ACE SECURITIES CORP.
Depositor
OCWEN FEDERAL BANK FSB
a Servicer
WELLS FARGO BANK, N.A.
Master Servicer and Securities Administrator
HSBC BANK USA
Trustee
______________________________________
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2004
______________________________________
ACE Securities Corp. Home Equity Loan Trust, Series 2004-HE1
Asset Backed Pass-Through Certificates
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms................................................-4-
Accepted Master Servicing Practices..........................-4-
Accepted Servicing Practices.................................-4-
Account ....................................................-4-
Accrued Certificate Interest.................................-4-
Adjustable Rate Mortgage Loan................................-4-
Adjustment Date..............................................-5-
Administration Fees..........................................-5-
Administration Fee Rate......................................-5-
Advance Facility.............................................-5-
Affiliate....................................................-5-
Aggregate Loss Severity Percentage...........................-5-
Agreement....................................................-5-
Amounts Held for Future Distribution.........................-5-
Assignment...................................................-5-
Authorized Officers..........................................-5-
Available Distribution Amount................................-5-
Balloon Mortgage Loan........................................-6-
Balloon Payment..............................................-6-
Bankruptcy Code..............................................-6-
Book-Entry Certificate.......................................-6-
Book-Entry Custodian.........................................-6-
Business Day.................................................-6-
Cap Contracts................................................-6-
Cash-Out Refinancing.........................................-7-
Certificate..................................................-7-
Certificate Factor...........................................-7-
Certificate Margin...........................................-7-
Certificateholder" or "Holder................................-8-
Certificate Owner............................................-9-
Certificate Principal Balance................................-9-
Certificate Register.........................................-9-
Class ....................................................-9-
Class A Certificate..........................................-9-
Class A Principal Distribution Amount........................-9-
Class A-1/A-3 Allocation Percentage..........................-9-
Class A-1 Certificate........................................-9-
Class A-1/A-3 Principal Distribution Amount..................-9-
Class A-2 Allocation Percentage.............................-10-
Class A-2 Certificate"......................................-10-
Class A-2A Certificate......................................-10-
-ii-
Class A-2B Certificate......................................-10-
Class A-2 Principal Distribution Amount.....................-10-
Class A-3 Certificate.......................................-10-
Class B Certificate.........................................-10-
Class B Principal Distribution Amount.......................-11-
Class CE Certificate........................................-11-
Class M Certificates........................................-11-
Class M-1 Certificate.......................................-11-
Class M-1 Principal Distribution Amount.....................-11-
Class M-2 Certificate.......................................-12-
Class M-2 Principal Distribution Amount.....................-12-
Class M-3 Certificate.......................................-12-
Class M-3 Principal Distribution Amount.....................-12-
Class M-4 Certificate.......................................-13-
Class M-4 Principal Distribution Amount.....................-13-
Class M-5 Certificate.......................................-13-
Class M-5 Principal Distribution Amount.....................-13-
Class M-6 Certificate.......................................-14-
Class M-6 Principal Distribution Amount.....................-14-
Class P Certificate.........................................-14-
Class R Certificates........................................-14-
Class R-I Interest..........................................-15-
Class R-II Interest.........................................-15-
Closing Date................................................-15-
Code ...................................................-15-
Collection Account..........................................-15-
Commission..................................................-15-
Corporate Trust Office......................................-15-
Corresponding Certificate...................................-16-
Credit Enhancement Percentage...............................-16-
Credit Risk Management Agreements...........................-16-
Credit Risk Management Fee..................................-16-
Credit Risk Management Fee Rate.............................-16-
Credit Risk Manager.........................................-16-
Custodial Agreement.........................................-16-
Custodian...................................................-16-
Cut-off Date................................................-17-
Debt Service Reduction......................................-17-
Deficient Valuation.........................................-17-
Definitive Certificates.....................................-17-
Deleted Mortgage Loan.......................................-17-
Delinquency Percentage......................................-17-
Depositor...................................................-17-
Depository..................................................-17-
Depository Institution......................................-17-
Depository Participant......................................-18-
-iii-
Determination Date..........................................-18-
Directly Operate............................................-18-
Disqualified Organization...................................-18-
Distribution Account........................................-18-
Distribution Date...........................................-18-
Due Date ...................................................-19-
Due Period..................................................-19-
Eligible Account............................................-19-
ERISA ...................................................-19-
Estate in Real Property.....................................-19-
Excess Liquidation Proceeds.................................-19-
Expense Adjusted Mortgage Rate..............................-19-
Extraordinary Trust Fund Expense............................-19-
Extra Principal Distribution Amount.........................-19-
Fannie Mae..................................................-19-
FDIC ...................................................-19-
Final Recovery Determination................................-19-
Fitch ...................................................-20-
Freddie Mac.................................................-20-
Gross Margin................................................-20-
Group I Interest Remittance Amount..........................-20-
Group I Mortgage Loans......................................-20-
Group I Principal Distribution Amount.......................-20-
Group I Principal Remittance Amount.........................-20-
Group II Interest Remittance Amount........................-20-
Group II Mortgage Loans.....................................-21-
Group II Principal Distribution Amount......................-21-
Group II Principal Remittance Amount........................-21-
Independent.................................................-21-
Independent Contractor......................................-21-
Index ...................................................-22-
Institutional Accredited Investor...........................-22-
Insurance Proceeds..........................................-22-
Interest Accrual Period.....................................-22-
Interest Carry Forward Amount...............................-22-
Interest Determination Date.................................-22-
Interest Distribution Amount................................-23-
Interest Remittance Amount..................................-23-
Late Collections............................................-23-
Liquidation Event...........................................-23-
Liquidation Proceeds........................................-23-
Loan-to-Value Ratio.........................................-23-
London Business Day.........................................-23-
Loss Severity Percentage....................................-23-
Marker Rate.................................................-24-
Master Servicer.............................................-24-
-iv-
Master Servicer Certification...............................-24-
Master Servicer Event of Default............................-24-
Master Servicer Fee Rate....................................-24-
Master Servicing Fee........................................-24-
Maximum I-LTZZ Uncertificated Interest Deferral Amount......-24-
Maximum Mortgage Rate.......................................-25-
MERS ...................................................-25-
MERS(R)System...............................................-25-
Mezzanine Certificate.......................................-25-
MIN ...................................................-25-
Minimum Mortgage Rate.......................................-25-
MOM Loan ...................................................-25-
Monthly Payment.............................................-25-
Moody's ...................................................-25-
Mortgage ...................................................-26-
Mortgage File...............................................-26-
Mortgage Loan...............................................-26-
Mortgage Loan Documents.....................................-26-
Mortgage Loan Purchase Agreement............................-26-
Mortgage Loan Schedule......................................-26-
Mortgage Note...............................................-28-
Mortgage Rate...............................................-28-
Mortgaged Property..........................................-28-
Mortgagor...................................................-28-
Net Monthly Excess Cashflow.................................-29-
Net Mortgage Rate...........................................-29-
Net WAC Pass-Through Rate...................................-29-
Net WAC Rate Carryover Amount...............................-30-
New Lease...................................................-30-
