and Class B
Certificates then entitled to receive distributions in respect
of principal, in an aggregate amount equal to the Extra
Principal Distribution Amounts for the Loan Groups, payable to
such holders as part of the Principal Distribution Amount
pursuant to Section 4.04(b) above;
102
(2) to the Class A Certificateholders, in an amount equal
to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(3) to the Class M-1 Certificateholders, in an amount
equal to the Interest Carry Forward Amount for such Class and
Distribution Date;
(4) to the Class M-1 Certificateholders, in an amount
equal to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(5) to the Class M-2 Certificateholders, in an amount
equal to the Interest Carry Forward Amount for such Class and
Distribution Date;
(6) to the Class M-2 Certificateholders, in an amount
equal to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(7) to the Class M-3 Certificateholders, in an amount
equal to the Interest Carry Forward Amount for such Class and
Distribution Date;
(8) to the Class M-3 Certificateholders, in an amount
equal to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(9) to the Class M-4 Certificateholders, in an amount
equal to the Interest Carry Forward Amount for such Class and
Distribution Date;
(10) to the Class M-4 Certificateholders, in an amount
equal to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(11) to the Class M-5 Certificateholders, in an amount
equal to the Interest Carry Forward Amount for such Class and
Distribution Date;
(12) to the Class M-5 Certificateholders, in an amount
equal to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(13) to the Class M-6 Certificateholders, in an amount
equal to the Interest Carry Forward Amount for such Class and
Distribution Date;
(14) to the Class M-6 Certificateholders, in an amount
equal to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(15) to the Class M-7 Certificateholders, in an amount
equal to the Interest Carry Forward Amount for such Class and
Distribution Date;
(16) to the Class M-7 Certificateholders, in an amount
equal to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(17) to the Class B Certificateholders, in an amount equal
to the Interest Carry Forward Amount for such Class and
Distribution Date;
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(18) to the Class B Certificateholders, in an amount equal
to the Unpaid Realized Loss Amount for such Class and
Distribution Date;
(19) to the Carryover Reserve Fund and from the Carryover
Reserve Fund, concurrently to each Class of Adjustable Rate
Certificates (after application of amounts received under the
applicable Corridor Contract to cover Net Rate Carryover), pro
rata based on the Certificate Principal Balances thereof, to
the extent needed to pay any unpaid Net Rate Carryover for each
such Class; and then any Excess Cashflow remaining after such
allocation to pay Net Rate Carryover based on the Certificate
Principal Balances of the Certificates will be distributed to
each Class of Adjustable Rate Certificates with respect to
which there remains any unpaid Net Rate Carryover, pro rata,
based on the amount of such unpaid Net Rate Carryover;
(20) to the to the Carryover Reserve Fund, in an amount
equal to the Required Secondary Carryover Reserve Fund Deposit
(after giving effect to other deposits and withdrawals
therefrom on such Distribution Date without regard to any
excess Corridor Contract proceeds);
(21) to the Class C Certificateholders, the Class C
Distributable Amount for such Distribution Date; and
(22) to the Class A-R Certificates
(e) On each Distribution Date on or prior to the Corridor
Contract Termination Date, amounts received by the Trustee in respect of each
Corridor Contract for such Distribution Date will be withdrawn from the
Carryover Reserve Fund and distributed:
(1) in the case of any such amounts received on the Class
1-A Corridor Contract, to the Class 1-A Certificates to the
extent needed to pay any Net Rate Carryover with respect to
such Class;
(2) in the case of any such amounts received on the Class
2-A Corridor Contract, to the Class 2-A Certificates to the
extent needed to pay any Net Rate Carryover with respect to
such Class;
(3) in the case of any such amounts received on the Class
3-A Corridor Contract, to the Class 3-A Certificates to the
extent needed to pay any Net Rate Carryover with respect to
such Class;
(4) in the case of any such amounts received on the Class
4-A Corridor Contract, concurrently to each Class of Class 4-A
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 amounts
remaining after such allocation to pay Net Rate Carryover based
on the Certificate Principal Balances of the Class 4-A
Certificates will be distributed to each Class of Class 4-A
Certificates with respect to which there remains any unpaid Net
Rate Carryover (after the distribution based on Certificate
Principal Balances), pro rata, based on the amount of such
unpaid Net Rate Carryover;
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(5) in the case of any such amounts received on the Class
A and Subordinate Corridor Contract, concurrently to the Class
A Certificates and each Class of Subordinate Certificates, pro
rata, based on the Certificate Principal Balances thereof, to
the extent needed to pay any Net Rate Carryover for each such
Class; provided that any amounts remaining after such
allocation to pay Net Rate Carryover based on the Certificate
Principal Balances of the Class A Certificates and the
Subordinate Certificates will be distributed to the Class A
Certificates and each Class of Subordinate Certificates with
respect to which there remains any unpaid Net Rate Carryover
(after the distribution based on Certificate Principal
Balances), pro rata, based on the amount of such unpaid Net
Rate Carryover; and
(6) any remaining amounts to the holders of the Class C
Certificates, unless a Corridor Contract is subject to early
termination, in which case any early termination payments
received on such Corridor Contract shall be deposited by the
Trustee in the Carryover Reserve Fund to cover any Net Rate
Carryover on the Certificates entitled thereto on future
Distribution Dates until the Corridor Contract Termination
Date.
(f) To the extent that a Class of Adjustable Rate
Certificates receives interest in excess of the Net Rate Cap, such interest
shall be deemed to have been paid to the Carryover Reserve Fund and then paid
by the Carryover Reserve Fund to those Certificateholders. For purposes of the
Code, amounts deemed deposited in the Carryover Reserve Fund shall be deemed
to have first been distributed to the Class C Certificates.
(g) On each Distribution Date, all Prepayment Charges
(including amounts deposited in connection with the full or partial waiver of
such Prepayment Charges pursuant to Section 3.20) shall be allocated and paid
to the Class P Certificates. On the Class P Principal Distribution Date, the
Trustee shall make the $100.00 distribution to the Class P Certificates as
specified in Section 3.08.
(h) On each Distribution Date, the Trustee shall allocate the
Applied Realized Loss Amount to reduce the Certificate Principal Balances of
the Class A Certificates and the Subordinate Certificates in the following
order of priority:
(1) to the Class B Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(2) to the Class M-7 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(3) to the Class M-6 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(4) to the Class M-5 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(5) to the Class M-4 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
105
(6) to the Class M-3 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(7) to the Class M-2 Certificates until the Certificate
Principal Balance thereof is reduced to zero;
(8) to the Class M-1 Certificates until the Certificate
Principal Balance thereof is reduced to zero; and
(9) to the Class A Certificates until the Certificate
Principal Balance thereof is reduced to zero.
(i) On each Distribution Date, the Trustee shall allocate the
amount of the Subsequent Recoveries, if any, to increase the Certificate
Principal Balances of the Class A Certificates or any Subordinate Certificates
to which Applied Realized Loss Amounts have been previously allocated in the
following order of priority:
(1) to the Class A Certificates, but not by more than the
amount of the Unpaid Realized Loss Amount of the Class A
Certificates;
(2) to the Class M-1 Certificates, but not by more than
the amount of the Unpaid Realized Loss Amount of the Class M-1
Certificates;
(3) to the Class M-2 Certificates, but not by more than
the amount of the Unpaid Realized Loss Amount of the Class M-2
Certificates;
(4) to the Class M-3 Certificates, but not by more than
the amount of the Unpaid Realized Loss Amount of the Class M-3
Certificates;
(5) to the Class M-4 Certificates, but not by more than
the amount of the Unpaid Realized Loss Amount of the Class M-4
Certificates;
(6) to the Class M-5 Certificates, but not by more than
the amount of the Unpaid Realized Loss Amount of the Class M-5
Certificates;
(7) to the Class M-6 Certificates, but not by more than
the amount of the Unpaid Realized Loss Amount of the Class M-6
Certificates;
(8) to the Class M-7 Certificates, but not by more than
the amount of the Unpaid Realized Loss Amount of the Class M-7
Certificates; and
(9) to the Class B Certificates, but not by more than the
amount of the Unpaid Realized Loss Amount of the Class B
Certificates.
Holders of Certificates to which any Subsequent Recoveries
have been allocated will 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.
106
Subject to Section 9.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either by
wire transfer in immediately available funds to the account of such holder at
a bank or other entity having appropriate facilities therefor, if (i) such
Holder has so notified the Trustee at least 5 Business Days prior to the
related Record Date and (ii) such Holder shall hold Regular Certificates with
an aggregate initial Certificate Principal Balance of not less than $1,000,000
or evidencing a Percentage Interest aggregating 10% or more with respect to
such Class or, if not, by check mailed by first class mail to such
Certificateholder at the address of such holder appearing in the Certificate
Register. Notwithstanding the foregoing, but subject to Section 9.02 hereof
respecting the final distribution, distributions with respect to Certificates
registered in the name of a Depository shall be made to such Depository in
immediately available funds.
On or before 5:00 p.m. Pacific time on the fifth Business
Day following each Determination Date (but in no event later than 5:00 p.m.
Pacific time on the third Business Day before the related Distribution Date),
the Master Servicer shall deliver a report to the Trustee (in the form of a
computer readable magnetic tape or by such other means as the Master Servicer
and the Trustee may agree from time to time) containing such data and
information as agreed to by the Master Servicer and the Trustee (including,
without limitation, the actual mortgage rate for each Credit Comeback Loan)
such as to permit the Trustee to prepare the Monthly Statement to
Certificateholders and make the required distributions for the related
Distribution Date (the "Remittance Report"). The Trustee shall not be
responsible to recompute, recalculate or verify information provided to it by
the Master Servicer and shall be permitted to conclusively rely on any
information provided to it by the Master Servicer.
Section 4.05 Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall
prepare and cause to be forwarded by first class mail to each Holder of a
Class of Certificates of the Trust Fund, the Master Servicer, each Seller and
the Depositor a statement setting forth for the Certificates:
(1) the amount of the related distribution to Holders of
each Class allocable to principal, separately identifying (A)
the aggregate amount of any Principal Prepayments included
therein and (B) the aggregate of all scheduled payments of
principal included therein;
(2) the amount of such distribution to Holders of each
Class allocable to interest;
(3) any Interest Carry Forward Amount for each Class;
(4) the Certificate Principal Balance of each Class after
giving effect (i) to all distributions allocable to principal
on such Distribution Date, (ii) the allocation of any Applied
Realized Loss Amounts for such Distribution Date and (iii) the
allocation of any Subsequent Recoveries for such Distribution
Date;
(5) the aggregate of the Stated Principal Balance of the
Mortgage Loans for the Mortgage Pool and each Loan Group;
107
(6) the related amount of the Servicing Fees paid to or
retained by the Master Servicer for the related Due Period;
(7) the Pass-Through Rate for each Class of Certificates
with respect to the current Accrual Period;
(8) the Net Rate Carryover paid on any Class of
Certificates on such Distribution Date and any Net Rate
Carryover remaining on any Class of Certificates on such
Distribution Date;
(9) the amount of Advances for each Loan Group included in
the distribution on such Distribution Date;
(10) the number and aggregate principal amounts of
Mortgage Loans in each Loan Group: (A) Delinquent (exclusive of
Mortgage Loans in foreclosure) (1) 30 to 59 days, (2) 60 to 89
days and (3) 90 or more days, and (B) in foreclosure and
Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or
more days, in each case as of the close of business on the last
day of the calendar month preceding such Distribution Date;
(11) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month in each Loan
Group, the loan number and Stated Principal Balance of such
Mortgage Loan and the date of acquisition thereof;
(12) the total number and Stated Principal Balance of any
Mortgage Loans converted to REO Properties, in each Loan Group
as of the close of business on the Determination Date preceding
such Distribution Date;
(13) the aggregate Stated Principal Balance of all
Liquidated Loans;
(14) with respect to any Liquidated Loan in each Loan
Group, the loan number and Stated Principal Balance relating
thereto;
(15) whether a Trigger Event is in effect;
(16) the amount of the distribution made to the Holders of
the Class P Certificates;
(17) [Reserved];
(18) the amount of Realized Losses and Subsequent
Recoveries applied to the Class A Certificates and the
Subordinate Certificates for such Distribution Date;
(19) the amount, if any, received under each Corridor
Contract for such Distribution Date;
(20) all payments made by the Master Servicer in respect
of Compensating Interest for such Distribution Date;
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(21) the information set forth in the Prepayment Charge
Schedule; and
(22) with respect to any Mortgage Loan repurchased by a
Seller or purchased by the Master Servicer, the loan number and
Stated Principal Balance relating thereto.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer.
The Trustee will send a copy of each statement provided pursuant to this
Section 4.05 to each Rating Agency and the NIM Insurer. The Trustee may make
the above information available to Certificateholders via the Trustee's
website at xxxx://xxx.xxxxxxxxxxxx.xxx.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(1), (a)(2) and (a)(6) of
this Section 4.05 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Class A-R Certificates the Form
1066 and each Form 1066Q and shall respond promptly to written requests made
not more frequently than quarterly by any Holder of Class A-R Certificates
with respect to the following matters:
(1) The original projected principal and interest cash
flows on the Closing Date on each related Class of regular and
residual interests created hereunder and on the Mortgage Loans,
based on the Prepayment Assumption;
(2) The projected remaining principal and interest cash
flows as of the end of any calendar quarter with respect to
each related Class of regular and residual interests created
hereunder and the Mortgage Loans, based on the Prepayment
Assumption;
(3) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal
and interest cash flows described above;
(4) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or
amortized through the end of such calendar quarter with respect
to each related Class of regular or residual interests created
hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(5) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder,
including the timing and amount of any cancellation of
indebtedness income of the related REMIC with respect to such
regular interests or bad debt deductions claimed with respect
to the Mortgage Loans;
109
(6) The amount and timing of any non-interest expenses of
the related REMIC; and
(7) Any taxes (including penalties and interest) imposed
on the related REMIC, including, without limitation, taxes on
"prohibited transactions," "contributions" or "net income from
foreclosure property" or state or local income or franchise
taxes.