Nonrecoverable P&I Advance..................................-30-
Nonrecoverable Servicing Advance............................-30-
Non-United States Person....................................-31-
Notional Amount.............................................-31-
Ocwen ...................................................-31-
Ocwen Mortgage Loans........................................-31-
Offered Certificates........................................-31-
Officer's Certificate.......................................-31-
One-Month LIBOR.............................................-31-
One-Month LIBOR Pass-Through Rate...........................-32-
Opinion of Counsel..........................................-33-
Optional Termination Date...................................-33-
Originators.................................................-33-
Overcollateralization Amount................................-33-
Overcollateralization Increase Amount.......................-33-
Overcollateralization Reduction Amount......................-33-
Ownership Interest..........................................-33-
-v-
P&I Advance.................................................-33-
Pass-Through Rate...........................................-34-
Percentage Interest.........................................-35-
Periodic Rate Cap...........................................-35-
Permitted Investments.......................................-36-
Permitted Transferee........................................-37-
Person ...................................................-37-
Plan ...................................................-37-
Prepayment Assumption.......................................-37-
Prepayment Charge...........................................-37-
Prepayment Charge Schedule..................................-37-
Prepayment Interest Excess..................................-38-
Prepayment Interest Shortfall...............................-38-
Prepayment Period...........................................-38-
Principal Prepayment........................................-39-
Principal Distribution Amount...............................-39-
Principal Remittance Amount.................................-39-
Purchase Price..............................................-39-
QIB ...................................................-39-
Qualified Substitute Mortgage Loan..........................-39-
Rate/Term Refinancing.......................................-40-
Rating Agency or Rating Agencies............................-40-
Realized Loss...............................................-40-
Record Date.................................................-41-
Reference Banks.............................................-42-
Refinanced Mortgage Loan....................................-42-
Regular Certificate.........................................-42-
Regular Interest............................................-42-
Regulation S Temporary Global Certificate...................-42-
Regulation S Permanent Global Certificate...................-42-
Release Date................................................-42-
Relief Act..................................................-42-
Relief Act Interest Shortfall...............................-42-
REMIC ...................................................-42-
REMIC I ...................................................-42-
REMIC I Interest Loss Allocation Amount.....................-43-
REMIC I Marker Allocation Percentage........................-43-
REMIC I Overcollateralization Amount........................-43-
REMIC I Principal Loss Allocation Amount....................-43-
REMIC I Regular Interest....................................-43-
REMIC I Regular Interest I-LTAA.............................-44-
REMIC I Regular Interest I-LTA1.............................-44-
REMIC I Regular Interest I-LTA2A............................-44-
REMIC I Regular Interest I-LTA2B............................-44-
REMIC I Regular Interest I-LTA3.............................-44-
REMIC I Regular Interest I-LTB..............................-44-
-vi-
REMIC I Regular Interest I-LTM1.............................-45-
REMIC I Regular Interest I-LTM2.............................-45-
REMIC I Regular Interest I-LTM3.............................-45-
REMIC I Regular Interest I-LTM4.............................-45-
REMIC I Regular Interest I-LTM5.............................-45-
REMIC I Regular Interest I-LTM6.............................-45-
REMIC I Regular Interest I-LTP..............................-45-
REMIC I Regular Interest I-LTXX.............................-46-
REMIC I Regular Interest I-LTZZ.............................-46-
REMIC I Regular Interest I-LT1A.............................-46-
REMIC I Regular Interest I-LT1B.............................-46-
REMIC I Regular Interest I-LT2A.............................-46-
REMIC I Regular Interest I-LT2B.............................-46-
REMIC I Remittance Rate.....................................-46-
REMIC I Sub WAC Allocation Percentage.......................-47-
REMIC I Subordinated Balance Ratio..........................-47-
REMIC I Required Overcollateralization Amount...............-47-
REMIC II ...................................................-47-
REMIC II Certificate........................................-47-
REMIC II Certificateholder..................................-47-
REMIC Provisions............................................-47-
Remittance Report...........................................-47-
Rents from Real Property....................................-47-
REO Account.................................................-48-
REO Disposition.............................................-48-
REO Imputed Interest........................................-48-
REO Principal Amortization..................................-48-
REO Property................................................-48-
Required Overcollateralization Amount.......................-48-
Reserve Fund................................................-48-
Reserve Interest Rate.......................................-48-
Residential Dwelling........................................-49-
Residual Certificate........................................-49-
Residual Interest...........................................-49-
Responsible Officer.........................................-49-
Rule 144A...................................................-49-
S&P ...................................................-49-
Scheduled Principal Balance.................................-49-
Securities Act..............................................-49-
Securities Administrator....................................-50-
Seller ...................................................-50-
Senior Interest Distribution Amount.........................-50-
Servicer ...................................................-50-
Servicer Event of Default...................................-50-
Servicer Remittance Date....................................-50-
Servicer Report.............................................-50-
-vii-
Servicing Advances..........................................-50-
Servicing Fee...............................................-50-
Servicing Fee Rate..........................................-51-
Servicing Officer...........................................-51-
Single Certificate..........................................-51-
Startup Day.................................................-51-
Stated Principal Balance....................................-51-
Stepdown Date...............................................-52-
Subsequent Recoveries.......................................-52-
Sub-Servicer................................................-52-
Sub-Servicing Agreement.....................................-52-
Substitution Shortfall Amount...............................-52-
Tax Returns.................................................-52-
Telerate Page 3750..........................................-52-
Termination Price...........................................-52-
Terminator..................................................-52-
Transfer ...................................................-53-
Transferee..................................................-53-
Transferor..................................................-53-
Trigger Event...............................................-53-
Trust ...................................................-53-
Trust Fund..................................................-53-
Trust REMIC.................................................-53-
Trustee ...................................................-53-
Uncertificated Balance......................................-53-
Uncertificated Interest.....................................-54-
Uninsured Cause.............................................-54-
United States Person........................................-54-
Value ...................................................-54-
Voting Rights...............................................-55-
Wells Fargo.................................................-55-
WFHM ...................................................-55-
WFHM Assignment Agreement...................................-55-
WFHM Mortgage Loans.........................................-55-
WFHM Servicing Agreement....................................-55-
SECTION 1.02. Allocation of Certain Interest Shortfalls...................-55-
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
SECTION 2.01. Conveyance of the Mortgage Loans............................-57-
SECTION 2.02. Acceptance of REMIC I by Trustee............................-58-
SECTION 2.03. Repurchase or Substitution of Mortgage Loans................-58-
SECTION 2.04. Representations and Warranties of the Master Servicer.......-61-
-viii-
SECTION 2.05. Representations, Warranties and Covenants of Ocwen..........-62-
SECTION 2.06. Issuance of the REMIC I Regular Interests and the Class
R-I Interest................................................-64-
SECTION 2.07. Conveyance of the REMIC I Regular Interests; Acceptance of
REMIC I by the Trustee......................................-64-
SECTION 2.08. Issuance of Class R Certificates............................-65-
SECTION 2.09. Establishment of the Trust..................................-65-
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE OCWEN MORTGAGE LOANS; ACCOUNTS
SECTION 3.01. Ocwen to Act as a Servicer..................................-66-
SECTION 3.02. Sub-Servicing Agreements Between Ocwen and Sub-Servicers....-67-
SECTION 3.03. Successor Sub-Servicers.....................................-68-
SECTION 3.04. No Contractual Relationship Between Sub-Servicer, Trustee
or the Certificateholders...................................-68-
SECTION 3.05. Assumption or Termination of Sub-Servicing Agreement by
Successor Servicer..........................................-68-
SECTION 3.06. Collection of Certain Mortgage Loan Payments................-69-
SECTION 3.07. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts..........................................-69-
SECTION 3.08. Collection Account and Distribution Account.................-70-
SECTION 3.09. Withdrawals from the Collection Account and Distribution
Account.....................................................-73-
SECTION 3.10. Investment of Funds in the Investment Accounts..............-74-
SECTION 3.11. Maintenance of Hazard Insurance, Errors and Omissions
and Fidelity Coverage.......................................-76-
SECTION 3.12. Enforcement of Due-on-Sale Clauses; Assumption Agreements...-77-
SECTION 3.13. Realization Upon Defaulted Mortgage Loans...................-78-
SECTION 3.14. Trustee to Cooperate; Release of Mortgage Files.............-80-
SECTION 3.15. Servicing Compensation......................................-81-
SECTION 3.16. Collection Account Statements...............................-82-
SECTION 3.17. Statement as to Compliance..................................-82-
SECTION 3.18. Independent Public Accountants' Servicing Report............-82-
SECTION 3.19 Annual Certification........................................-83-
SECTION 3.20. Access to Certain Documentation.............................-83-
SECTION 3.21. Title, Management and Disposition of REO Property...........-84-
SECTION 3.22. Obligations of Ocwen in Respect of Prepayment Interest
Shortfalls; Relief Act Interest Shortfalls..................-87-
SECTION 3.23. Obligations of Ocwen in Respect of Mortgage Rates and
Monthly Payments............................................-87-
SECTION 3.24. Reserve Fund................................................-87-
SECTION 3.25. Advance Facility............................................-89-
SECTION 3.26. Ocwen Indemnification.......................................-90-
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ARTICLE IV
ADMINISTRATION AND MASTER SERVICING
OF THE MORTGAGE LOANS BY THE MASTER SERVICER
SECTION 4.01. Master Servicer.............................................-92-
SECTION 4.02 REMIC-Related Covenants.....................................-93-
SECTION 4.03 Monitoring of Servicer......................................-93-
SECTION 4.04 Fidelity Bond...............................................-94-
SECTION 4.05 Power to Act; Procedures....................................-94-
SECTION 4.06 Due-on-Sale Clauses; Assumption Agreements..................-95-
SECTION 4.07 Reserved....................................................-96-
SECTION 4.08 Documents, Records and Funds in Possession of Master
Servicer To Be Held for Trustee.............................-96-
SECTION 4.09 Standard Hazard Insurance and Flood Insurance Policies......-96-
SECTION 4.10 Presentment of Claims and Collection of Proceeds............-96-
SECTION 4.11 Maintenance of Primary Mortgage Insurance Policies..........-97-
SECTION 4.12 Trustee to Retain Possession of Certain Insurance Policies
and Documents...............................................-97-
SECTION 4.13 Realization Upon Defaulted Mortgage Loans...................-97-
SECTION 4.14 Compensation for the Master Servicer........................-98-
SECTION 4.15 REO Property................................................-98-
SECTION 4.16 Annual Officer's Certificate as to Compliance...............-98-
SECTION 4.17 Annual Independent Accountant's Servicing Report............-99-
SECTION 4.18 UCC.........................................................-99-
SECTION 4.19 Obligation of the Master Servicer in Respect of Prepayment
Interest Shortfalls........................................-100-
SECTION 4.20 Reserved...................................................-100-
SECTION 4.21 Prepayment Penalty Verification............................-100-
ARTICLE V
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 5.01 Distributions..............................................-102-
SECTION 5.02 Statements to Certificateholders...........................-117-
SECTION 5.03 Servicer Reports; P&I Advances.............................-120-
SECTION 5.04 Allocation of Realized Losses..............................-122-
SECTION 5.05 Compliance with Withholding Requirements...................-124-
SECTION 5.06 Reports Filed with Securities and Exchange Commission......-124-
ARTICLE VI
THE CERTIFICATES
SECTION 6.01 The Certificates...........................................-126-
SECTION 6.02 Registration of Transfer and Exchange of Certificates......-128-
-x-
SECTION 6.03 Mutilated, Destroyed, Lost or Stolen Certificates..........-133-
SECTION 6.04 Persons Deemed Owners......................................-134-
SECTION 6.05 Certain Available Information..............................-134-
ARTICLE VII
THE DEPOSITOR, OCWEN AND THE MASTER SERVICER
SECTION 7.01 Liability of the Depositor, Ocwen and the Master Servicer..-135-
SECTION 7.02 Merger or Consolidation of the Depositor, Ocwen or the
Master Servicer............................................-135-
SECTION 7.03 Limitation on Liability of the Depositor, Ocwen, the
Master Servicer and Others................................-135-
SECTION 7.04 Limitation on Resignation of Ocwen.........................-136-
SECTION 7.05 Limitation on Resignation of the Master Servicer...........-137-
SECTION 7.06 Assignment of Master Servicing.............................-137-
SECTION 7.07 Rights of the Depositor in Respect of Ocwen and the
Master Servicer............................................-138-
SECTION 7.08. Duties of the Credit Risk Manager..........................-139-
SECTION 7.09. Limitation Upon Liability of the Credit Risk Manager.......-139-
SECTION 7.10. Removal of the Credit Risk Manager.........................-139-
ARTICLE VIII
DEFAULT
SECTION 8.01 Servicer Events of Default.................................-141-
SECTION 8.02 Master Servicer to Act; Appointment of Successor...........-144-
SECTION 8.03 Notification to Certificateholders.........................-146-
SECTION 8.04 Waiver of Servicer Events of Default.......................-146-
ARTICLE IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
SECTION 9.01 Duties of Trustee and Securities Administrator.............-148-
SECTION 9.02 Certain Matters Affecting Trustee and Securities
Administrator..............................................-149-
SECTION 9.03 Trustee and Securities Administrator not Liable for
Certificates or Mortgage Loans.............................-151-
SECTION 9.04 Trustee and Securities Administrator May Own Certificates..-151-
SECTION 9.05 Fees and Expenses of Trustee and Securities Administrator..-152-
SECTION 9.06 Eligibility Requirements for Trustee and Securities
Administrator..............................................-152-
SECTION 9.07 Resignation and Removal of Trustee and Securities
Administrator..............................................-153-
SECTION 9.08 Successor Trustee or Securities Administrator..............-154-
SECTION 9.09 Merger or Consolidation of Trustee or Securities
Administrator..............................................-154-
SECTION 9.10 Appointment of Co-Trustee or Separate Trustee..............-155-
-xi-
SECTION 9.11 Appointment of Office or Agency............................-155-
SECTION 9.12 Representations and Warranties.............................-156-
ARTICLE X
TERMINATION
SECTION 10.01 Termination Upon Repurchase or Liquidation of All
Mortgage Loans.............................................-157-
SECTION 10.02 Additional Termination Requirements........................-159-
ARTICLE XI
REMIC PROVISIONS
SECTION 11.01 REMIC Administration.......................................-160-
SECTION 11.02 Prohibited Transactions and Activities.....................-162-
SECTION 11.03 Indemnification............................................-163-
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01 Amendment..................................................-164-
SECTION 12.02 Recordation of Agreement; Counterparts.....................-165-
SECTION 12.03 Limitation on Rights of Certificateholders.................-165-
SECTION 12.04 Governing Law..............................................-166-
SECTION 12.05 Notices....................................................-166-
SECTION 12.06 Severability of Provisions.................................-167-
SECTION 12.07 Notice to Rating Agencies..................................-167-
SECTION 12.08 Article and Section References.............................-168-
SECTION 12.09 Grant of Security Interest.................................-168-
SECTION 12.10 Survival of Indemnification................................-169-
SECTION 12.11 WFHM Servicing Agreement...................................-169-
-xii-
EXHIBITS
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class M Certificate
Exhibit A-3 Form of Class B Certificates
Exhibit A-4 Form of Class CE Certificate
Exhibit A-5 Form of Class P Certificate
Exhibit A-6 Form of Class R Certificate
Exhibit B-1 Form of Transferor Representation Letter and Form of
Transferee Representation Letter in Connection with Transfer
of the Class B Certificates, Class P Certificates, Class CE
Certificates and Residual Certificates Pursuant to Rule 144A
Under the 1933 Act
Exhibit B-2 Form of Transferor Representation Letter and Form of
Transferee Representation Letter in Connection with Transfer
of the Class B Certificates, Class P Certificates, Class CE
Certificates and Residual Certificates Pursuant to Rule 501
(a) Under the 1933 Act
Exhibit B-3 Form of Transfer Affidavit and Agreement and Form of
Transferor Affidavit in Connection with Transfer of Residual
Certificates
Exhibit C Form of Servicer Certification
Schedule 1 Mortgage Loan Schedule
Schedule 2 Prepayment Charge Schedule
-xiii-
This Pooling and Servicing Agreement, is dated and effective
as of March 1, 2004, among ACE SECURITIES CORP. as Depositor, OCWEN FEDERAL BANK
FSB as a Servicer, WELLS FARGO BANK, N.A. as Master Servicer and Securities
Administrator and HSBC BANK USA as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest of the Trust Fund created hereunder. The
Trust Fund will consist of a segregated pool of assets comprised of the Mortgage
Loans and certain other related assets subject to this Agreement.
REMIC I
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (other than the Reserve Fund) as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC I". The Class R-I Interest will be the sole class of
"residual interests" in REMIC I for purposes of the REMIC Provisions (as defined
herein). The following table irrevocably sets forth the designation, the REMIC I
Remittance Rate, the initial Uncertificated Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for each of the REMIC I Regular Interests (as defined herein).
None of the REMIC I Regular Interests will be certificated.