The information pursuant to clauses (1), (2), (3) and (4)
above shall be provided by the Depositor pursuant to Section 8.11.
Section 4.06 [Reserved]
Section 4.07 [Reserved]
Section 4.08 Carryover Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the
Certificates, the Carryover Reserve Fund and shall deposit $10,000 therein.
The Carryover Reserve Fund shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled
with, any other moneys, including without limitation, other moneys held by the
Trustee pursuant to this Agreement.
(b) On each Distribution Date, the Trustee shall deposit all
amounts received pursuant to the Corridor Contracts in the Carryover Reserve
Fund. The Trustee shall make withdrawals from the Carryover Reserve Fund to
make distributions in respect of Net Rate Carryover as to the extent required
by Section 4.04.
(c) Any amounts received on the Corridor Contracts with
respect to a Distribution Date and remaining after the distributions required
pursuant to Section 4.04(e) shall be distributed to the Class C Certificates;
provided, however, that if any Corridor Contract is subject to early
termination, early termination payments received on such Corridor Contract
shall be deposited by the Trustee in the Carryover Reserve Fund and withdrawn
from the Carryover Reserve Fund to pay any Net Rate Carryover on the related
Classes of Certificates as provided in Section 4.04(e) on the Distribution
Dates following such termination to and including the Corridor Contract
Termination Date, but such early termination payments shall not be available
for distribution to the Class C Certificates on future Distribution Dates
until the Corridor Contract Termination Date.
(d) Funds in the Carryover Reserve Fund in respect of amounts
received under the Corridor Contract may be invested in Permitted Investments
at the direction of the Majority Holder of the Class C Certificates (voting as
a single Class), which Permitted Investments shall mature not late than the
Business Day immediately preceding the first Distribution Date that follows
the date of such investment (except that if such Permitted Investment is an
obligation of the institution that maintains the Carryover Reserve Fund, then
such Permitted Investment shall mature not later than such Distribution Date)
and shall not be sold or disposed of prior to maturity. All such Permitted
Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. In the absence of such written direction,
110
all funds in the Carryover Reserve Fund in respect of amounts received of
under any Corridor Contract shall be invested by the Trustee in The Bank of
New York cash reserves. Any net investment earnings on such amounts shall be
payable pro rata to the Holders of the Class C Certificates in accordance with
their Percentage Interests. Any losses incurred in the Carryover Reserve Fund
in respect of any such investments shall be charged against amounts on deposit
in the Carryover Reserve Fund (or such investments) immediately as realized.
(e) The Trustee shall not be liable for the amount of any
loss incurred in respect of any investment or lack of investment of funds held
in the Carryover Reserve Fund and made in accordance with this Section 4.08.
The Carryover Reserve Fund will not constitute an asset of any REMIC created
hereunder. The Class C Certificates shall evidence ownership of the Carryover
Reserve Fund for federal tax purposes.
ARTICLE V.
THE CERTIFICATES
Section 5.01 The Certificates.
The Certificates shall be substantially in the forms
attached hereto as Exhibits A-1 through A-16. 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:
Class Minimum Denomination Integral Multiples in Original Certificate
Excess of Minimum Principal Balance
------------------------------- ---------------------------- -------------------------- ------------------------------
1-A $20,000 $1,000 $1,320,312,000
2-A $20,000 $1,000 $964,656,000
3-A $20,000 $1,000 $550,536,000
4-A-1 $20,000 $1,000 $291,420,000
4-A-2 $20,000 $1,000 $200,000,000
4-A-3 $20,000 $1,000 $103,483,000
4-A-4 $20,000 $1,000 $61,193,000
A $20,000 $1,000 $139,750,000
M-1 $20,000 $1,000 $129,000,000
M-2 $20,000 $1,000 $86,000,000
M-3 $20,000 $1,000 $64,500,000
M-4 $20,000 $1,000 $75,250,000
M-5 $20,000 $1,000 $64,500,000
M-6 $20,000 $1,000 $53,750,000
M-7 $20,000 $1,000 $64,500,000
B $20,000 $1,000 $53,750,000
A-R $99.95(1) N/A $100
C N/A N/A N/A
P N/A N/A $100
(1) The Tax Matters Person Certificate related to the Class A-R Certificates
may be issued in a denomination of $0.05.
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The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Certificates
bearing the manual or facsimile signatures of individuals who were, at the
time when such signatures were affixed, authorized to sign on behalf of the
Trustee shall bind the Trustee, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
authentication and delivery. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form set
forth as attached hereto executed by the Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication. On the Closing Date, the Trustee shall
authenticate the Certificates to be issued at the written direction of the
Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
Section 5.02 Certificate Register; Registration of Transfer
and Exchange of Certificates.
(a) The Trustee shall maintain a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c)
below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration
of Transfer of any Certificate, the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of Transfer or exchange shall be accompanied by a
written instrument of Transfer in form satisfactory to the Trustee duly
executed by the holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made
for any registration of Transfer or exchange of Certificates, but payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
112
(b) No Transfer of a Private Certificate shall be made unless
such Transfer is made pursuant to an effective registration statement under
the Securities Act and any applicable state securities laws or is exempt from
the registration requirements under the Securities Act and such state
securities laws. In the event that a transfer is to be made in reliance upon
an exemption from the Securities Act and such state securities laws, in order
to assure compliance with the Securities Act and such state securities laws,
the Certificateholder desiring to effect such Transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee
in writing the facts surrounding the Transfer in substantially the forms set
forth in Exhibit J (the "Transferor Certificate") and (i) deliver a letter in
substantially the form of either Exhibit K (the "Investment Letter") or
Exhibit L (the "Rule 144A Letter") or (ii) there shall be delivered to the
Trustee at the expense of the Certificateholder desiring to effect such
transfer an Opinion of Counsel that such Transfer may be made pursuant to an
exemption from the Securities Act; provided, however, that in the case of the
delivery of an Investment Letter in connection with the transfer of any Class
C or Class P Certificate to a transferee that is formed with the purpose of
issuing notes backed by such Class C or Class P Certificate, as the case may
be, clause (b) and (c) of the form of Investment Letter shall not be
applicable and shall be deleted by such transferee. The Depositor shall
provide to any Holder of a Private Certificate and any prospective transferee
designated by any such Holder, information regarding the related Certificates
and the Mortgage Loans and such other information as shall be necessary to
satisfy the condition to eligibility set forth in Rule 144A(d)(4) for transfer
of any such Certificate without registration thereof under the Securities Act
pursuant to the registration exemption provided by Rule 144A. The Trustee, the
Co-Trustee and the Master Servicer shall cooperate with the Depositor in
providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect
such Transfer shall, and does hereby agree to, indemnify the Trustee, the
Co-Trustee, the Depositor, each Seller and the Master Servicer against any
liability that may result if the Transfer is not so exempt or is not made in
accordance with such federal and state laws.
No Transfer of an ERISA-Restricted Certificate shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee (in the event such Certificate is a Private
Certificate, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
K or Exhibit L, or in the event such Certificate is a Residual Certificate,
such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
I-1), to the effect that (x) such transferee is not an employee benefit plan
or arrangement subject to Section 406 of ERISA or a plan or arrangement
subject to Section 4975 of the Code, or a Person acting on behalf of any such
plan or arrangement or using the assets of any such plan or arrangement, or
(y) in the case of an ERISA-Restricted Certificate that has been the subject
of an ERISA-Qualifying Underwriting, a representation that the transferee is
an insurance company which is purchasing such Certificate with funds contained
in an "insurance company general account" (as such term is defined in section
V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that
the purchase and holding of such Certificate satisfy the requirements for
exemptive relief under Sections I and III of PTCE 95-60 or (ii) in the case of
any ERISA-Restricted Certificate presented for registration in the name of an
employee benefit plan or
113
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 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 to any obligation in addition to
those expressly undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee. For purposes of the preceding sentence, one
of such representations, as appropriate, shall be deemed to have been made to
the Trustee by the transferee's acceptance of an ERISA-Restricted Certificate
(or the acceptance by a Certificate Owner of the beneficial interest in any
such Class of ERISA-Restricted Certificates) unless the Trustee shall have
received from the transferee an Opinion of Counsel as described in clause (ii)
or a representation letter acceptable in form and substance to the Trustee.
Notwithstanding anything else to the contrary herein, any purported transfer
of an ERISA-Restricted Certificate to or on behalf of an employee benefit plan
subject to Section 406 of ERISA or a plan subject to Section 4975 of the Code
without the delivery to the Trustee of an Opinion of Counsel satisfactory to
the Trustee meeting the requirements of clause (i) of the first sentence of
this paragraph as described above shall be void and of no effect. The Trustee
shall be under no liability to any Person for any registration of transfer of
any ERISA-Restricted Certificate that is in fact not permitted by this Section
5.02(b) or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Trustee, with respect to the
transfer of such Classes of Certificates, required delivery of such
certificates and other documentation or evidence as are expressly required by
the terms of this Agreement and examined such certificates and other
documentation or evidence to determine compliance as to form with the express
requirements hereof. The Trustee shall be entitled, but not obligated, to
recover from any Holder of any ERISA-Restricted Certificate that was in fact
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan or arrangement subject to Section 4975 of the Code or a Person acting on
behalf of any such plan or arrangement at the time it became a Holder or, at
such subsequent time as it became such a plan or arrangement or Person acting
on behalf of such a plan or arrangement, all payments made on such
ERISA-Restricted Certificate at and after either such time. Any such payments
so recovered by the Trustee shall be paid and delivered by the Trustee to the
last preceding Holder of such Certificate that is not such a plan or
arrangement or Person acting on behalf of a plan or arrangement.
(c) Each Person who has or who acquires any Ownership
Interest in a Class A-R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions, and the rights of each Person acquiring any Ownership
Interest in a Class A-R Certificate are expressly subject to the following
provisions:
(1) Each Person holding or acquiring any Ownership
Interest in a Class A-R Certificate shall be a Permitted
Transferee and shall promptly notify the Trustee of any change
or impending change in its status as a Permitted Transferee.
(2) 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
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affidavit (a "Transfer Affidavit") of the initial owner
or the proposed transferee in the form attached hereto as
Exhibit I-1.
(3) Each Person holding or acquiring any Ownership
Interest in a Class A-R Certificate shall agree (A) to obtain a
Transfer Affidavit from any other Person to whom such Person
attempts to Transfer its Ownership Interest in a Class A-R
Certificate, (B) to obtain a Transfer Affidavit from any Person
for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Class A-R Certificate and (C)
not to Transfer its Ownership Interest in a Class A-R
Certificate, or to cause the Transfer of an Ownership Interest
in a Class A-R Certificate to any other Person, if it has
actual knowledge that such Person is not a Permitted Transferee
or that such Transfer Affidavit is false.
(4) Any attempted or purported Transfer of any Ownership
Interest in a Class A-R Certificate in violation of the
provisions of this Section 5.02(c) shall be absolutely null and
void and shall vest no rights in the purported Transferee. If
any purported transferee shall become a Holder of a Class A-R
Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the
date of registration of Transfer of such Class A-R Certificate.
The Trustee shall be under no liability to any Person for any
registration of Transfer of a Class A-R Certificate that is in
fact not permitted by Section 5.02(b) and this Section 5.02(c)
or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such
Holder under the provisions of this Agreement so long as the
Transfer was registered after receipt of the related Transfer
Affidavit and Transferor Certificate. The Trustee shall be
entitled but not obligated to recover from any Holder of a
Class A-R Certificate that was in fact not a Permitted
Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee,
all payments made on such Class A-R Certificate at and after
either such time. Any such payments so recovered by the Trustee
shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
(5) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee,
all information necessary to compute any tax imposed under
section 860E(e) of the Code as a result of a Transfer of an
Ownership Interest in a Class A-R Certificate to any Holder who
is not a Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set
forth in this section 5.02(c) shall cease to apply (and the applicable
portions of the legend on a Class A-R Certificate may be deleted) with respect
to Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee, either Seller
or the Master Servicer to the effect that the elimination of such restrictions
will not cause any REMIC formed hereunder to fail to qualify as a REMIC at any
time that the Certificates are outstanding or result in the imposition of any
tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Class A-R Certificate hereby
consents to any amendment of this Agreement that, based on an Opinion of
Counsel furnished to the Trustee, is reasonably necessary (a) to ensure that
the record ownership of, or any beneficial
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interest in, a Class A-R Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class A-R Certificate that is held by
a Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
(d) The preparation and delivery of all affidavits,
certifications and opinions referred to above in this section 5.02 shall not
be an expense of the Trust Fund, the Trustee, the Depositor, either Seller or
the Master Servicer.
Section 5.03 Mutilated, Destroyed, Lost or Stolen
Certificates.
If (a) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and of the ownership thereof and
(b) there is delivered to the Master Servicer and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Trustee that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and Percentage Interest.
In connection with the issuance of any new Certificate under this Section
5.03, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section 5.03
shall constitute complete and indefeasible evidence of ownership in the Trust
Fund, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time. All Certificates surrendered to the
Trustee under the terms of this Section 5.03 shall be canceled and destroyed
by the Trustee in accordance with its standard procedures without liability on
its part.
Section 5.04 Persons Deemed Owners.
The Master Servicer, the Trustee and any agent of the Master
Servicer or the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and none of the Master Servicer, the Trustee or the NIM Insurer or
any agent of the Master Servicer, the Trustee or the NIM Insurer shall be
affected by any notice to the contrary.