REMIC I Initial Latest Possible
Designation Remittance Rate Uncertificated Balance Maturity Date (1)
- ----------- --------------- ---------------------- -----------------
I-LTAA Variable(2) $ 174,291,670.63 March 25, 2034
I-LTA1 Variable(2) $ 1,005,560.00 March 25, 2034
I-LTA2A Variable(2) $ 177,675.00 March 25, 2034
I-LTA2B Variable(2) $ 101,150.00 March 25, 2034
I-LTA3 Variable(2) $ 111,730.00 March 25, 2034
I-LTM1 Variable(2) $ 122,715.00 March 25, 2034
I-LTM2 Variable(2) $ 102,265.00 March 25, 2034
I-LTM3 Variable(2) $ 26,675.00 March 25, 2034
I-LTM4 Variable(2) $ 26,675.00 March 25, 2034
I-LTM5 Variable(2) $ 26,675.00 March 25, 2034
I-LTM6 Variable(2) $ 22,230.00 March 25, 2034
I-LTB Variable(2) $ March 25, 2034
I-LTZZ Variable(2) $ 1,789,162.87 March 25, 2034
I-LTP Variable(2) $ 100.00 March 25, 2034
I-LT1A Variable(2) $ 6,120.17 March 25, 2034
I-LT1B Variable(2) $ 28,465.98 March 25, 2034
I-LT2A Variable(2) $ 1,527.26 March 25, 2034
I-LT2B Variable(2) $ 7,103.76 March 25, 2034
-1-
I-LTXX Variable(2) $ 177,805,426.33 March 25, 2034
- ---------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each REMIC I
Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance
Rate" herein.
REMIC II
--------
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Interest will evidence the sole class
of "residual interests" in REMIC II for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the Pass-Through Rate,
the initial aggregate Certificate Principal Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for the indicated Classes of Certificates.
Initial Aggregate
Pass Through Certificate Principal Latest Possible
Designation Rate Balance Maturity Date (1)
- ------------------ -------------------- ------------------------- -----------------
Class A-1 Variable(2) $ 201,112,000.00 March 25, 2034
Class A-2A Variable(2) $ 35,535,000.00 March 25, 2034
Class A-2B Variable $ 20,230,000.00 March 25, 2034
Class A-3 Variable(2) $ 22,346,000.00 March 25, 2034
Class M-1 Variable(2) $ 24,543,000.00 March 25, 2034
Class M-2 Variable(2) $ 20,453,000.00 March 25, 2034
Class M-3 Variable(2) $ 5,335,000.00 March 25, 2034
Class M-4 Variable(2) $ 5,335,000.00 March 25, 2034
Class M-5 Variable(2) $ 5,335,000.00 March 25, 2034
Class M-6 Variable(2) $ 4,446,000.00 March 25, 2034
Class B Variable $ 8,892,000 March 25, 2034
Class P N/A(3) $ 100.00 March 25, 2034
Class CE N/A(4) $ 2,135,287 March 25, 2034
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(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each Class of
Certificates.
(2) Calculated in accordance with the definition of "Pass-Through Rate"
herein. (3) The Class P Certificates will not accrue interest.
(4) The Class CE Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE Certificates
outstanding from time to time which shall equal the Uncertificated
Balance of the REMIC I Regular Interests (other than REMIC I Regular
Interest I-LTP) The Class CE Certificates will not accrue interest on
their Certificate Principal Balance.
-2-
As of the Cut-off Date, the Group I Mortgage Loans had an aggregate
Scheduled Principal Balance equal to approximately $284,659,787 and the Group II
Mortgage Loans had an aggregate Scheduled Principal Balance equal to
approximately $71,037,600.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Master Servicer, the Securities Administrator and
the Trustee agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.
"Accepted Master Servicing Practices": With respect to any
Mortgage Loan, as applicable, either (x) those customary mortgage master
servicing practices of prudent mortgage servicing institutions that master
service mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Master Servicer (except in its capacity as successor to the
Servicer), or (y) as provided in Section 3.01 hereof, but in no event below the
standard set forth in clause (x).
"Accepted Servicing Practices": As defined in Section 3.01.
"Account": The Collection Account and the Distribution Account
as the context may require.
"Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate, Class B Certificates or Class CE Certificate
and each Distribution Date, interest accrued during the related Interest Accrual
Period at the Pass-Through Rate for such Certificate for such Distribution Date
on the Certificate Principal Balance, in the case of the Class A Certificates,
the Mezzanine Certificates and the Class B Certificates, or on the Notional
Amount in the case of the Class CE Certificates, of such Certificate immediately
prior to such Distribution Date. The Class P Certificates are not entitled to
distributions in respect of interest and, accordingly, will not accrue interest.
All distributions of interest on the Class A Certificates, the Mezzanine
Certificates and the Class B Certificates will be calculated on the basis of a
360-day year and the actual number of days in the applicable Interest Accrual
Period. All distributions of interest on the Class CE Certificates will be based
on a 360-day year consisting of twelve 30-day months. Accrued Certificate
Interest with respect to each Distribution Date, as to any Class A Certificate,
Mezzanine Certificate, Class B Certificate or Class CE Certificate shall be
reduced by an amount equal to the portion allocable to such Certificate pursuant
to Section 1.02 hereof, if any, of the sum of (a) the aggregate Prepayment
Interest Shortfall, if any, for such Distribution Date to the extent not covered
by payments pursuant to Section 3.22 or Section 4.19 of this Agreement or
pursuant to the WFHM Servicing Agreement and (b) the aggregate amount of any
Relief Act Interest Shortfall, if any, for such Distribution Date. In addition,
Accrued Certificate Interest with respect to each Distribution Date, as to any
Class CE Certificate, shall be reduced by an amount equal to the portion
allocable to such Class CE Certificate of Realized Losses, if any, pursuant to
Section 1.02 and Section 5.04 hereof.
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"Adjustable Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.
"Adjustment Date": With respect to each Adjustable Rate
Mortgage Loan, the first day of the month in which the Mortgage Rate of an
Adjustable Rate Mortgage Loan changes pursuant to the related Mortgage Note. The
first Adjustment Date following the Cut-off Date as to each Adjustable Rate
Mortgage Loan is set forth in the Mortgage Loan Schedule.
"Administration Fees": The sum of (i) the Servicing Fee, (ii)
the Master Servicing Fee and (iii) the Credit Risk Management Fee.
"Administration Fee Rate": The sum of (i) the Servicing Fee
Rate, (ii) the Master Servicer Fee Rate and (iii) the Credit Risk Management Fee
Rate.
"Advance Facility": As defined in Section 3.25(a).
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Loss Severity Percentage": With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate amount of Realized Losses incurred on any Mortgage Loans
from the Cut-off Date to the last day of the preceding calendar month and the
denominator of which is the aggregate principal balance of such Mortgage Loans
immediately prior to the liquidation of such Mortgage Loans.
"Agreement": This Pooling and Servicing Agreement, including
all exhibits and schedules hereto and all amendments hereof and supplements
hereto.
"Amounts Held for Future Distribution": As to any Distribution
Date, the aggregate amount held in the Collection Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Monthly Payments or portions thereof received in respect of the Mortgage Loans
due after the related Due Period and (ii) Principal Prepayments and Liquidation
Proceeds received in respect of such Mortgage Loans after the last day of the
related Prepayment Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
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"Authorized Officers": A managing director of the whole loan
trading desk and a managing director in global markets.
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Collection Account and Distribution Account as of the
close of business on the related Servicer Remittance Date, (b) the aggregate of
any amounts deposited in the Distribution Account by a Servicer or the Master
Servicer in respect of Prepayment Interest Shortfalls for such Distribution Date
pursuant to Section 3.22 or Section 4.19 of this Agreement or pursuant to the
WFHM Servicing Agreement, as applicable, (c) the aggregate of any P&I Advances
for such Distribution Date made by a Servicer pursuant to Section 5.03 of this
Agreement or pursuant to the WFHM Servicing Agreement, as applicable, and (d)
the aggregate of any P&I Advances made by a successor Servicer (including the
Master Servicer) for such Distribution Date pursuant to Section 8.02, reduced
(to not less than zero) by (2) the portion of the amount described in clause
(1)(a) above that represents (i) Amounts Held for Future Distribution, (ii)
Principal Prepayments on the Mortgage Loans received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, a Servicer, the Trustee, the
Master Servicer, the Securities Administrator or the Custodian pursuant to
Section 3.09 or 9.05 of this Agreement, the WFHM Servicing Agreement or
otherwise payable in respect of Extraordinary Trust Fund Expenses, (v) the
Credit Risk Management Fee, (vi) amounts deposited in the Collection Account or
the Distribution Account in error, (vii) the amount of any Prepayment Charges
collected by the Servicers in connection with the Principal Prepayment of any of
the Mortgage Loans and (viii) amounts reimbursable to a successor Servicer
(including the Master Servicer) pursuant to Section 8.02.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the
payment of the unamortized principal balance of such Mortgage Loan in a single
payment, that is substantially greater than the preceding monthly payment at the
maturity of such Mortgage Loan.