Section 5.05 Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders or Certificate Owners
(a) request such information in writing from the Trustee, (b) state that such
Certificateholders or Certificate Owners desire to communicate with other
Certificateholders or Certificate Owners with respect to their rights under
this Agreement or under the Certificates and (c) provide a copy of the
communication that such Certificateholders or Certificate Owners propose to
transmit or if the Depositor or Master Servicer shall request such information
in writing from the Trustee, then the Trustee shall, within ten Business Days
after the receipt of such request, provide the Depositor, the Master Servicer
or such Certificateholders or Certificate Owners at such recipients' expense
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the most recent list of the Certificateholders of the Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder or Certificate
Owner, by receiving and holding a Certificate, agree that the Trustee shall
not be held accountable by reason of the disclosure of any such information as
to the list of the Certificateholders hereunder, regardless of the source from
which such information was derived.
Section 5.06 Book-Entry Certificates.
The Book-Entry Certificates, upon original issuance, shall
be issued in the form of one typewritten Certificate (or more than one, if
required by the Depository) for each Class of such Certificates, to be
delivered to the Depository by or on behalf of the Depositor. Such
Certificates shall initially be registered on the Certificate Register in the
name of the Depository or its nominee, and no Certificate Owner of such
Certificates will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in
Section 5.08. Unless and until definitive, fully registered Certificates
("Definitive Certificates") have been issued to the Certificate Owners of such
Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Depositor, the Sellers, the Master Servicer and the
Trustee may deal with the Depository and the Depository Participants for all
purposes (including the making of distributions) as the authorized
representative of the respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and
until Definitive Certificates are issued pursuant to Section 5.08, the
Depository will make book-entry transfers among the Depository Participants
and receive and transmit distributions of principal and interest on the
related Certificates to such Depository Participants;
(e) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and
(g) to the extent the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may
be given by Certificate Owners (acting through the Depository and the
Depository
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Participants) owning Book-Entry Certificates evidencing the requisite
percentage of principal amount of such Class of Certificates.
Section 5.07 Notices to Depository.
Whenever any notice or other communication is required to be
given to Certificateholders of the Class with respect to which Book-Entry
Certificates have been issued, unless and until Definitive Certificates shall
have been issued to the related Certificate Owners, the Trustee shall give all
such notices and communications to the Depository.
Section 5.08 Definitive Certificates.
If, after Book-Entry Certificates have been issued with
respect to any Certificates, (a) the Depositor advises the Trustee that the
Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor or (b) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall
notify all Certificate Owners of such Certificates, through the Depository, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Class requesting the same. The
Depositor shall provide the Trustee with an adequate inventory of Certificates
to facilitate the issuance and transfer of Definitive Certificates. Upon
surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall authenticate and deliver such Definitive Certificates.
Neither the Depositor nor the Trustee shall be liable for any delay in
delivery of such instructions and each may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or
to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.
Section 5.09 Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its
expense an office or offices or agency or agencies in New York City where
Certificates may be surrendered for registration of transfer or exchange. The
Trustee initially designates its offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Corporate Trust MBS Administration, as offices for such
purposes. The Trustee will give prompt written notice to the
Certificateholders of any change in such location of any such office or
agency.
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ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS
Section 6.01 Respective Liabilities of the Depositor, the
Master Servicer and the Sellers.
The Depositor, the Master Servicer and each Seller shall
each be liable in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them herein.
Section 6.02 Merger or Consolidation of the Depositor, the
Master Servicer or the Sellers.
The Depositor will keep in full effect its existence, rights
and franchises as a corporation under the laws of the United States or under
the laws of one of the states thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement. The Master Servicer will keep in effect its
existence, rights and franchises as a limited partnership under the laws of
the United States or under the laws of one of the states thereof and will
obtain and preserve its qualification or registration to do business as a
foreign partnership in each jurisdiction in which such qualification or
registration is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Depositor, the Master Servicer or
either Seller may be merged or consolidated, or any Person resulting from any
merger or consolidation to which the Depositor, the Master Servicer or either
Seller shall be a party, or any person succeeding to the business of the
Depositor, the Master Servicer or either Seller, shall be the successor of the
Depositor, the Master Servicer or such Seller, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided that the successor or surviving Person to the Master Servicer shall
be qualified to service mortgage loans on behalf of Xxxxxx Mae and Xxxxxxx
Mac.
Section 6.03 Limitation on Liability of the Depositor, the
Sellers, the Master Servicer, the NIM Insurer
and Others.
None of the Depositor, the Seller, the NIM Insurer or the
Master Servicer or any of the directors, officers, employees or agents of the
Depositor, the Seller, the NIM Insurer or the Master Servicer shall be under
any liability to the Trustee (except as provided in Section 8.05), the Trust
Fund or the Certificateholders for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided that this provision shall not protect the Depositor, the
Seller, the Master Servicer or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Seller, the Master Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or gross
negligence in the performance of
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duties or by reason of reckless disregard of obligations and duties hereunder.
The Depositor, the Seller, the NIM Insurer, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Seller, the NIM
Insurer or the Master Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor, the Seller, the NIM Insurer, the
Master Servicer and any director, officer, employee or agent of the Depositor,
the Seller, the NIM Insurer or the Master Servicer shall be indemnified by the
Trust Fund and held harmless against any loss, liability or expense incurred
in connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason
of reckless disregard of obligations and duties hereunder. None of the
Depositor, the Seller, the NIM Insurer or the Master Servicer shall be under
any obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided that any of the Depositor,
the Seller, the NIM Insurer or the Master Servicer may, in its discretion
undertake any such action that it may deem necessary or desirable in respect
of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be, expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Seller, the NIM Insurer and the Master Servicer shall be
entitled to be reimbursed therefor out of the Certificate Account as provided
by Section 3.08 hereof.
Section 6.04 Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations
and duties hereby imposed on it except (i) upon determination that its duties
hereunder are no longer permissible under applicable law or (ii) upon
appointment of a successor servicer that is reasonably acceptable to the
Trustee and the NIM Insurer and the written confirmation from each Rating
Agency (which confirmation shall be furnished to the Depositor, the Trustee
and the NIM Insurer) that such resignation will not cause such Rating Agency
to reduce the then current rating of the Certificates. Any such determination
pursuant to clause (i) of the preceding sentence permitting the resignation of
the Master Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee. No resignation of the Master Servicer shall become
effective until the Trustee shall have assumed the Master Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Section 6.05 Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall, for so long as it acts as
servicer under this Agreement, obtain and maintain in force (a) a policy or
policies of insurance covering errors and omissions in the performance of its
obligations as servicer hereunder, and (b) a fidelity bond in respect of its
officers, employees and agents. Each such policy or policies and bond shall,
together, comply with the requirements from time to time of Xxxxxx Xxx and
Xxxxxxx Mac for persons performing
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servicing for mortgage loans purchased by Xxxxxx Mae and Xxxxxxx Mac. In the
event that any such policy or bond ceases to be in effect, the Master Servicer
shall use its reasonable best efforts to obtain a comparable replacement
policy or bond from an insurer or issuer, meeting the requirements set forth
above as of the date of such replacement.
The Master Servicer shall provide the Trustee and the NIM
Insurer (upon such party's reasonable request) with copies of any such
insurance policies and fidelity bond. The Master Servicer shall be deemed to
have complied with this provision if an Affiliate of the Master Servicer has
such errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to
the Master Servicer.
ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01 Events of Default.
"Event of Default," wherever used herein, means any one of
the following events:
(1) any failure by the Master Servicer to deposit in the
Certificate Account or the Distribution Account or remit to the
Trustee any payment (excluding a payment required to be made
under Section 4.01 hereof) required to be made under the terms
of this Agreement, which failure shall continue unremedied for
five calendar days and, with respect to a payment required to
be made under Section 4.01(b) or (c) hereof, for one Business
Day, after the date on which written notice of such failure
shall have been given to the Master Servicer by the Trustee,
the NIM Insurer or the Depositor, or to the Trustee, the NIM
Insurer and the Master Servicer by the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by
the Certificates; or
(2) any failure by the Master Servicer to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this
Agreement or any representation or warranty shall prove to be
untrue, which failure or breach shall continue unremedied for a
period of 60 days after the date on which written notice of
such failure shall have been given to the Master Servicer by
the Trustee, the NIM Insurer or the Depositor, or to the
Trustee by the Holders of Certificates evidencing not less than
25% of the Voting Rights evidenced by the Certificates;
provided that the sixty-day cure period shall not apply to the
initial delivery of the Mortgage File for Delay Delivery
Mortgage Loans nor the failure to repurchase or substitute in
lieu thereof; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days;
or
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(4) the Master Servicer shall consent to the appointment
of a receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Master Servicer or all or
substantially all of the property of the Master Servicer; or
(5) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case
under, any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(6) the Master Servicer shall fail to reimburse in full
the Trustee not later than 6:00 p.m. (New York time) on the
Business Day following the related Distribution Date for any
Advance made by the Trustee pursuant to Section 4.01(d)
together with accrued and unpaid interest.
If an Event of Default shall occur, then, and in each and
every such case, so long as such Event of Default shall not have been
remedied, the Trustee shall, but only at the direction of either the NIM
Insurer or the Holders of Certificates evidencing not less than 25% of the
Voting Rights evidenced by the Certificates, by notice in writing to the
Master Servicer (with a copy to each Rating Agency), terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. On or after the receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer hereunder,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee. The Trustee shall thereupon make any Advance described
in Section 4.01 hereof subject to Section 3.04 hereof. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Master Servicer
to pay amounts owed pursuant to Article VIII. The Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Certificate Account, or thereafter be received with
respect to the Mortgage Loans. The Trustee shall promptly notify the Rating
Agencies of the occurrence of an Event of Default.
Notwithstanding any termination of the activities of a
Master Servicer hereunder, such Master Servicer shall be entitled to receive,
out of any late collection of a Scheduled Payment on a Mortgage Loan that was
due prior to the notice terminating such Master Servicer's rights and
obligations as Master Servicer hereunder and received after such notice, that
portion thereof to which such Master Servicer would have been entitled
pursuant to Sections 3.08(a)(i) through (viii), and any other amounts payable
to such Master Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
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Section 7.02 Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice
of termination pursuant to Section 7.01 hereof, the Trustee shall, to the
extent provided in Section 3.04, be the successor to the Master Servicer in
its capacity as servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof and applicable law including the obligation to
make advances pursuant to Section 4.01. As compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage
Loans that the Master Servicer would have been entitled to if the Master
Servicer had continued to act hereunder. Notwithstanding the foregoing, if the
Trustee has become the successor to the Master Servicer in accordance with
Section 7.01 hereof, the Trustee may, if it shall be unwilling to so act, or
shall, if it is prohibited by applicable law from making Advances pursuant to
Section 4.01 hereof or if it is otherwise unable to so act, (i) appoint any
established mortgage loan servicing institution reasonably acceptable to the
NIM Insurer (as evidenced by the prior written consent of the NIM Insurer), or
(ii) petition a court of competent jurisdiction to appoint any established
mortgage loan servicing institution, the appointment of which does not
adversely affect the then current rating of the Certificates and the NIM
Insurer guaranteed notes by each Rating Agency as the successor to the Master
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder. Any
successor Master Servicer shall be an institution that is a Xxxxxx Xxx and
Xxxxxxx Mac approved seller/servicer in good standing, that has a net worth of
at least $15,000,000 and that is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, that contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of
the Master Servicer (other than liabilities and indemnities of the Master
Servicer under Section 6.03 hereof incurred prior to termination of the Master
Servicer under Section 7.01), with like effect as if originally named as a
party to this Agreement; and provided further that each Rating Agency
acknowledges that its rating of the Certificates in effect immediately prior
to such assignment and delegation will not be qualified or reduced as a result
of such assignment and delegation. No appointment of a successor to the Master
Servicer hereunder shall be effective until the Trustee shall have consented
thereto, and written notice of such proposed appointment shall have been
provided by the Trustee to each Certificateholder. The Trustee shall not
resign as servicer until a successor servicer has been appointed and has
accepted such appointment. Pending appointment of a successor to the Master
Servicer hereunder, the Trustee, unless the Trustee is prohibited by law from
so acting, shall, subject to Section 3.04 hereof, act in such capacity as
herein above provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree; provided
that no such compensation shall be in excess of that permitted the Master
Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor servicer shall be
deemed to be in default hereunder by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the Master Servicer to
deliver or provide, or any delay in delivering or providing, any cash,
information, documents or records to it.
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Any successor to the Master Servicer as servicer shall give
notice to the NIM Insurer and the Mortgagors of such change of servicer and
shall, during the term of its service as servicer maintain in force the policy
or policies that the Master Servicer is required to maintain pursuant to
Section 6.05.
In connection with the termination or resignation of the
Master Servicer hereunder, either (i) the successor Master Servicer, including
the Trustee if the Trustee is acting as successor Master Servicer, shall
represent and warrant that it is a member of MERS in good standing and shall
agree to comply in all material respects with the rules and procedures of MERS
in connection with the servicing of the Mortgage Loans that are registered
with MERS, or (ii) the predecessor Master Servicer shall cooperate with the
successor Master Servicer in causing MERS to execute and deliver an assignment
of Mortgage in recordable form to transfer the Mortgage from MERS to the
Trustee and to execute and deliver such other notices, documents and other
instruments as may be necessary or desirable to effect a transfer of such
Mortgage Loan or servicing of such Mortgage Loan on the MERS(R) System to the
successor Master Servicer. The predecessor Master Servicer shall file or cause
to be filed any such assignment in the appropriate recording office. The
successor Master Servicer shall cause such assignment to be delivered to the
Co-Trustee promptly upon receipt of the original with evidence of recording
thereon or a copy certified by the public recording office in which such
assignment was recorded.
Section 7.03 Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor
to the Master Servicer, the Trustee shall give prompt written notice thereof
to Certificateholders, to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Certificateholders notice
of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
ARTICLE VIII.
CONCERNING THE TRUSTEE AND THE CO-TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee (or the Co-Trustee, to the extent provided in this
Agreement) that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they
conform to the
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requirements of this Agreement, to the extent provided in this Agreement. If
any such instrument is found not to conform to the requirements of this
Agreement in a material manner, the Trustee shall take action as it deems
appropriate to have the instrument corrected.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own grossly negligent action, its own gross
negligent failure to act or its own misconduct, its grossly negligent failure
to perform its obligations in compliance with this Agreement, or any liability
that would be imposed by reason of its willful misfeasance or bad faith;
provided that:
(1) prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default that may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement,
the Trustee shall not be liable, individually or as Trustee,
except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement
against the Trustee and the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Agreement that it reasonably believed in good faith to be
genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(2) the Trustee shall not be liable, individually or as
Trustee, for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee,
unless the Trustee was grossly negligent or acted in bad faith
or with willful misfeasance;
(3) the Trustee shall not be liable, individually or as
Trustee, with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with the
direction of the Holders of each Class of Certificates
evidencing not less than 25% of the Voting Rights of such Class
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under
this Agreement; and
(4) without in any way limiting the provisions of this
Section 8.01 or Section 8.02 hereof, the Trustee shall be
entitled to rely conclusively on the information delivered to
it by the Master Servicer in a Trustee Advance Notice in
determining whether or not it is required to make an Advance
under Section 4.01(d), shall have no responsibility to
ascertain or confirm any information contained in any Trustee
Advance Notice, and shall have no obligation to make any
Advance under Section 4.01(d) in the absence of a Trustee
Advance Notice or actual knowledge by a Responsible Officer
that (A) a required Advance was not made and (B) such required
Advance was not a Nonrecoverable Advance.
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Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(1) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any
resolution, Officer's Certificate, certificate of auditors or
any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(2) the Trustee may consult with counsel and any Opinion
of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(3) the Trustee shall not be liable, individually or as
Trustee, for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Agreement;
(4) prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default that
may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do
by the NIM Insurer or the Holders of each Class of Certificates
evidencing not less than 25% of the Voting Rights of such
Class; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee not reasonably
assured to the Trustee by such Certificateholders, the Trustee
may require reasonable indemnity against such expense, or
liability from such Certificateholders as a condition to taking
any such action;
(5) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents, accountants or attorneys;
(6) the Trustee shall not be required to expend its own
funds or otherwise incur any financial liability in the
performance of any of its duties hereunder if it shall have
reasonable grounds for believing that repayment of such funds
or adequate indemnity against such liability is not assured to
it;
(7) the Trustee shall not be liable, individually or as
Trustee, for any loss on any investment of funds pursuant to
this Agreement (other than as issuer of the investment
security);
(8) the Trustee shall not be deemed to have knowledge of
an Event of Default until a Responsible Officer of the Trustee
shall have received written notice thereof; and
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(9) the Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Agreement or
to make any investigation of matters arising hereunder or to
institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of the NIM
Insurer or any of the Certificateholders, pursuant to the
provisions of this Agreement, unless the NIM Insurer or such
Certificateholders, as applicable, shall have offered to the
Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or
thereby.
(b) All rights of action under this Agreement or under any
of the Certificates, enforceable by the Trustee, may be enforced by the
Trustee without the possession of any of the Certificates, or the production
thereof at the trial or other proceeding relating thereto, and any such suit,
action or proceeding instituted by the Trustee shall be brought in its name
for the benefit of all the Holders of the Certificates, subject to the
provisions of this Agreement.
Section 8.03 Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the
statements of the Depositor or the Master Servicer, as the case may be, and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this Agreement or of
any Mortgage Loan or related document or of MERS or the MERS(R) System other
than with respect to the Trustee's execution and authentication of the
Certificates. The Trustee shall not be accountable for the use or application
by the Depositor or the Master Servicer of any funds paid to the Depositor or
the Master Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Certificate Account by the Depositor or the Master
Servicer.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would
have if it were not the Trustee.
Section 8.05 Master Servicer to Pay Trustee's Fees and
Expenses.
The Master Servicer covenants and agrees to pay or reimburse
the Trustee, upon its request, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee on behalf of the Trust Fund in
accordance with any of the provisions of this Agreement (including, without
limitation: (A) the reasonable compensation and the expenses and disbursements
of its counsel, but only for representation of the Trustee acting in its
capacity as Trustee hereunder and (B) to the extent that the Trustee must
engage persons not regularly in its employ to perform acts or services on
behalf of the Trust Fund, which acts or services are not in the ordinary
course of the duties of a trustee, paying agent or certificate registrar, in
the absence of a breach or default by any party hereto, the reasonable
compensation, expenses and disbursements of such persons, except any such
expense, disbursement or advance as may arise from its negligence, bad faith
or willful misconduct). The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection
with any legal action relating to
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this Agreement or the Certificates, or in connection with the performance of
any of the Trustee's duties hereunder, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of any of the Trustee's duties hereunder or by reason of
reckless disregard of the Trustee's obligations and duties hereunder and (ii)
resulting from any error in any tax or information return prepared by the
Master Servicer. Such indemnity shall survive the termination of this
Agreement or the resignation or removal of the Trustee hereunder.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation
or association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority and with a
credit rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates below the ratings issued on
the Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07 hereof. The corporation
or national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the Sellers and the Master Servicer
and their respective affiliates; provided that such corporation cannot be an
affiliate of the Master Servicer other than the Trustee in its role as
successor to the Master Servicer.
Section 8.07 Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from
the trusts hereby created by (1) giving written notice of resignation to the
Depositor and the Master Servicer and by mailing notice of resignation by
first class mail, postage prepaid, to the Certificateholders at their
addresses appearing on the Certificate Register and each Rating Agency, not
less than 60 days before the date specified in such notice when, subject to
Section 8.08, such resignation is to take effect, and (2) acceptance of
appointment by a successor trustee in accordance with Section 8.08 and meeting
the qualifications set forth in Section 8.06. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice or resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to resign
after written request thereto by the NIM Insurer or the Depositor, (ii) the
Trustee shall become incapable of acting, or shall be adjudged as bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the
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purpose of rehabilitation, conservation or liquidation, or (iii)(A) a tax is
imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located, (B) the imposition of such tax would be avoided by
the appointment of a different trustee and (C) the Trustee fails to indemnify
the Trust Fund against such tax, then the Depositor, the NIM Insurer or the
Master Servicer may remove the Trustee and appoint a successor trustee,
reasonably acceptable to the NIM Insurer, by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee,
one copy of which shall be delivered to the Master Servicer and one copy of
which shall be delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of
each Class of Certificates may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set
of which instruments shall be delivered by the successor Trustee to the Master
Servicer one complete set to the Trustee so removed and one complete set to
the successor so appointed. Notice of any removal of the Trustee shall be
given to each Rating Agency by the Successor Trustee.
Any resignation or removal of the Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section 8.07
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 8.08 hereof.
Section 8.08 Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
hereof shall execute, acknowledge and deliver to the Depositor, its
predecessor trustee and the Master Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein.
No successor trustee shall accept appointment as provided in
this Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 hereof, is reasonably
acceptable to the NIM Insurer and its appointment shall not adversely affect
the then current ratings of the Certificates.
Upon acceptance of appointment by a successor trustee as
provided in this Section 8.08, the Depositor shall mail notice of the
succession of such trustee hereunder to the NIM Insurer and all Holders of
Certificates. If the Depositor fails to mail such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.
Section 8.09 Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to substantially all of the corporate
trust business of the Trustee, shall be the successor of the
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Trustee hereunder, provided that such corporation shall be eligible under the
provisions of Section 8.06 hereof without the execution or filing of any paper
or further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Fund or property securing any
Mortgage Note may at the time be located, the Master Servicer and the Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee and
reasonably acceptable to the NIM Insurer to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the
Trust Fund or any part thereof, whichever is applicable, and, subject to the
other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Master Servicer and the Trustee may consider
necessary or desirable. If the Master Servicer shall not have joined in such
appointment within 15 days after receipt by it of a request to do so, or in
the case an Event of Default shall have occurred and be continuing, the
Trustee shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.06 and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required
under Section 8.08.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(1) All rights, powers, duties and obligations conferred
or imposed upon the Trustee, except for the obligation of the
Trustee under this Agreement to advance funds on behalf of the
Master Servicer, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately
without the Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular
act or acts are to be performed (whether as Trustee hereunder
or as successor to the Master Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund
or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(2) No trustee hereunder shall be held personally liable
by reason of any act or omission of any other trustee
hereunder; and
(3) The Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each
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of them. Every instrument appointing any separate trustee or co-trustee shall
refer to this Agreement and the conditions of this Article VIII. Each separate
trustee and co-trustee upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically
including every provision of this Agreement relating to the conduct of,
affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to
the Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
Section 8.11 Tax Matters.
It is intended that the Trust Fund shall constitute, and
that the affairs of the Trust Fund shall be conducted so that each REMIC
created pursuant to the Preliminary Statement qualifies as, a "real estate
mortgage investment conduit" as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Trustee covenants and agrees
that it shall act as agent (and the Trustee is hereby appointed to act as
agent) on behalf of the Trust Fund and that in such capacity it shall: (a)
prepare and file, or cause to be prepared and filed, in a timely manner, a
U.S. Real Estate Mortgage Investment Conduit Income Tax Returns (Form 1066 or
any successor form adopted by the Internal Revenue Service) and prepare and
file or cause to be prepared and filed with the Internal Revenue Service and
applicable state or local tax authorities income tax or information returns
for each taxable year with respect to each REMIC created hereunder containing
such information and at the times and in the manner as may be required by the
Code or state or local tax laws, regulations, or rules, and furnish or cause
to be furnished to Certificateholders the schedules, statements or information
at such times and in such manner as may be required thereby; (b) within thirty
days of the Closing Date, furnish or cause to be furnished to the Internal
Revenue Service, on Forms 8811 or as otherwise may be required by the Code,
the name, title, address, and telephone number of the person that the Holders
of the Certificates may contact for tax information relating thereto, together
with such additional information as may be required by such Form, and update
such information at the time or times in the manner required by the Code for
the Trust Fund; (c) make or cause to be made elections, on behalf of each
REMIC created hereunder to be treated as a REMIC on the federal tax return of
each such REMIC for its first taxable year (and, if necessary, under
applicable state law); (d) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and,
if necessary, state tax authorities, all information returns and reports as
and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original
issue discount using the Prepayment Assumption; (e) provide information
necessary for the computation of tax imposed on the transfer of a Class A-R
Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is
the record holder of an interest (the
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reasonable cost of computing and furnishing such information may be charged to
the Person liable for such tax); (f) to the extent that they are under its
control conduct the affairs of the Trust Fund at all times that any
Certificates are outstanding so as to maintain the status of each REMIC
created hereunder as a REMIC under the REMIC Provisions; (g) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any REMIC created hereunder; (h) pay, from
the sources specified in the last paragraph of this Section 8.11, the amount
of any federal, state and local taxes, including prohibited transaction taxes
as described below, imposed on any REMIC created hereunder prior to the
termination of the Trust Fund when and as the same shall be due and payable
(but such obligation shall not prevent the Trustee or any other appropriate
Person from contesting any such tax in appropriate proceedings and shall not
prevent the Trustee from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings); (i) sign or cause to be signed
federal, state or local income tax or information returns; (j) maintain
records relating to each REMIC created hereunder, including but not limited to
the income, expenses, assets and liabilities of each such REMIC, and the fair
market value and adjusted basis of the Trust Fund property determined at such
intervals as may be required by the Code, as may be necessary to prepare the
foregoing returns, schedules, statements or information; and (k) as and when
necessary and appropriate, represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year
of any REMIC created hereunder, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust Fund, and otherwise act on behalf of any REMIC created
hereunder in relation to any tax matter involving any such REMIC.
In order to enable the Trustee to perform its duties as set
forth herein, the Depositor shall provide, or cause to be provided, to the
Trustee within 10 days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows
of the Certificates and the Mortgage Loans (and, to the extent not part of the
aforementioned, the information referred to in paragraphs (1), (2), (3) and
(4) of Section 4.05(d)). Thereafter, the Depositor shall provide to the
Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order
to enable the Trustee to perform its duties as set forth herein. The Depositor
hereby indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause
to be provided, accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited
transactions" of the Trust Fund as defined in section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of the Trust Fund as defined in
section 860G(c) of the Code, on any contribution to the Trust Fund after the
startup day pursuant to section 860G(d) of the Code, or any other tax is
imposed, including, without limitation, any federal, state or local tax or
minimum tax imposed upon the Trust Fund pursuant to sections 23153 and 24872
of the California Revenue and Taxation Code if not paid as otherwise provided
for herein, such tax shall be paid by (i) the Trustee, if any such other tax
arises out of or results from a breach by the Trustee of any of its
obligations under this Agreement, (ii) (x) the Master Servicer, in the case of
any such minimum tax, and (y) any party
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hereto (other than the Trustee) to the extent any such other tax arises out of
or results from a breach by such other party of any of its obligations under
this Agreement or (iii) in all other cases, or in the event that any liable
party here fails to honor its obligations under the preceding clauses (i) or
(ii), any such tax will be paid first with amounts otherwise to be distributed
to the Class A-R Certificateholders, and second with amounts otherwise to be
distributed to all other Certificateholders in the same manner as if such tax
were a Realized Loss that occurred ratably within each Loan Group.