"Balloon Payment": A payment of the unamortized principal
balance of a Mortgage Loan in a single payment, that is substantially greater
than the preceding Monthly Payment at the maturity of such Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11
of the United States Code), as amended.
"Book-Entry Certificates": The Offered Certificates for so
long as the Certificates of such Class shall be registered in the name of the
Depository or its nominee.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 6.01.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the States of New York,
New Jersey, Florida, Maryland,
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Minnesota or in the city in which the Corporate Trust Office of the Trustee is
located, are authorized or obligated by law or executive order to be closed.
"Cap Contracts": Shall mean (i) the Cap Contract between the
Trustee and the counterparty named thereunder, for the benefit of the Holders of
the Class A-1 Certificates, Class A-3 Certificates, the Mezzanine Certificates
and the Class B Certificates and (ii) the Cap Contract between
the Trustee and the counterparty thereunder, for the benefit of the Class A-2
Certificates, the Mezzanine Certificates and the Class B Certificates.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which are more than a nominal amount in excess of the principal
balance of any existing first mortgage plus any subordinate mortgage on the
related Mortgaged Property and related closing costs.
"Certificate": Any one of ACE Securities Corp., Asset Backed
Pass-Through Certificates, Series 2004-HE1, Class A-1, Class A-2A, Class A-2B,
Class A-3, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class B, Class P, Class CE and Class R issued under this Agreement.
"Certificate Factor":With respect to any Class of Certificates
(other than the Residual Certificates) as of any Distribution Date, a fraction,
expressed as a decimal carried to six places, the numerator of which is the
aggregate Certificate Principal Balance (or Notional Amount, in the case of the
Class CE Certificates) of such Class of Certificates on such Distribution Date
(after giving effect to any distributions of principal and allocations of
Realized Losses resulting in reduction of the Certificate Principal Balance (or
Notional Amount, in the case of the Class CE Certificates) of such Class of
Certificates to be made on such Distribution Date), and the denominator of which
is the initial aggregate Certificate Principal Balance (or Notional Amount, in
the case of the Class CE Certificates) of such Class of Certificates as of the
Closing Date.
"Certificate Margin": With respect to the Class A-1
Certificates and, for purposes of the definition of "Marker Rate", REMIC I
Regular Interest I-LTA1, 0.210% in the case of each Distribution Date through
and including the Optional Termination Date and 0.420% in the case of each
Distribution Date thereafter.
With respect to the Class A-2A Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA2A, 0.120% in
the case of each Distribution Date through and including the Optional
Termination Date and 0.240% in the case of each Distribution Date thereafter.
With respect to the Class A-2B Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA2B, 0.450% in
the case of each Distribution Date through and including the Optional
Termination Date and 0.900% in the case of each Distribution Date thereafter.
With respect to the Class A-3 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA3, 0.440% in
the case of each Distribution Date
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through and including the Optional Termination Date and 0.880% in the case of
each Distribution Date thereafter.
With respect to the Class M-1 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM1, 0.500% in
the case of each Distribution Date through and including the Optional
Termination Date and 0.750% in the case of each Distribution Date thereafter.
With respect to the Class M-2 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM2, 1.100% in
the case of each Distribution Date through and including the Optional
Termination Date and 1.650% in the case of each Distribution Date thereafter.
With respect to the Class M-3 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM3, 1.350% in
the case of each Distribution Date through and including the Optional
Termination Date and 2.025% in the case of each Distribution Date thereafter.
With respect to the Class M-4 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM4, 1.800% in
the case of each Distribution Date through and including the Optional
Termination Date and 2.700% in the case of each Distribution Date thereafter.
With respect to the Class M-5 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM5, 1.950% in
the case of each Distribution Date through and including the Optional
Termination Date and 2.925% in the case of each Distribution Date thereafter.
With respect to the Class M-6 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM6, 3.000% in
the case of each Distribution Date through and including the Optional
Termination Date and 4.500% in the case of each Distribution Date thereafter.
With respect to the Class B Certificates and, for purposes of
the definition of "Marker Rate", REMIC I Regular Interest I-LTB, 3.500% in the
case of each Distribution Date through and including the Optional Termination
Date and 5.250% in the case of each Distribution Date thereafter.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof, and solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of or beneficially owned by the Depositor, the Seller, a Servicer, the
Master Servicer, the Securities Administrator, the Trustee or any Affiliate
thereof shall be deemed not to be outstanding and the Voting Rights to which it
is entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 12.01. The Trustee and the
Securities Administrator may
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conclusively rely upon a certificate of the Depositor, the Seller, the Master
Servicer, the Securities Administrator or a Servicer in determining whether a
Certificate is held by an Affiliate thereof. All references herein to "Holders"
or "Certificateholders" shall reflect the rights of Certificate Owners as they
may indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee and the Securities Administrator shall be required to recognize as a
"Holder" or "Certificateholder" only the Person in whose name a Certificate is
registered in the Certificate Register.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate, Class B Certificate or Class P Certificate
as of any date of determination, the Certificate Principal Balance of such
Certificate on the Distribution Date immediately prior to such date of
determination plus, in the case of the Class CE Certificates, the Class M
Certificates and the Class B Certificates any Subsequent Recoveries allocable to
such Class, minus all distributions allocable to principal made thereon and
Realized Losses allocated thereto, if any, on such immediately prior
Distribution Date (or, in the case of any date of determination up to and
including the first Distribution Date, the initial Certificate Principal Balance
of such Certificate, as stated on the face thereof). With respect to each Class
CE Certificate as of any date of determination, an amount equal to the
Percentage Interest evidenced by such Certificate times the excess, if any, of
(A) the then aggregate Uncertificated Balances of the REMIC I Regular Interests
over (B) the then aggregate Certificate Principal Balances of the Class A
Certificates, the Mezzanine Certificates, the Class B Certificates and the Class
P Certificates then outstanding. The aggregate initial Certificate Principal
Balance of each Class of Regular Certificates is set forth in the Preliminary
Statement hereto.
"Certificate Register": The register maintained pursuant to
Section 6.02.
"Class": Collectively, all of the Certificates bearing the
same class designation.
"Class A Certificate": Any Class A-1, Class A-2A, Class A-2B
or Class A-3 Certificate.
"Class A Principal Distribution Amount": The Class A Principal
Distribution Amount is an amount equal to the sum of the Class A-1/A-3 Principal
Distribution Amount and the Class A-2 Principal Distribution Amount.
"Class A-1/A-3 Allocation Percentage": With respect to any
Distribution Date is the percentage equivalent of a fraction, the numerator of
which is (x) the Group I Principal Remittance Amount for such Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.
"Class A-1 Certificate": Any one of the Class A-1 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially
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in the form annexed hereto as Exhibit A-1 and evidencing a Regular Interest in
REMIC II for purposes of the REMIC Provisions.
"Class A-1/A-3 Principal Distribution Amount": With respect to
any Distribution Date on or after the Stepdown Date and on which a Trigger Event
is not in effect, the excess of (x) the sum of the Certificate Principal
Balances of the Class A-1 Certificates and Class A-3 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
57.00% and (ii) the aggregate Stated Principal Balance of the Group I Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced and unscheduled collections of principal received during
the related Prepayment Period) and (B) the aggregate Stated Principal Balance of
the Group I Mortgage Loans as of the last day of the related Due Period (after
giving effect to scheduled payments of principal due during the related Due
Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) minus the product of
(i) 0.50% and (ii) the aggregate principal balance of the Group I Mortgage Loans
as of the Cut-off Date.
"Class A-2 Allocation Percentage": With respect to any
Distribution Date is the percentage equivalent of a fraction, the numerator of
which is (x) the Group II Principal Remittance Amount for such Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.
"Class A-2 Certificate": Any Class A-2A Certificate or Class
A-2B Certificate.
"Class A-2A Certificate": Any one of the Class A-2A
Certificates executed and authenticated by the Securities Administrator and
delivered by the Trustee, substantially in the form annexed hereto as Exhibit
A-1 and evidencing a Regular Interest in REMIC II for purposes of the REMIC
Provisions.
"Class A-2B Certificate": Any one of the Class A-2B
Certificates executed and authenticated by the Securities Administrator and
delivered by the Trustee, substantially in the form annexed hereto as Exhibit
A-1 and evidencing a Regular Interest in REMIC II for purposes of the REMIC
Provisions.