Notwithstanding anything to the contrary contained herein, to the extent that
such tax is payable by the Class A-R Certificates, the Trustee is hereby
authorized to retain on any Distribution Date, from the Holders of the Class
A-R Certificates (and, if necessary, second, from the Holders of the all other
Certificates in the priority specified in the preceding sentence), funds
otherwise distributable to such Holders in an amount sufficient to pay such
tax. The Trustee agrees to promptly notify in writing the party liable for any
such tax of the amount thereof and the due date for the payment thereof.
The Trustee shall treat the Carryover Reserve Fund as an
outside reserve fund within the meaning of Treasury Regulation 1.860G-2(h)
that is owned by the holders of the Class C Certificates, and that is not an
asset of any REMIC created hereunder. The Trustee shall treat the rights of
the holders of each Class of Certificates (other than the Class P and Class
A-R Certificates) to receive payments from the Carryover Reserve Fund as
rights in an interest rate corridor contract written by: (i) the Corridor
Contract Counterparty in respect of any Net Rate Carryover funded by each
Corridor Contract and in respect of any residual payments from each such
Corridor Contract received by the Class C Certificates, and (ii) the holders
of the Class C Certificates in respect of any monies distributed pursuant to
Section 4.04(d)(18) and (19) and Section 4.08(c) herein, in favor of the other
Certificateholders. Thus, each Certificate (other than the Class P and Class
A-R Certificates) shall be treated as representing ownership of not only an
Master REMIC regular interest, but also ownership of an interest in an
interest rate corridor contract. For purposes of determining the issue price
of the Master REMIC regular interests, the Trustee shall assume that the
related portion of the related interest rate corridor contract in respect of
each Certificate has the following values:
------------------------------------------------------------------------
Class Value of Corridor Contract
------------------------------------------------------------------------
Class 1-A $4,315,000
------------------------------------------------------------------------
Class 2-A $2,385,000
------------------------------------------------------------------------
Class 3-A $1,230,000
------------------------------------------------------------------------
Class 4-A-1 $332,967
------------------------------------------------------------------------
Class 4-A-2 $628,413
------------------------------------------------------------------------
Class 4-A-3 $454,028
------------------------------------------------------------------------
Class 4-A-4 $514,590
------------------------------------------------------------------------
Class A $555,004
------------------------------------------------------------------------
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------------------------------------------------------------------------
Class M-1 $958,584
------------------------------------------------------------------------
Class M-2 $627,048
------------------------------------------------------------------------
Class M-3 $458,279
------------------------------------------------------------------------
Class M-4 $526,487
------------------------------------------------------------------------
Class M-5 $441,268
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Class M-6 $356,884
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Class M-7 $411,250
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Class B $315,192
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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.
(b) No provision of this Agreement shall be construed to
relieve the Co-Trustee from liability for its own grossly negligent action,
its own gross negligent failure to act or its own misconduct, its grossly
negligent failure to perform its obligations in compliance with this
Agreement, or any liability that would be imposed by reason of its willful
misfeasance or bad faith; provided that:
(1) the duties and obligations of the Co-Trustee shall be
determined solely by the express provisions of this Agreement
with the exception of Section 8.10, the Co-Trustee shall not be
liable, individually or as Co-Trustee, except for the
performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the
Co-Trustee and the Co-Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Co-Trustee and conforming to the requirements of this
Agreement that it reasonably believed in good faith to be
genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder; and
(2) the Co-Trustee shall not be liable, individually or as
Co-Trustee, for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of
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the Trustee, unless the Co-Trustee was grossly negligent or
acted in bad faith or with willful misfeasance.
(c) Except as otherwise provided in paragraph (b) above:
(1) the Co-Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any
resolution, Officer's Certificate, certificate of auditors or
any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(2) the Co-Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(3) the Co-Trustee shall not be liable, individually or as
Co-Trustee, for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Agreement;
(4) the Co-Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document;
(5) the Co-Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents, accountants or attorneys; and
(6) the Co-Trustee shall not be required to expend its own
funds or otherwise incur any financial liability in the
performance of any of its duties hereunder if it shall have
reasonable grounds for believing that repayment of such funds
or adequate indemnity against such liability is not assured to
it.
(d) The recitals contained herein shall be taken as the
statements of the Depositor or the Master Servicer, as the case may be, and
the Co-Trustee assumes no responsibility for their correctness. The Co-Trustee
makes no representations as to the validity or sufficiency of this Agreement
or of any Mortgage Loan or related document or of MERS or the MERS(R) System
other than with respect to the Co-Trustee's execution and authentication of
the Certificates. The Co-Trustee shall not be accountable for the use or
application by the Depositor or the Master Servicer of any funds paid to the
Depositor or the Master Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Certificate Account by the Depositor or the Master
Servicer.
(e) The Co-Trustee in its individual or any other capacity
may become the owner or pledgee of Certificates with the same rights as it
would have if it were not the Co-Trustee.
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(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 cannot be an affiliate of the Master Servicer other than the
Trustee in its role as successor to the Master Servicer.
The Co-Trustee may at any time resign and be discharged from
the trusts hereby created by giving 30 days prior written notice of
resignation to the Trustee, the Depositor and the
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Master Servicer. Upon such resignation the Trustee (x) may appoint a successor
Co-Trustee meeting the requirements in paragraph (g) above and acceptable to
the Master Servicer (in its sole discretion), so long as such Co-Trustee
executes and delivers to the other parties hereto an instrument agreeing to be
bound by the provisions of this Agreement or (y) may if permitted by the
Master Servicer (in its sole discretion) assume the rights and duties of the
resigning Co-Trustee so long as the Trustee executes and delivers an
instrument to that effect.
Section 8.13 Access to Records of the Trustee.
The Trustee and any Co-Trustee shall afford the Sellers, the
Depositor, the Master Servicer, the NIM Insurer and each Certificate Owner
upon reasonable notice during normal business hours access to all records
maintained by the Trustee or Co-Trustee in respect of its duties under this
Agreement and access to officers of the Trustee responsible for performing its
duties. Upon request, the Trustee or Co-Trustee shall furnish the Depositor,
the Master Servicer, the NIM Insurer and any requesting Certificate Owner with
its most recent financial statements. The Trustee shall cooperate fully with
the Sellers, the Master Servicer, the Depositor, the NIM Insurer and the
Certificate Owner for review and copying any books, documents, or records
requested with respect to the Trustee's and Co-Trustee's respective duties
under this Agreement. The Sellers, the Depositor, the Master Servicer and the
Certificate Owner shall not have any responsibility or liability for any
action for failure to act by the Trustee or Co-Trustee and are not obligated
to supervise the performance of the Trustee under this Agreement or otherwise.
Section 8.14 Suits for Enforcement.
If an Event of Default or other material default by the
Master Servicer or the Depositor under this Agreement occurs and is
continuing, at the direction of the Certificateholders holding not less than
51% of the Voting Rights or the NIM Insurer, the Trustee shall proceed to
protect and enforce its rights and the rights of the Certificateholders or the
NIM Insurer under this Agreement by a suit, action, or proceeding in equity or
at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the execution of any power
granted in this Agreement or for the enforcement of any other legal,
equitable, or other remedy, as the Trustee, being advised by counsel, and
subject to the foregoing, shall deem most effectual to protect and enforce any
of the rights of the Trustee, the NIM Insurer and the Certificateholders.
ARTICLE IX.
TERMINATION
Section 9.01 Termination upon Liquidation or Repurchase of
all Mortgage Loans
Subject to Section 9.03, the Trust Fund shall terminate and
the obligations and responsibilities of the Depositor, the Master Servicer,
the Sellers, the Trustee and the Co-Trustee created hereby shall terminate
upon the earlier of (a) the purchase by the Master Servicer or NIM Insurer
(the party exercising such purchase option, the "Terminator") of all of the
Mortgage Loans (and REO Properties) remaining in the Trust Fund at the price
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan in the Trust Fund (other than in respect of an REO Property), (ii)
accrued interest thereon at the applicable Mortgage Rate (or, if
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such repurchase is effected by the Master Servicer, at the applicable Net
Mortgage Rate), (iii) the appraised value of any REO Property in the Trust
Fund (up to the Stated Principal Balance of the related Mortgage Loan), such
appraisal to be conducted by an appraiser mutually agreed upon by the
Terminator and the Trustee and (iv) any unreimbursed Servicing Advances, and
the principal portion of any unreimbursed Advances, made on the Mortgage Loans
prior to the exercise of such repurchase and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to related Certificateholders of all
amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor
of the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United
States to the Court of St. James's, living on the date hereof and (ii) the
Latest Possible Maturity Date.
The right to purchase all Mortgage Loans and REO Properties
by the Terminator pursuant to clause (a) above shall be conditioned upon the
Stated Principal Balance of the Mortgage Loans, at the time of any such
repurchase, aggregating ten percent (10%) or less of the Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date. The NIM Insurer's right
to purchase all Mortgage Loans and REO Properties shall be further conditioned
upon the written consent of the Master Servicer.
Section 9.02 Final Distribution on the Certificates.
If on any Determination Date, (i) the Master Servicer
determines that there are no Outstanding Mortgage Loans and no other funds or
assets in the Trust Fund other than the funds in the Certificate Account
related to such Loan Group, the Master Servicer shall direct the Trustee to
send a final distribution notice promptly to each related Certificateholder or
(ii) the Trustee determines that a Class of Certificates shall be retired
after a final distribution on such Class, the Trustee shall notify the related
Certificateholders within five (5) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the related Certificates at the
Corporate Trust Office of the Trustee. If the Terminator elects to terminate
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date
notice is to be mailed to the affected Certificateholders, such electing party
shall notify the Depositor and the Trustee of the date such electing party
intends to terminate and of the applicable repurchase price of the related
Mortgage Loans and REO Properties.
Notice of any termination, specifying the Distribution Date
on which related Certificateholders may surrender their Certificates for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to related Certificateholders mailed not earlier than
the 10th day and no later than the 15th day of the month immediately preceding
the month of such final distribution. Any such notice shall specify (a) the
Distribution Date upon which final distribution on related Certificates will
be made upon presentation and surrender of such Certificates at the office
therein designated, (b) the amount of such final distribution, (c) the
location of the office or agency at which such presentation and surrender must
be made and (d) that the Record Date otherwise applicable to such Distribution
Date is not applicable, distributions being made only upon presentation and
surrender of such Certificates at the office
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therein specified. The Terminator will give such notice to each Rating Agency
at the time such notice is given to the affected Certificateholders.
In the event such notice is given, the Master Servicer shall
cause all funds in the Certificate Account to be remitted to the Trustee for
deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit and the receipt by the
Trustee of a Request for Release therefor, the Co-Trustee shall promptly
release to the Master Servicer the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders of each affected
Class the amounts allocable to such Certificates held in the Distribution
Account (and, if applicable, the Carryover Reserve Fund) in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and
in proportion to their respective Percentage Interests. Notwithstanding the
reduction of the Certificate Principal Balance of any Class of Certificates
to zero, such Class will be outstanding hereunder (solely for the purpose of
receiving distributions (if any) to which it may be entitled pursuant to the
terms of this Agreement and not for any other purpose) until the termination
of the respective obligations and responsibilities of the Depositor, each
Seller, the Master Servicer and the Trustee hereunder in accordance with
Article IX.
In the event that any affected Certificateholders shall not
surrender related Certificates for cancellation within six months after the
date specified in the above mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
related Certificates for cancellation and receive the final distribution with
respect thereto. If within six months after the second notice all the
applicable Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain a part of the Trust Fund. If within one
year after the second notice all related Certificates shall not have been
surrendered for cancellation, the Class A-R Certificates shall be entitled to
all unclaimed funds and other assets that remain subject hereto.
Section 9.03 Additional Termination Requirements.
(a) In the event the Terminator exercises its purchase
option, the Trust Fund shall be terminated in accordance with the following
additional requirements, unless the Trustee have been supplied with an Opinion
of Counsel, at the expense of the Terminator, to the effect that the failure
of the Trust Fund to comply with the requirements of this Section 9.03 will
not (i) result in the imposition of taxes on "prohibited transactions" of a
REMIC, or (ii) cause any REMIC created hereunder to fail to qualify as a REMIC
at any time that any Certificates are outstanding:
(1) The Master Servicer shall establish a 90-day
liquidation period and notify the Trustee thereof, which shall in turn specify
the first day of such period in a statement attached to the Trust Fund's final
Tax Return pursuant to Treasury Regulation Section 1.860F-1. The Master
Servicer shall prepare a plan of complete liquidation and shall otherwise
satisfy all the requirements of a qualified liquidation under Section 860F of
the Code and any regulations thereunder, as evidenced by an Opinion of Counsel
delivered to the Trustee and the Depositor obtained at the expense of the
Terminator;
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(2) During such 90-day liquidation period, and at
or prior to the time of making the final payment on the Certificates, the
Master Servicer as agent of the Trustee shall sell all of the assets of the
Trust Fund to the Terminator for cash; and
(3) At the time of the making of the final payment
on the Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class A-R Certificateholders all cash on hand
(other than cash retained to meet claims) related to such Class of
Certificates, and the Trust Fund shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Master Servicer to specify the 90-day liquidation
period for the Trust Fund, which authorization shall be binding upon all
successor Certificateholders. The Trustee shall attach a statement to the
final federal income tax return for each of any REMIC created hereunder
stating that pursuant to Treasury Regulation Section 1.860F-1, the first day
of the 90-day liquidation period for each the REMIC was the date on which the
Trustee sold the assets of the Trust Fund to the Terminator.
(c) The Trustee as agent for each REMIC created hereunder
hereby agrees to adopt and sign such a plan of complete liquidation upon the
written request of the Master Servicer, and the receipt of the Opinion of
Counsel referred to in Section 9.03(a)(1), and together with the Holders of
the Class A-R Certificates agree to take such other action in connection
therewith as may be reasonably requested by the Terminator.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment.
This Agreement may be amended from time to time by the
Depositor, the Master Servicer, the Sellers the Co-Trustee and the Trustee
with the consent of the NIM Insurer, without the consent of any of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, to conform this Agreement to the Prospectus Supplement, or
to make such other provisions with respect to matters or questions arising
under this Agreement, as shall not be inconsistent with any other provisions
herein if such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any
Certificateholder; provided that any such amendment shall be deemed not to
adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal
of the respective ratings then assigned to the Certificates, it being
understood and agreed that any such letter in and of itself will not represent
a determination as to the materiality of any such amendment and will represent
a determination only as to the credit issues affecting any such rating. Any
amendment described above, made solely to conform this Agreement to the
Prospectus Supplement shall be deemed not to adversely affect in any material
respect the interests of the Certificateholders. Notwithstanding the
foregoing, no amendment that significantly changes the permitted activities of
the trust created by this Agreement may be made without the consent of
Certificateholders
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representing not less than 51% of the Voting Rights of each Class of
Certificates affected by such amendment.
The Trustee, the Co-Trustee, the Depositor, the Master
Servicer and the Sellers with the consent of the NIM Insurer may also at any
time and from time to time amend this Agreement, without the consent of the
Certificateholders, to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the qualification
of the Trust Fund as a REMIC under the Code or to avoid or minimize the risk
of the imposition of any tax on the Trust Fund pursuant to the Code that would
be a claim against the Trust Fund at any time prior to the final redemption of
the Certificates, provided that the Trustee have been provided an Opinion of
Counsel, which opinion shall be an expense of the party requesting such
opinion but in any case shall not be an expense of the Trustee, to the effect
that such action is necessary or appropriate to maintain such qualification or
to avoid or minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Sellers, the Co-Trustee and the Trustee
with the consent of the NIM Insurer and the Holders of each Class of
Certificates affected thereby evidencing not less than 51% of the Voting
Rights of such Class for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, payments required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in
a manner other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing 66% or more of the Voting Rights of such
Class, or (iii) reduce the aforesaid percentages of Certificates the Holders
of which are required to consent to any such amendment without the consent of
the Holders of all such Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement,
Trustee and the NIM Insurer shall not consent to any amendment to this
Agreement unless each shall have first received an Opinion of Counsel
satisfactory to the Trustee and the NIM Insurer, which opinion shall be an
expense of the party requesting such amendment but in any case shall not be an
expense of the Trustee or the NIM Insurer, to the effect that such amendment
will not cause the imposition of any tax on the Trust Fund or the
Certificateholders or cause any REMIC formed hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this
Agreement requiring the consent of Certificateholders, the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
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Nothing in this Agreement shall require the Trustee to enter
into an amendment without receiving an Opinion of Counsel, reasonably
satisfactory to the Trustee and the NIM Insurer that (i) such amendment is
permitted and is not prohibited by this Agreement and that all requirements
for amending this Agreement have been complied with; and (ii) either (A) the
amendment does not adversely affect in any material respect the interests of
any Certificateholder or (B) the conclusion set forth in the immediately
preceding clause (A) is not required to be reached pursuant to this Section
10.01.
Section 10.02 Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other
comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office
or elsewhere, such recordation to be effected by the Master Servicer at its
expense.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 10.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.04 Intention of Parties.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Notes, Mortgages, assignments of Mortgages, title
insurance policies and any modifications, extensions and/or assumption
agreements and private mortgage insurance policies relating to the Mortgage
Loans by the Depositor to the Trustee be, and be construed as, an absolute
sale thereof to the Trustee. It is, further, not the intention of the parties
that such conveyance be deemed a pledge thereof by the Depositor to the
Trustee. However, in the event that, notwithstanding the intent of the
parties, such assets are held to be the property of the Depositor, or if for
any other reason this Agreement is held or deemed to create a security
interest in such assets, then (i) this Agreement shall be deemed to be a
security agreement (within the meaning of the Uniform Commercial Code of the
State of New York) with respect to all such assets and security interests and
(ii) the conveyance provided for in this Agreement shall be deemed to be an
assignment and a grant pursuant to the terms of this Agreement by the
Depositor to the Trustee, for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders and
the NIM Insurer shall, to the extent consistent with this Agreement, take such
actions as may be necessary to ensure
142
that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for
the benefit of the Certificateholders.
Section 10.05 Notices.
(a) The Trustee shall use its best efforts to promptly
provide notice to each Rating Agency with respect to each of the following of
which it has actual knowledge:
(1) Any material change or amendment to this Agreement;
(2) The occurrence of any Event of Default that has not
been cured;
(3) The resignation or termination of the Master Servicer
or the Trustee and the appointment of any successor;
(4) The repurchase or substitution of Mortgage Loans
pursuant to Sections 2.02, 2.03, 2.04 and 3.12; and
(5) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each
Rating Agency copies of the following:
(6) Each report to Certificateholders described in Section
4.05;
(7) Each annual statement as to compliance described in
Section 3.17; and
(8) Each annual independent public accountants' servicing
report described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when sent by facsimile
transmission, first class mail or delivered to (i) in the case of the
Depositor, CWABS, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
facsimile number: (000) 000-0000, Attention: Xxxxx X. Xxxxxxx, or such other
address as may be hereafter furnished to the Sellers, the Master Servicer and
the Trustee by the Depositor in writing; (ii) in the case of CHL, Countrywide
Home Loans, Inc., 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile
number (000) 000-0000, Attention: Xxxxx X. Xxxxxxx, or such other address as
may be hereafter furnished to the Depositor, the Master Servicer and the
Trustee by the Sellers in writing; (iii) in the case of the Liquidity Trust,
Countrywide LFT LLC, 0000 Xxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile
number (000) 000-0000, Attention: Xxxx Xxx, or such other address as may be
hereafter furnished to the Depositor, the Master Servicer and the Trustee by
the Sellers in writing; (iv) in the case of the Master Servicer, Countrywide
Home Loans Servicing LP, 0000 Xxxxxxxxx Xxxxx, Xxxxx, Xxxxx 00000, facsimile
number (000) 000-0000, Attention: Xxxx Xxxx or such other address as may
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be hereafter furnished to the Depositor, the Sellers and the Trustee by the
Master Servicer in writing; (v) in the case of the Trustee, The Bank of New
York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust
MBS Administration, CWABS, Series 2004-5, or such other address as the Trustee
may hereafter furnish to the Depositor or the Master Servicer; ; (vi) in the
case of the Co-Trustee, BNY Western Trust Company, a subsidiary of The Bank of
New York Company, Inc., 000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx, 00000, Attention: MBS Support Services, or such other address as
the Co-Trustee may be hereafter furnished to the Depositor, the Master
Servicer and the Trustee; and (vii) in the case of the Rating Agencies, (x)
Xxxxx'x Investors Service, Inc., Attention: ABS Monitoring Department, 00
Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, (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
(z) Fitch Ratings, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. Notices
to Certificateholders shall be deemed given when mailed, first postage
prepaid, to their respective addresses appearing in the Certificate Register.
Section 10.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions
or terms of this Agreement shall be for any reason whatsoever held invalid,
then such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of the
Holders thereof.
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
144
Trustee a written notice of an Event of Default and of the continuance
thereof, as hereinbefore provided, the Holders of Certificates evidencing not
less than 25% of the Voting Rights evidenced by the Certificates shall also
have made written request to the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section 10.08, each and every Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Section 10.09 Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice,
it will permit any representative of the Depositor, either Seller, the NIM
Insurer or the Trustee during the Master Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Master Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor, a Seller, the NIM Insurer or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees and independent public accountants
(and by this provision the Master Servicer hereby authorizes such accountants
to discuss with such representative such affairs, finances and accounts), all
at such reasonable times and as often as may be reasonably requested. Any
out-of-pocket expense incident to the exercise by the Depositor, either
Seller, the NIM Insurer or the Trustee of any right under this Section 10.09
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:
145
(1) the notes certain payments on which are guaranteed by
the NIM Insurer remain outstanding or
(2) the NIM Insurer is owed amounts paid by it with
respect to that guaranty.
(b) The rights of the NIM Insurer under this Agreement are
exercisable by the NIM Insurer only so long as no default by the NIM Insurer
under its guaranty of certain payments under notes backed principally by the
Class C and Class P Certificates has occurred and is continuing. If the NIM
Insurer is the subject of any insolvency proceeding, the rights of the NIM
Insurer under this Agreement will be exercisable by the NIM Insurer only so
long as:
(1) the obligations of the NIM Insurer under its guaranty
of notes backed principally by the Class C and Class P
Certificates have not been disavowed and
(2) the Seller and the Trustee have received reasonable
assurances that the NIM Insurer will be able to satisfy its
obligations under its guaranty of notes backed principally by
the Class C or Class P Certificates.
(c) The NIM Insurer is a third party beneficiary of this
Agreement to the same extent as if it were a party to this Agreement and may
enforce any of those rights under this Agreement.
(d) A copy of any documents of any nature required by this
Agreement to be delivered by the Trustee, or to the Trustee or the Rating
Agencies, shall in each case at the same time also be delivered to the NIM
Insurer. Any notices required to be given by the Trustee, or to the Trustee or
the Rating Agencies, shall in each case at the same time also be given to the
NIM Insurer.
(e) Anything in this Agreement that is conditioned on not
resulting in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies shall also be conditioned on not resulting
in the downgrading or withdrawal of the ratings then assigned by the Rating
Agencies to the notes backed principally by the Class C and Class P
Certificate.
146
IN WITNESS WHEREOF, the parties hereto have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
CWABS, INC.,
as Depositor
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.,
as Seller
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
COUNTRYWIDE LFT LLC,
as Seller
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
COUNTRYWIDE HOME LOANS SERVICING LP,
as Master Servicer
By: COUNTRYWIDE GP, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
BNY WESTERN TRUST COMPANY,
as Co-Trustee
By: /s/ Xxxxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Vice President
THE BANK OF NEW YORK
(solely with respect to its obligations under
Section 4.01(d))
By: /s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 27th day of May, 2004, before me, a notary public in
and for said State, appeared Xxxxx Xxxxxxx, personally known to me on the
basis of satisfactory evidence to be the Executive Vice President of
Countrywide Home Loans, Inc., one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
----------------------------------------------
Notary Public
[Notarial Seal]
Xxxxxx Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
Comm. Expires Oct. 15, 0000
XXXXX XX XXXXXXXXXX )
) ss.:
COUNTY OF LOS ANGELES )
On this 27th day of May, 2004, before me, a notary public in
and for said State, appeared Xxxxx Xxxxxxx, personally known to me on the
basis of satisfactory evidence to be the Senior Vice President of Countrywide
GP, Inc., the parent company of Countrywide Home Loans Servicing LP, one of
the organizations that executed the within instrument, and also known to me to
be the person who executed it on behalf of such limited partnership and
acknowledged to me that such limited partnership executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
----------------------------------------------
Notary Public
[Notarial Seal]
Xxxxxx Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
Comm. Expires Oct. 15, 0000
XXXXX XX XXXXXXXXXX )
) ss.:
COUNTY OF LOS ANGELES )
On this 27th day of May, 2004, before me, a notary public in
and for said State, appeared Xxxxx Xxxxxxx, personally known to me on the
basis of satisfactory evidence to be the Vice President of CWABS, Inc., one of
the corporations that executed the within instrument, and also known to me to
be the person who executed it on behalf of such corporation and acknowledged
to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
----------------------------------------------
Notary Public
[Notarial Seal]
Xxxxxx Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
Comm. Expires Oct. 15, 0000
XXXXX XX XXXXXXXXXX )
) ss.:
COUNTY OF LOS ANGELES )
On this 27th day of May, 2004, before me, a notary public in
and for said State, appeared Xxxxx Xxxxxxx, personally known to me on the
basis of satisfactory evidence to be the Vice President of Countrywide LFT
LLC, one of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/ Xxxxxx Xxxxxx
----------------------------------------------
Notary Public
[Notarial Seal]
Xxxxxx Xxxxxx
Commission # 1325392
Notary Public - California
Los Angeles County
Comm. Expires Oct. 15, 0000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On this 27th day of May, 2004 before me, a notary
public in and for said State, appeared Xxxxx Xxxxxxx, personally
known to me on the basis of satisfactory evidence to be a Vice
President of The Bank of New York, a New York banking corporation
that executed the within instrument, and also known to me to be the
person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/ Xxxxx Xxxx
----------------------------------------------
Notary Public
[Notarial Seal]
Xxxxx Xxxx
Notary Public
Bronx County
State of New York
Registration #01BA6031258
Expires 09/27/2005
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On this 27th day of May, 2004 before me, a notary
public in and for said State, appeared Xxxxxxxxx Xxxxxx, personally
known to me on the basis of satisfactory evidence to be a Vice
President of BNY Western Trust Company, one of the corporations that
executed the within instrument, and also known to me to be the person
who executed it on behalf of such corporation and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/ Xxxxxxxx X. Xxxxxx
----------------------------------------------
Notary Public
[Notarial Seal]
Xxxxxxxx X. Xxxxxx
Commission # 1389902
Notary Public - California
Los Angeles County
Comm. Expires Dec. 13, 0000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On this 27th day of May, 2004 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 Xxxxx
----------------------------------------------
Notary Public
[Notarial Seal]
Xxxxxx Xxxxx
Notary Public, State of New York
No. 00-0000000 Qualified in New York County Comm. Expires June 30, 2006
Exhibit A-1
through A-16
[Exhibits A-1 through A-16 are
photocopies of such Certificates as delivered.]