"Class A-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of the Certificate Principal Balances
of the Class A-2A Certificates and Class A2B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 57.00% and
(ii) the aggregate Stated Principal Balance of the Group II Mortgage Loans as of
the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment Period) and (B) the aggregate Stated Principal Balance of the Group
II Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced and unscheduled collections of principal
received during the related Prepayment Period) minus the
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product of (i) 0.50% and (ii) the aggregate principal balance of the Group II
Mortgage Loans as of the Cut-off Date.
"Class A-3 Certificate": Any one of the Class A-3 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class B Certificate": Any one of the Class B Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-3 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class B Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5 Certificates (after taking into account the payment of the Class M-5
Principal Distribution Amount on such Distribution Date), (vii) the Certificate
Principal Balance of the Class M-6 Certificates (after taking into account the
payment of the Class M-6 Principal Distribution Amount on such Distribution
Date) and (viii) the Certificate Principal Balance of the Class B Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 98.80% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) minus the product of
(i) 0.50% and (ii) the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date.
"Class CE Certificate": Any one of the Class CE Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-4 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M Certificates": The Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5 and Class M-6 Certificates.
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"Class M-1 Certificate": Any one of the Class M-1 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date)
and (ii) the Certificate Principal Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 70.80% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) minus the product of
(i) 0.50% and (ii) the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date.
"Class M-2 Certificate": Any one of the Class M-2 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date) and (iii) the Certificate Principal Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 82.30% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced and unscheduled
collections of principal received during the related Prepayment Period) minus
the product of (i) 0.50% and (ii) the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.
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"Class M-3 Certificate": Any one of the Class M-3 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class M-3 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 85.30% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment Period) minus the product of (i) 0.50% and (ii) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.
"Class M-4 Certificate": Any one of the Class M-4 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-4 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date) and (v) the Certificate Principal Balance of the Class M-4 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 88.30% and (ii) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced and unscheduled collections of principal received
during the related Prepayment Period) and (B) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) minus the product of
(i) 0.50% and (ii) the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date.
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"Class M-5 Certificate": Any one of the Class M-5 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-5 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date) and (vi) the Certificate Principal Balance of
the Class M-5 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 91.30% and (ii) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced and unscheduled
collections of principal received during the related Prepayment Period) and (B)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date.
"Class M-6 Certificate": Any one of the Class M-6 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class M-6 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the payment of the Class M-1 Principal Distribution Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2 Certificates (after taking into account the payment of the Class M-2
Principal Distribution Amount on such Distribution Date), (iv) the Certificate
Principal Balance of the Class M-3 Certificates (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates
(after taking into account the payment of the Class M-4 Principal Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5 Certificates (after taking into account the payment of the Class M-5
Principal Distribution Amount
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on such Distribution Date) and (vii) the Certificate Principal Balance of the
Class M-6 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 93.80% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced and unscheduled
collections of principal received during the related Prepayment Period) minus
the product of (i) 0.50% and (ii) the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.
"Class P Certificate": Any one of the Class P Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-5 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class R Certificates": Any one of the Class R Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-6, and evidencing
the Class R-I Interest and the Class R-II Interest.
"Class R-I Interest": The uncertificated residual interest in
REMIC I.
"Class R-II Interest": The uncertificated residual interest in
REMIC II.
"Closing Date": March 30, 2004.
"Code": The Internal Revenue Code of 1986 as amended from time
to time.
"Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by Ocwen pursuant to Section
3.08(a), which shall be entitled "Ocwen Federal Bank FSB, as Servicer for HSBC
Bank USA, as Trustee, in trust for the registered holders of ACE Securities
Corp., Home Equity Loan Trust, Series 2004-HE1, Asset Backed Pass-Through
Certificates" or by WFHM in accordance with the WFHM Servicing Agreement. The
Collection Account maintained by Ocwen must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office
of the Trustee which office at the date of the execution of this instrument is
located at 452 Fifth Avenue, New York, New York 10018, Attention: ACE Securities
Corp., 2004-HE1, or at such other address as the Trustee may designate from time
to time by notice to the Certificateholders, the Depositor, the Master Servicer,
the Securities Administrator and the Servicer. The office of the Securities
Administrator, which for purposes of Certificate transfers and surrender is
located at Wells Fargo Bank, N.A., Sixth and Marquette Avenue, Minneapolis,
Minnesota 55479, Attention: Corporate Trust (ACE 2004-HE1), and for all other
purposes is located at Wells Fargo Bank, N.A., P.O. Box 98, Columbia,
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Maryland 21045, Attention: Corporate Trust (ACE 2004-HE1) (or for overnight
deliveries, at 9062 Old Annapolis Road, Columbia, Maryland 21046, Attention:
Corporate Trust (ACE 2004-HE1)).
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"Corresponding Certificate": With respect to each REMIC I
Regular Interest, as follows:
REMIC I Regular Interest Class
- --------------------------------- ----------
REMIC I Regular Interest I-LTA1 A-1
REMIC I Regular Interest I-LTA2A A-2A
REMIC I Regular Interest I-LTA2B A-2B
REMIC I Regular Interest I-LTA3 A-3
REMIC I Regular Interest I-LTM1 M-1
REMIC I Regular Interest I-LTM2 M-2
REMIC I Regular Interest I-LTM3 M-3
REMIC I Regular Interest I-LTM4 M-4
REMIC I Regular Interest I-LTM5 M-5
REMIC I Regular Interest I-LTM6 M-6
REMIC I Regular Interest I-LTB B
REMIC I Regular Interest I-LTP P
"Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
the aggregate Certificate Principal Balances of the Mezzanine Certificates, the
Class B Certificates and the Class CE Certificates, and the denominator of which
is the aggregate Stated Principal Balance of the Mortgage Loans, calculated
after taking into account distributions of principal on the Mortgage Loans and
distribution of the Principal Distribution Amount to the Certificates then
entitled to distributions of principal on such Distribution Date.
"Credit Risk Management Agreements": The agreements between
the Credit Risk Manager and the Servicers and/or Master Servicer, regarding the
loss mitigation and advisory services to be provided by the Credit Risk Manager.
"Credit Risk Management Fee": The amount payable to the Credit
Risk Manager on each Distribution Date as compensation for all services rendered
by it in the exercise and performance of any and all powers and duties of the
Credit Risk Manager under the Credit Risk Management Agreements, which amount
shall equal one twelfth of the product of (i) the Credit Risk Management Fee
Rate multiplied by (ii) the Stated Principal Balance of the Mortgage Loans and
any related REO Properties as of the first day of the related Due Period.
"Credit Risk Management Fee Rate": 0.015% per annum.
"Credit Risk Manager": The Murrayhill Company, a Colorado
corporation, and its successors and assigns.
"Custodial Agreement": The Custodial Agreement dated as of
March 1, 2004, among the Trustee, the Custodian and the Servicers as such
agreement may be amended or supplemented from time to time, or any other
custodial agreement entered into after the date hereof with respect to any
Mortgage Loan subject to this Agreement.
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"Custodian": Wells Fargo or any other custodian appointed
under any custodial agreement entered into after the date of this Agreement.
"Cut-off Date": With respect to each Mortgage Loan, March 1,
2004. With respect to all Qualified Substitute Mortgage Loans, their respective
dates of substitution. References herein to the "Cut-off Date," when used with
respect to more than one Mortgage Loan, shall be to the respective Cut-off Dates
for such Mortgage Loans.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 6.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a fraction, the numerator of which is
the aggregate Stated Principal Balance of all Mortgage Loans that, as of the
last day of the previous calendar month, are 60 or more days delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans and REO Properties as of the last day of
the previous calendar month.
"Depositor": ACE Securities Corp., a Delaware corporation, or
its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is the principal subsidiary of a
holding company, such holding company has unsecured commercial paper or other
short-term unsecured debt obligations) that are
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rated at least A-1+ by S&P and P-1 by Moody's (or, if such Rating Agencies are
no longer rating the Offered Certificates, comparable ratings by any other
nationally recognized statistical rating agency then rating the Offered
Certificates).
"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 each Distribution Date
and (i) Ocwen, the 15th day of the calendar month in which such Distribution
Date occurs, or if such 15th day is not a Business Day, the Business Day
immediately preceding such 15th day and (ii) WFHM, as set forth in the WFHM
Servicing Agreement.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; provided, however, that the Servicer, on
behalf of the Trustee, shall not be considered to Directly Operate an REO
Property solely because the related Servicer establishes rental terms, chooses
tenants, enters into or renews leases, deals with taxes and insurance, or makes
decisions as to repairs or capital expenditures with respect to such REO
Property.
"Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for Freddie Mac, a majority of its board of directors
is not selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the holding of an Ownership Interest in a
Residual Certificate by such Person may cause any Trust REMIC or any Person
having an Ownership Interest in any Class of Certificates (other than such
Person) to incur a liability for any federal tax imposed under the Code that
would not otherwise be imposed but for the Transfer of an Ownership Interest in
a Residual Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
"Distribution Account": The trust account or accounts created
and maintained by the Securities Administrator pursuant to Section 3.08(b) in
the name of the Securities Administrator for the benefit of the
Certificateholders and designated "Wells Fargo Bank, National Association, in
trust for registered holders of ACE Securities Corp. Home Equity Loan Trust,
Series 2004-HE1". Funds in the Distribution Account shall be held in trust for
the Certificateholders for the uses and purposes set forth in this Agreement.
The Distribution Account must be an Eligible Account.
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"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in April 2004.
"Due Date": With respect to each Distribution Date, the day of
the month on which the Monthly Payment is due on a Mortgage Loan during the
related Due Period, exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month immediately preceding the month
in which such Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution, (ii) an account or accounts the
deposits in which are fully insured by the FDIC or (iii) a trust account or
accounts maintained with a federal depository institution or state chartered
depository institution acting in its fiduciary capacity. Eligible Accounts may
bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Liquidation Proceeds": To the extent that such amount
is not required by law to be paid to the related mortgagor, the amount, if any,
by which Liquidation Proceeds with respect to a liquidated Mortgage Loan exceed
the sum of (i) the outstanding principal balance of such Mortgage Loan and
accrued but unpaid interest at the related Net Mortgage Rate through the last
day of the month in which the related Liquidation Event occurs, plus (ii)
related liquidation expenses or other amounts to which the related Servicer is
entitled to be reimbursed from Liquidation Proceeds with respect to such
liquidated Mortgage Loan pursuant to Section 3.09 of this Agreement or the WFHM
Servicing Agreement.
"Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan or REO Property, the then applicable Mortgage Rate thereon minus the
Administration Fee Rate.
"Extraordinary Trust Fund Expense": Any amounts payable or
reimbursable to the Trustee, the Master Servicer, the Securities Administrator,
the Custodian or any director, officer, employee or agent of any such Person
from the Trust Fund pursuant to the terms of this Agreement and any amounts
payable from the Distribution Account in respect of taxes pursuant to Section
11.01(g)(v).
"Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (i) the Net Monthly Excess Cashflow for such
Distribution Date and (ii) the Overcollateralization Increase Amount for such
Distribution Date.
"Fannie Mae": Fannie Mae, formerly known as the Federal
National Mortgage Association, or any successor thereto.
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"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Originator, the Seller or the Terminator pursuant to or as
contemplated by Section 2.03, 3.13(c) or Section 10.01), a determination made by
the related Servicer that all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries which the Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered, which determination shall be evidenced by a certificate of a
Servicing Officer delivered to the Master Servicer and maintained in its
records.
"Fitch": Fitch Ratings or any successor in interest.
"Freddie Mac": Freddie Mac, formerly known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
"Gross Margin": With respect to each Adjustable Rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Adjustable Rate
Mortgage Loan.
"Group I Interest Remittance Amount": With respect to any
Distribution Date is that portion of the Available Distribution Amount for such
Distribution Date that represents interest received or advanced on the Group I
Mortgage Loans (net of the Administration Fees and any Prepayment Charges and
after taking into account amounts payable or reimbursable to the Trustee, the
Custodian, the Securities Administrator, the Master Servicer or the Servicers
pursuant to this Agreement, the WFHM Servicing Agreement, or the Custodial
Agreement).
"Group I Mortgage Loans": Those Mortgage Loans identified on
the Mortgage Loan Schedule as Group I Mortgage Loans.
"Group I Principal Distribution Amount": With respect to any
Distribution Date will be the sum of (i) the principal portion of all Monthly
Payments on the Group I Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination Date; (ii) the
principal portion of all proceeds received in respect of the repurchase of a
Group I Mortgage Loan or, in the case of a substitution, certain amounts
representing a principal adjustment, during the related Prepayment Period
pursuant to or as contemplated by Section 2.03, Section 3.13(c) and Section
10.01; (iii) the principal portion of all other unscheduled collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part, received during the related Prepayment Period, to the
extent applied as recoveries of principal on the Group I Mortgage Loans, net in
each case of payments or reimbursements to the Trustee, the Custodian, the
Master Servicer, the Securities Administrator and the Servicers and (iv) the
Class A-1/A-3 Allocation Percentage of the amount of any Overcollateralization
Increase Amount for such Distribution Date MINUS (v) the Class A-1/A-3
Allocation Percentage of the amount of any Overcollateralization Reduction
Amount for such Distribution Date.
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"Group I Principal Remittance Amount": With respect to any
Distribution Date will be the sum of the amounts described in clauses (i)
through (iii) of the definition of Group I Principal Distribution Amount.
"Group II Interest Remittance Amount": With respect to any
Distribution Date is that portion of the Available Distribution Amount for such
Distribution Date that represents interest received or advanced on the Group II
Mortgage Loans (net of the Administration Fees and any Prepayment Charges and
after taking into account amounts payable or reimbursable to the Trustee, the
Custodian, the Securities Administrator, the Master Servicer or the Servicers
pursuant to this Agreement, the WFHM Servicing Agreement or the Custodial
Agreement).
"Group II Mortgage Loans": Those Mortgage Loans identified on
the Mortgage Loan Schedule as Group II Mortgage Loans.
"Group II Principal Distribution Amount": With respect to any
Distribution Date will be the sum of (i) the principal portion of all Monthly
Payments on the Group II Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination Date; (ii) the
principal portion of all proceeds received in respect of the repurchase of a
Group II Mortgage Loan or, in the case of a substitution, certain amounts
representing a principal adjustment, during the related Prepayment Period
pursuant to or as contemplated by Section 2.03, Section 3.13(c) and Section
10.01; (iii) the principal portion of all other unscheduled collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part, received during the related Prepayment Period, to the
extent applied as recoveries of principal on the Group II Mortgage Loans, net in
each case of payments or reimbursements to the Trustee, the Custodian, the
Master Servicer, the Securities Administrator and the Servicers and (iv) the
Class A-2 Allocation Percentage of the amount of any Overcollateralization
Increase Amount for such Distribution Date MINUS (v) the Class A-2 Allocation
Percentage of the amount of any Overcollateralization Reduction Amount for such
Distribution Date.
"Group II Principal Remittance Amount": With respect to any
Distribution Date will be the sum of the amounts described in clauses (i)
through (iii) of the definition of Group II Principal Distribution Amount.
"Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Master
Servicer, the Securities Administrator, the Servicers, the Seller, the
Originator and their respective Affiliates, (b) does not have any direct
financial interest in or any material indirect financial interest in the
Depositor, the Master Servicer, the Securities Administrator, the Servicer, the
Seller, the Originator or any Affiliate thereof, and (c) is not connected with
the Depositor, the Master Servicer, the Securities Administrator, the Servicers,
the Seller, the Originator or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions; provided, however, that a Person shall not fail to be Independent of
the Depositor, the Master Servicer, the Securities Administrator, the Servicer,
the Seller, the Originator or any Affiliate thereof merely because such Person
is the beneficial owner of 1% or less of any class of securities issued by the
Depositor, the Master Servicer, the Securities Administrator, the Servicers, the
Seller, the Originator or any Affiliate thereof, as the case may be.
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"Independent Contractor": Either (i) any Person (other than a
Servicer) that would be an "independent contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including a Servicer) if the Trustee has received an Opinion of Counsel to the
effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Index": As of any Adjustment Date, the index applicable to
the determination of the Mortgage Rate on each Adjustable Rate Mortgage Loan
will generally be the average of the interbank offered rates for six-month
United States dollar deposits in the London market as published in THE WALL
STREET JOURNAL and as most recently available either (a) as of the first
Business Day 45 days prior to such Adjustment Date or (b) as of the first
Business Day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note.
"Institutional Accredited Investor": As defined in Section
6.01(c).