[See appropriate documents delivered at closing.]
A-1
Exhibit B
Exhibit B is a photocopy
of the Class P Certificates
as delivered.
[See appropriate documents delivered at closing.]
B-1
Exhibit C
Exhibit C is a photocopy
of the Class C Certificates
as delivered.
[See appropriate documents delivered at closing.]
C-1
Exhibit D
Exhibit D is a photocopy
of the Class A-R Certificate
as delivered.
[See appropriate documents delivered at closing.]
D-1
Exhibit E
Exhibit E is a photocopy
of the Tax Matters Person Certificate (Class A-R)
as delivered.
[See appropriate documents delivered at closing.]
E-1
Exhibit F-1 and F-2
[Exhibit F-1 and F-2 are schedules of Mortgage Loans]
[Delivered to Trustee at closing and on file with the Trustee.]
F-1
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Seller]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of May 1, 2004 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller,
Countrywide LFT LLC, as Seller, Countrywide Home Loans Servicing LP, as Master
Servicer, the undersigned, as Trustee, BNY Western Trust Company, as
Co-Trustee, the undersigned, as Trustee, hereby certifies that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed in the attached list of exceptions) the Co-Trustee
has received:
(i) the original Mortgage Note, endorsed by the applicable
Seller or the originator of such Mortgage Loan, without recourse in the
following form: "Pay to the order of , without recourse", or, if the original
Mortgage Note has been lost or destroyed and not replaced, an original lost
note affidavit from the applicable Seller, stating that the original Mortgage
Note was lost or destroyed, together with a copy of the related Mortgage Note;
and
(ii) a duly executed assignment of the Mortgage in the form
permitted by Section 2.01 of the Pooling and Servicing Agreement.
Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and related
to such Mortgage Loan.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
G-1-1
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
--------------------------------
Name:
Title:
G-1-2
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Seller]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of May 1, 2004 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller,
Countrywide LFT LLC, as Seller, Countrywide Home Loans Servicing LP, as Master
Servicer, the undersigned, as Trustee, BNY Western Trust Company, as
Co-Trustee, the undersigned, as Trustee, hereby certifies that, except as
listed in the following paragraph, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attached list of exceptions) the Co-Trustee has received:
(i) original Mortgage Note, endorsed by the applicable
Seller or the originator of such Mortgage Loan, without recourse in the
following form: "Pay to the order of _______________ without recourse", with
all intervening endorsements that show a complete chain of endorsement from
the originator to the applicable Seller, or, if the original Mortgage Note has
been lost or destroyed and not replaced, an original lost note affidavit from
the applicable Seller, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note;
(ii) the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage, [and in the case of each
Mortgage Loan that is a MERS Mortgage Loan, the original Mortgage, noting
thereon the presence of the MIN of the Mortgage Loan and language indicating
that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM Loan, with
evidence of recording indicated thereon, or a copy of the Mortgage certified
by the public recording office in which such Mortgage has been recorded];
(iii) the case of each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage to "Asset-Backed
Certificates, Series 2004-5, CWABS, Inc., by The Bank of New York, a New York
banking corporation, as trustee under the Pooling and Servicing Agreement
dated as of May 1, 2004, without recourse", or, in the case of each Mortgage
Loan with respect to property located in the State of California that is not a
MERS Mortgage Loan, a duly executed assignment of the Mortgage in blank (each
such
G-2-1
assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates);
(iv) original recorded assignment or assignments of the
Mortgage together with all interim recorded assignments of such Mortgage
[(noting the presence of a MIN in the case of each MERS Mortgage Loan)];
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any, with evidence of
recording thereon if recordation thereof is permissible under applicable law;
and
(vi) the original or duplicate original lender's title
policy or a printout of the electronic equivalent and all riders thereto or,
in the event such original title policy has not been received from the
insurer, any one of an original title binder, an original preliminary title
report or an original title commitment, or a copy thereof certified by the
title company, with the original policy of title insurance to be delivered
within one year of the Closing Date.
In the event that in connection with any Mortgage Loan that
is not a MERS Mortgage Loan the applicable Seller cannot deliver the original
recorded Mortgage or all interim recorded assignments of the Mortgage
satisfying the requirements of clause (ii), (iii) or (iv), as applicable, the
Co-Trustee has received, in lieu thereof, a true and complete copy of such
Mortgage and/or such assignment or assignments of the Mortgage, as applicable,
each certified by the applicable Seller, the applicable title company, escrow
agent or attorney, or the originator of such Mortgage Loan, as the case may
be, to be a true and complete copy of the original Mortgage or assignment of
Mortgage submitted for recording.
Based on its review and examination and only as to the
foregoing documents, (i) such documents appear regular on their face and
related to such Mortgage Loan, and (ii) the information set forth in items
(i), (iv), (v), (vi), (viii), (xi) and (xiv) of the definition of the
"Mortgage Loan Schedule" in Section 1.01 of the Pooling and Servicing
Agreement accurately reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
G-2-2
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:
G-2-3
EXHIBIT G-3
FORM OF DELAY DELIVERY CERTIFICATION
[Date]
[Depositor]
[Seller]
[Seller]
[Master Servicer]
Re: CWABS Asset-Backed Certificates, Series 0000-0
Xxxxxxxxx:
[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 May 1, 2004 (the "Pooling and Servicing Agreement") among CWABS,
Inc., as Depositor, Countrywide Home Loans, Inc., as Seller, Countrywide LFT
LLC, as Seller, Countrywide Home Loans Servicing LP, as Master Servicer, the
undersigned, as Trustee, BNY Western Trust Company, as Co-Trustee.] The
undersigned hereby certifies that as to each Delay Delivery Mortgage Loan
listed on the Schedule A attached hereto (other than any Mortgage Loan paid in
full or listed on Schedule B attached hereto) it has received:
(1) the original Mortgage Note, endorsed by the applicable
Seller or the originator of such Mortgage Loan, without recourse in the
following form: "Pay to the order of _______________ without recourse", with
all intervening endorsements that show a complete chain of endorsement from
the originator to the applicable Seller, or, if the original Mortgage Note has
been lost or destroyed and not replaced, an original lost note affidavit from
the applicable Seller, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note;
(2) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage to "Asset-Backed
Certificates, Series 2004-5, CWABS, Inc., by The Bank of New York, a New York
banking corporation, as trustee under the Pooling and Servicing Agreement
dated as of May 1, 2004, without recourse", or, in the case of each Mortgage
Loan with respect to property located in the State of California that is not a
MERS Mortgage Loan, a duly executed assignment of the Mortgage in blank (each
such assignment, when duly and validly completed, to be in recordable form and
sufficient to effect the assignment of and transfer to the assignee thereof,
under the Mortgage to which such assignment relates).
G-3-1
Based on its review and examination and only as to the
foregoing documents, such documents appear regular on their face and related
to such Mortgage Loan.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
-----------------------------------
Name:
Title:
G-3-2
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[Date]
[Depositor]
[Master Servicer]
[Seller]
Re: CWABS Asset-Backed Certificates, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement dated as of May 1, 2004 (the "Pooling and Servicing Agreement")
among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller,
Countrywide Home Loans Servicing LP, Countrywide LFT LLC, as Seller, as Master
Servicer, the undersigned, as Trustee, BNY Western Trust Company, as
Co-Trustee, the undersigned, as Trustee, hereby certifies that as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attached Document Exception Report) it has
received:
(i) the original Mortgage Note, endorsed by the applicable
Seller or the originator of such Mortgage Loan, without recourse in the
following form: "Pay to the order of _________________ without recourse", with
all intervening endorsements that show a complete chain of endorsement from
the originator to the applicable Seller, or, if the original Mortgage Note has
been lost or destroyed and not replaced, an original lost note affidavit from
the applicable Seller, stating that the original Mortgage Note was lost or
destroyed, together with a copy of the related Mortgage Note;
(ii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original recorded Mortgage, [and in the case of each
Mortgage Loan that is a MERS Mortgage Loan, the original Mortgage, noting
thereon the presence of the MIN of the Mortgage Loan and language indicating
that the Mortgage Loan is a MOM Loan if the Mortgage Loan is a MOM Loan, with
evidence of recording indicated thereon, or a copy of the Mortgage certified
by the public recording office in which such Mortgage has been recorded];
(iii) in the case of each Mortgage Loan that is not a MERS
Mortgage Loan, a duly executed assignment of the Mortgage to "Asset-Backed
Certificates, Series 2004-5, CWABS, Inc., by The Bank of New York, a New York
banking corporation, as trustee under the Pooling and Servicing Agreement
dated as of May 1, 2004, without recourse", or, in the case of each Mortgage
Loan with respect to property located in the State of California that is not a
MERS Mortgage Loan, a duly executed assignment of the Mortgage in blank (each
such assignment, when duly and validly completed, to be in recordable form and
sufficient to effect
H-1
the assignment of and transfer to the assignee thereof, under the Mortgage to
which such assignment relates);
(iv) the original recorded assignment or assignments of the
Mortgage together with all interim recorded assignments of such Mortgage
[(noting the presence of a MIN in the case of each MERS Mortgage Loan)];
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any, with evidence of
recording thereon if recordation thereof is permissible under applicable law;
and
(vi) the original or duplicate original lender's title
policy or a printout of the electronic equivalent and all riders thereto or
any one of an original title binder, an original preliminary title report or
an original title commitment, or a copy thereof certified by the title
company.
If the public recording office in which a Mortgage or
assignment thereof is recorded has retained the original of such Mortgage or
assignment, the Trustee has received, in lieu thereof, a copy of the original
Mortgage or assignment so retained, with evidence of recording thereon,
certified to be true and complete by such recording office.
Based on its review and examination and only as to the
foregoing documents, (i) such documents appear regular on their face and
related to such Mortgage Loan, and (ii) the information set forth in items
(i), (iv), (v), (vi), (viii), (xiii) and (xiv) of the definition of the
"Mortgage Loan Schedule" in Section 1.01 of the Pooling and Servicing
Agreement accurately reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any
of the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
H-2
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By:
------------------------------------
Name:
Title:
H-3
EXHIBIT I-1
TRANSFER AFFIDAVIT FOR THE CLASS A-R CERTIFICATES
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is an officer of _______________, the
proposed Transferee of an Ownership Interest in a Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, dated
as of May 1, 2004 (the "Agreement"), by and among CWABS, Inc., as depositor
(the "Depositor"), Countrywide Home Loans, Inc., as Seller, Countrywide LFT
LLC, as Seller, Countrywide Home Loans Servicing LP, as Master Servicer, BNY
Western Trust Company, as Co-Trustee, and The Bank of New York, as Trustee.
Capitalized terms used, but not defined herein or in Exhibit 1 hereto, shall
have the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is not an employee benefit plan that is
subject to Title I of ERISA or to section 4975 of the Internal Revenue Code of
1986, nor is it acting on behalf of or with plan assets of any such plan. The
Transferee is, as of the date hereof, and will be, as of the date of the
Transfer, a Permitted Transferee. The Transferee will endeavor to remain a
Permitted Transferee for so long as it retains its Ownership Interest in the
Certificate. The Transferee is acquiring its Ownership Interest in the
Certificate for its own account.
3. The Transferee has been advised of, and understands that
(i) a tax will be imposed on Transfers of the Certificate to Persons that are
not Permitted Transferees; (ii) such tax will be imposed on the transferor,
or, if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that
a tax will be imposed on a "pass-through entity" holding the Certificate if at
any time during the taxable year of the pass-through entity a Person that is
not a Permitted Transferee is the record holder of an interest in such entity.
The Transferee understands that such tax will not be imposed for any period
with respect to which the record holder furnishes to the pass-through entity
an affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
I-1-1
5. The Transferee has reviewed the provisions of Section
5.02(c) of the Agreement (attached hereto as Exhibit 2 and incorporated herein
by reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit
from any Person to whom the Transferee attempts to Transfer its Ownership
Interest in the Certificate, and in connection with any Transfer by a Person
for whom the Transferee is acting as nominee, trustee or agent, and the
Transferee will not Transfer its Ownership Interest or cause any Ownership
Interest to be Transferred to any Person that the Transferee knows is not a
Permitted Transferee. In connection with any such Transfer by the Transferee,
the Transferee agrees to deliver to the Trustee a certificate substantially in
the form set forth as Exhibit J-1 to the Agreement (a "Transferor
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect
to the Class A-R Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code
section 7701(a)(30).
10. The Transferee is aware that the Class A-R Certificates
may be "noneconomic residual interests" within the meaning of proposed
Treasury regulations promulgated pursuant to the Code and that the transferor
of a noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax. In
addition, as the holder of a noneconomic residual interest, the Transferee may
incur tax liabilities in excess of any cash flows generated by the interest
and the Transferee hereby represents that it intends to pay taxes associated
with holding the residual interest as they become due.
11. The Transferee has provided financial statements or
other financial information requested by the Transferor in connection with the
transfer of the Class A-R Certificates to permit the Transferor to assess the
financial capability of the Transferee to pay such taxes.
* * *
I-1-2
IN WITNESS WHEREOF, the Transferee has caused this instrument
to be executed on its behalf, pursuant to authority of its Board of Directors,
by its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ____ day of _____________, 20__.
[NAME OF TRANSFEREE]
By:
--------------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
-------------------------
[Assistant] Secretary
Personally appeared before me the above-named _____________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ____________ of the Transferee, and acknowledged that
he executed the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this ____ day of _______, 20__.
-------------------------------------
NOTARY PUBLIC
My Commission expires the ___ day of
, 20__.
I-1-3
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership
interest in such Certificate, including any interest in such Certificate as
the Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial.
"Permitted Transferee": Any person other than (i) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
International Organization or any agency or instrumentality of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives
described in section 521 of the Code) that is exempt from tax imposed by
Chapter 1 of the Code (including the tax imposed by section 511 of the Code on
unrelated business taxable income) on any excess inclusions (as defined in
section 860E(c)(1) of the Code) with respect to any Class A-R Certificate,
(iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) an "electing large partnership" as defined in
section 775 of the Code, (vi) a Person that is not a citizen or resident of
the United States, a corporation, partnership, or other entity (treated as a
corporation or a partnership for federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or an estate whose income from sources without the
United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have authority to control all
substantial decisions of the trustor unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
W-8ECI, and (vii) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause any REMIC formed hereunder to fail to
qualify as a REMIC at any time that any Certificates are Outstanding. The
terms "United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.
"Person": Any individual, corporation, limited liability
company, partnership, joint venture, bank, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate, including the acquisition of a
Certificate by the Depositor.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
I-1-4
Section 5.02(c) of the Agreement
(c) Each Person who has or who acquires any Ownership
Interest in a Class A-R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions, and the rights of each Person acquiring any Ownership
Interest in a Class A-R Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Class A-R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Class A-R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class A-R Certificate
unless, the Trustee shall have been furnished with an affidavit (a
"Transfer Affidavit") of the initial owner or the proposed transferee
in the form attached hereto as Exhibit I-1 or Exhibit I-2,
respectively.
(iii) Each Person holding or acquiring any Ownership
Interest in a Class A-R Certificate shall agree (A) to obtain a
Transfer Affidavit from any other Person to whom such Person attempts
to Transfer its Ownership Interest in a Class A-R Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer
of a Class A-R Certificate and (C) not to Transfer its Ownership
Interest in a Class A-R Certificate, or to cause the Transfer of an
Ownership Interest in a Class A-R Certificate to any other Person, if
it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class A-R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class A-R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Class A-R
Certificate. The Trustee shall be under no liability to any Person
for any registration of Transfer of a Class A-R Certificate that is
in fact not permitted by Section 5.02(b) and this Section 5.02(c) or
for making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit and Transferor
Certificate. The Trustee shall be entitled but not obligated to
recover from any Holder of a Class A-R Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class A-R Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee
of such Certificate.
(v) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax
I-1-5
imposed under section 860E(e) of the Code as a result of a Transfer
of an Ownership Interest in a Class A-R Certificate to any Holder who
is not a Permitted Transferee.
The restrictions on Transfers of a Class A-R Certificate set
forth in this section 5.02(c) shall cease to apply (and the applicable
portions of the legend on a Class A-R Certificate may be deleted) with respect
to Transfers occurring after delivery to the Trustee of an Opinion of Counsel,
which Opinion of Counsel shall not be an expense of the Trustee, the Sellers
or the Master Servicer to the effect that the elimination of such restrictions
will not cause any constituent REMIC of any REMIC formed hereunder to fail to
qualify as a REMIC at any time that the Certificates are outstanding or result
in the imposition of any tax on the Trust Fund, a Certificateholder or another
Person. Each Person holding or acquiring any ownership Interest in a Class A-R
Certificate hereby consents to any amendment of this Agreement that, based on
an Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to
ensure that the record ownership of, or any beneficial interest in, a Class
A-R Certificate is not transferred, directly or indirectly, to a Person that
is not a Permitted Transferee and (b) to provide for a means to compel the
Transfer of a Class A-R Certificate that is held by a Person that is not a
Permitted Transferee to a Holder that is a Permitted Transferee.
I-1-6
EXHIBIT J-1
FORM OF TRANSFEROR CERTIFICATE FOR CLASS A-R CERTIFICATES
Date:
CWABS, Inc.
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWABS, Inc., Asset Backed Certificates, Series 2004-5
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 May 1, 2004, among CWABS, Inc., as Depositor,
Countrywide Home Loans, Inc., as Seller, Countrywide LFT LLC, as Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, BNY Western Trust
Company, as Co-Trustee, and The Bank of New York, as Trustee.
Very truly yours,
-------------------------------------
Name of Transferor
By:
----------------------------------
Name:
Title:
X-0-0
XXXXXXX X-0
FORM OF TRANSFEROR CERTIFICATE FOR
PRIVATE CERTIFICATES
Date:
CWABS, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWABS, Inc. Asset-Backed Certificates, Series 2004-5,
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 May 1, 2004, among CWABS, Inc., as Depositor,
Countrywide Home Loans, Inc., as Seller, Countrywide LFT LLC, as Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, BNY Western Trust
Company, as Co-Trustee and The Bank of New York, as Trustee.
Very truly yours,
-------------------------------------
Name of Transferor
By:
----------------------------------
Name:
Title:
J-2-1
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
Date:
CWABS, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWABS, Inc. Asset-Backed Certificates, Series 2004-5,
Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, [(b) we are an "accredited investor," as defined in Regulation D under
the Act, and have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d)][(b)] either (i)
we are not an employee benefit plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended, or a plan or arrangement that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan or arrangement or using the assets of
any such plan or arrangement to effect such acquisition or (ii) if the
Certificates have been the subject of an ERISA-Qualifying Underwriting, we are
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, (e) we are acquiring the Certificates for
investment for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (g) below),
(f) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, or taken any other action which would
result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale,
transfer or other disposition is made pursuant to an effective registration
statement under the Act or is exempt from such registration
K-1
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 May 1, 2004, among CWABS, Inc., as Depositor,
Countrywide Home Loans, Inc., as Seller, Countrywide LFT LLC, as Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, BNY Western Trust
Company, as Co-Trustee, and The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By:
------------------------------
Authorized Officer
K-2
EXHIBIT L
FORM OF RULE 144A LETTER
Date:
CWABS, Inc.,
as Depositor
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The Bank of New York
as Trustee
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: CWABS, Inc. Asset-Backed Certificates, Series 2004-5,
Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) either (i) we are
not an employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, or a plan or arrangement that is subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, nor are we
acting on behalf of any such plan or arrangement or using the assets of any
such plan or arrangement to effect such acquisition or (ii) if the
Certificates have been the subject of an ERISA-Qualifying Underwriting, we are
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, (e) we have not, nor has anyone acting on
our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security
to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Certificates, any interest in the Certificates or any other
similar security from, or otherwise approached or negotiated with respect to
the Certificates, any interest in the Certificates or any other similar
security with, any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other
action, that would constitute a distribution of the Certificates under the
Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto,
L-1
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 May 1, 2004, among CWABS, Inc., as Depositor,
Countrywide Home Loans, Inc., as Seller, Countrywide LFT LLC, as Seller,
Countrywide Home Loans Servicing LP, as Master Servicer, BNY Western Trust
Company, as Co-Trustee and The Bank of New York, as Trustee.
Very truly yours,
----------------------------------
Name of Transferee
By:
-------------------------------
Authorized Officer
L-2
ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive
officer of the Buyer.
In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A")
because (i) the Buyer owned and/or invested on a discretionary
basis either at least $100,000 in securities or, if Buyer is a
dealer, Buyer must own and/or invest on a discretionary basis at
least $10,000,000 in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A and (ii) the Buyer satisfies the criteria in the
category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking commission
or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which
is supervised and examined by a State or Federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing
of insurance or the reinsuring of
L-3
risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the
District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940.
The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities
that are part of an unsold allotment to or subscription by the
Buyer, if the Buyer is a dealer, (iii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency,
interest rate and commodity swaps.
For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer
used the cost of such securities to the Buyer and did not
include any of the securities referred to in the preceding
paragraph, except (i) where the Buyer reports its securities
holdings in its financial statements on the basis of their
market value, and (ii) no current information with respect to
the cost of those securities has been published. If clause (ii)
in the preceding sentence applies, the securities may be valued
at market. Further, in determining such aggregate amount, the
Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the
Buyer in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments
of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise
and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to
the Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer
may be in reliance on Rule 144A.
L-4
Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is
made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the
Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if
the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated annual
financial statements promptly after they become available.
------------------------------------------
Print Name of Buyer
By:
--------------------------------------
Name:
Title:
Date:
------------------------------------
L-5
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A
under the Securities Act of 1933, as amended ("Rule 144A") because Buyer is
part of a Family of Investment Companies (as defined below), is such an
officer of the Adviser.
In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment
Company Act of 1940, as amended and (ii) as marked below, the
Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the
amount of securities owned by the Buyer or the Buyer's Family of
Investment Companies, the cost of such securities was used,
except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial
statements on the basis of their market value, and (ii) no
current information with respect to the cost of those securities
has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market.
___ The Buyer owned $ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the
same parent or because one investment adviser is a majority owned
subsidiary of the other).
The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's
Family of Investment Companies, (ii) securities issued or guaranteed
by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
L-6
agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
The Buyer is familiar with Rule 144A and under-stands that the parties
listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer will be
in reliance on Rule 144A. In addition, the Buyer will only purchase
for the Buyer's own account.
Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to
which this certification relates of any changes in the information
and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
-------------------------------------------
Print Name of Buyer or Adviser
By:
----------------------------------------
Name:
Title:
IF AN ADVISER:
-------------------------------------------
Print Name of Buyer
Date:
--------------------------------------
L-7
EXHIBIT M
[Reserved]
M-1
EXHIBIT N
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full, Repurchased or Replaced]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
ASSET-BACKED CERTIFICATES,
Series 2004-5
__________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
[ALL PAYMENTS OF PRINCIPAL AND INTEREST HAVE BEEN MADE.] [THE [PURCHASE PRICE]
[MORTGAGE LOAN REPURCHASE PRICE] FOR SUCH MORTGAGE LOANS HAS BEEN PAID.] [THE
MORTGAGE LOANS HAVE BEEN LIQUIDATED AND THE RELATED [INSURANCE PROCEEDS]
[LIQUIDATION PROCEEDS] HAVE BEEN DEPOSITED PURSUANT TO SECTION 3.13 OF THE
POOLING AND SERVICING AGREEMENT.] [A REPLACEMENT MORTGAGE LOAN HAS BEEN
DELIVERED TO THE TRUSTEE IN THE MANNER AND OTHERWISE IN ACCORDANCE WITH THE
CONDITIONS SET FORTH IN SECTIONS 2.02 AND 2.03 OF THE POOLING AND SERVICING
AGREEMENT.]
LOAN NUMBER:_______________ BORROWER'S NAME:_____________
COUNTY:____________________
[For Substitution or Repurchase Only: The Master Servicer certifies that [an]
[no] opinion is required by Section 2.05 [and is attached hereto].]
I HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
THAT ARE REQUIRED TO BE DEPOSITED IN THE CERTIFICATE ACCOUNT PURSUANT TO
SECTION 3.05 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
____________ _____________________
DATED:____________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
N-1
Exhibit O
Exhibit O is a photocopy
of the Depository Agreement
as delivered.
[See appropriate documents delivered at closing.]
O-1
EXHIBIT P
[Reserved]
P-1
EXHIBIT Q-1
FORM OF CLASS 1-A CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-1
EXHIBIT Q-2
FORM OF CLASS 2-A CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-2-1
EXHIBIT Q-3
FORM OF CLASS 3-A CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-3-1
EXHIBIT Q-4
FORM OF CLASS 4-A CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-4-1
EXHIBIT Q-5
FORM OF CLASS A AND SUBORDINATE CORRIDOR CONTRACT
[See appropriate documents delivered at closing.]
Q-5-1
EXHIBIT R-1
[Reserved]
X-0
XXXXXXX X-0
[Reserved]
R-2
EXHIBIT S
FORM OF CORRIDOR CONTRACT ASSIGNMENT AGREEMENT
[see document delivered at closing]
S-1
EXHIBIT T
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
ASSET-BACKED CERTIFICATES,
Series 2004-5
[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 May 1, 2004, (the "Pooling and Servicing Agreement") among CWABS,
Inc., as Depositor, Countrywide Home Loans, Inc., as Seller, Countrywide LFT
LLC, as Seller, Countrywide Home Loans Servicing LP, as Master Servicer, BNY
Western Trust Company, as Co-Trustee, and The Bank of New York, as Trustee.
Capitalized terms used herein shall have the meanings ascribed to such terms
in the Pooling and Servicing Agreement.
__________________ hereby certifies that he/she is a
Servicing Officer, holding the office set forth beneath his/her name and
hereby further certifies as follows:
With respect to the Distribution Date in _________ 20[ ] and
each Mortgage Loan set forth in the attached schedule:
1. A Principal Prepayment in full or in part was received
during the related Prepayment Period;
2. Any Prepayment Charge due under the terms of the Mortgage
Note with respect to such Principal Prepayment was or was not, as indicated on
the attached schedule using "Yes" or "No", received from the Mortgagor and
deposited in the Certificate Account;
3. As to each Mortgage Loan set forth on the attached
schedule for which all or part of the Prepayment Charge required in connection
with the Principal Prepayment was waived by the Master Servicer, such waiver
was, as indicated on the attached schedule, based upon:
(i) the Master Servicer's determination that such
waiver would maximize recovery of Liquidation Proceeds for such
Mortgage Loan, taking into account the value of such Prepayment
Charge, or
T-1
(ii)(A) the enforceability thereof is limited (1)
by bankruptcy, insolvency, moratorium, receivership, or other similar
law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or prohibited
by applicable law; and
4. We certify that all amounts due in connection with the
waiver of a Prepayment Charge inconsistent with clause 3 above which are
required to be deposited by the 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
T-2
SCHEDULE OF MORTGAGE LOANS FOR WHICH A PREPAYMENT WAS RECEIVED
DURING THE RELATED PREPAYMENT PERIOD
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Loan Number Clause 2: Yes/No Clause 3: (i) or (ii)
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T-3
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE AND PREPAYMENT CHARGE SUMMARY
[Delivered to Trustee at closing and on file with the Trustee.]
S-I-1