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan or the related
Mortgaged Property, to the extent such proceeds are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor or a
senior lienholder in accordance with Accepted Servicing Practices, subject to
the terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date and the Class A Certificates, the Mezzanine Certificate and the Class B
Certificates, the period commencing on the Distribution Date of the month
immediately preceding the month in which such Distribution Date occurs (or, in
the case of the first Distribution Date, commencing on the Closing Date) and
ending on the day preceding such Distribution Date. With respect to any
Distribution Date and the Class CE Certificates and the REMIC I Regular
Interests, the one-month period ending on the last day of the calendar month
immediately preceding the month in which such Distribution Date occurs.
"Interest Carry Forward Amount": With respect to any
Distribution Date and any Class A Certificate, Mezzanine Certificate or Class B
Certificate, the sum of (i) the amount, if any, by which (a) the Interest
Distribution Amount for such Class as of the immediately preceding Distribution
Date exceeded (b) the actual amount distributed on such Class in respect of
interest on such immediately preceding Distribution Date and (ii) the amount of
any Interest Carry Forward Amount for such Class remaining unpaid from the
previous Distribution Date, plus accrued interest on such sum calculated at the
related Pass-Through Rate for the most recently ended Interest Accrual Period.
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"Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, the Class B Certificates, REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2A, REMIC I Regular
Interest I-LTA2B, REMIC I Regular Interest I-LTA3, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6, REMIC I Regular Interest I-LTB and any Interest Accrual Period
therefor, the second London Business Day preceding the commencement of such
Interest Accrual Period.
"Interest Distribution Amount": With respect to any
Distribution Date and any Class A Certificates, any Mezzanine Certificates, any
Class B Certificates and any Class CE Certificates, the aggregate Accrued
Certificate Interest on the Certificates of such Class for such Distribution
Date.
"Interest Remittance Amount": With respect to any Distribution
Date, the sum of the Group I Interest Remittance Amount and the Group II
Interest Remittance Amount.
"Last Scheduled Distribution Date": March 25, 2034.
"Late Collections": With respect to any Mortgage Loan and any
Due Period, all amounts received subsequent to the Determination Date
immediately following such Due Period with respect to such Mortgage Loan,
whether as late payments of Monthly Payments or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent late payments or collections
of principal and/or interest due (without regard to any acceleration of payments
under the related Mortgage and Mortgage Note) but delinquent for such Due Period
and not previously recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.13(c) or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 10.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds, amounts received in respect of the rental of any REO Property prior to
REO Disposition, or required to be released to a Mortgagor or a senior
lienholder in accordance with applicable law or the terms of the related
Mortgage Loan Documents) received by the related Servicer in connection with (i)
the taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation (other than amounts required to be released to
the Mortgagor or a senior lienholder), (ii) the liquidation of a defaulted
Mortgage Loan through a trustee's sale, foreclosure sale or otherwise, (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.13(c), Section 3.21 or Section
10.01 of this Agreement or pursuant to the WFHM Servicing Agreement or (iv) any
Subsequent Recoveries.
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"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the Value of the related Mortgaged Property.
"London Business Day": Any day on which banks in the Cities of
London and New York are open and conducting transactions in United States
dollars.
"Loss Severity Percentage": With respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
amount of Realized Losses incurred on a Mortgage Loan and the denominator of
which is the principal balance of such Mortgage Loan immediately prior to the
liquidation of such Mortgage Loan.
"Marker Rate": With respect to the Class CE Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the REMIC I Remittance Rate for each of REMIC I Regular Interest
I-LTA1, REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B,
REMIC I Regular Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular
Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular Interest
I-LTM6, REMIC I Regular Interest I-LTB and REMIC I Regular Interest I-LTZZ, with
the rate on each such REMIC I Regular Interest (other than REMIC I Regular
Interest I-LTZZ) subject to a cap equal to the lesser of (i) the related
One-Month LIBOR Pass-Through Rate and (ii) the Net WAC Pass-Through Rate for the
purpose of this calculation for such Distribution Date and with the rate on
REMIC I Regular Interest I-LTZZ subject to a cap of zero for the purpose of this
calculation; provided however, each such cap for each REMIC I Regular Interest
shall be multiplied by a fraction the numerator of which is the actual number of
days in the related Interest Accrual Period and the denominator of which is 30.
"Master Servicer": As of the Closing Date, Wells Fargo Bank,
N.A. and thereafter, its respective successors in interest who meet the
qualifications of this Agreement. The Master Servicer and the Securities
Administrator shall at all times be the same Person.
"Master Servicer Certification": A written certification
covering servicing of the Mortgage Loans by a Servicer and signed by an officer
of the Master Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the Sarbanes-Oxley Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superceded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the Sarbanes-Oxley Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Master Servicer Certification shall be as agreed to by the
Master Servicer, the Depositor and the Seller following a negotiation in good
faith to determine how to comply with any such new requirements.
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"Master Servicer Event of Default": One or more of the events
described in Section 8.01(b).
"Master Servicer Fee Rate": 0.0175% per annum.
"Master Servicing Fee": With respect to each Mortgage Loan and
for any calendar month, an amount equal to one twelfth of the product of the
Master Servicer Fee Rate multiplied by the Scheduled Principal Balance of the
Mortgage Loans as of the Due Date in the preceding calendar month.
"Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LTZZ for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralization Amount, in each
case for such Distribution Date, over (ii) Uncertificated Interest on REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2A, REMIC I Regular
Interest I-LTA2B, REMIC I Regular Interest I-LTA3, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6 and REMIC I Regular Interest I-LTB, for such Distribution Date,
with the rate on each such REMIC I Regular Interest subject to a cap equal to
the lesser of (i) the related One-Month LIBOR Pass-Through Rate and (ii) the Net
WAC Pass-Through Rate for the purpose of this calculation for such Distribution
Date; provided however, each such cap for each REMIC I Regular Interest shall be
multiplied by a fraction the numerator of which is the actual number of days in
the related Interest Accrual Period and the denominator of which is 30.
"Maximum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.
"MERS": Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
"MERS(R) System": The system of recording transfers of
mortgages electronically maintained by MERS.
"Mezzanine Certificate": Any Class M-1, Class M-2, Class M-3,
Class M-4, Class M- 5 or Class M-6 Certificate.
"MIN": The Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"Minimum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.
"MOM Loan": With respect to any Mortgage Loan, MERS acting as
the mortgagee of such Mortgage Loan, solely as nominee for the originator of
such Mortgage Loan and its successors and assigns, at the origination thereof.
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"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act or similar state laws; (b) without giving effect to any extension
granted or agreed to by the related Servicer pursuant to Section 3.01 of this
Agreement or pursuant to the WFHM Servicing Agreement; and (c) on the assumption
that all other amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's:" Moody's Investors Service, Inc. or any successor
interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Mortgage Note.
"Mortgage File": The Mortgage Loan Documents pertaining to a
particular Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee and the Mortgage Loan Documents for which have been delivered to
the Custodian pursuant to Section 2.01 of this Agreement and pursuant to the
Custodial Agreement, as held from time to time as a part of the Trust Fund, the
Mortgage Loans so held being identified in the Mortgage Loan Schedule.
"Mortgage Loan Documents": The documents evidencing or
relating to each Mortgage Loan delivered to the Custodian under the Custodial
Agreement on behalf of the Trustee.
"Mortgage Loan Purchase Agreement": Shall mean the Mortgage
Loan Purchase Agreement dated as of March 30, 2004, between the Depositor and
the Seller.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, separately identifying the Group I
Mortgage Loans and the Group II Mortgage Loans, attached hereto as Schedule 1.
The Depositor shall deliver or cause the delivery of the initial Mortgage Loan
Schedule to the related Servicer, the Master Servicer, the Custodian and the
Trustee on the Closing Date. The Mortgage Loan Schedule shall set forth the
following information with respect to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's first and last name;
(iii) the street address of the Mortgaged Property including
the state and zip code;
(iv) a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property;
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(vi) the original months to maturity;
(vii) the original date of the Mortgage Loan and the remaining
months to maturity from the Cut-off Date, based on the original amortization
schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Mortgage Rate in effect immediately following the
Cut-off Date;
(x) the date on which the first Monthly Payment was due on the
Mortgage Loan; (xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the amount of the Monthly Payment as of the Cut-off
Date;
(xiv) the last Due Date on which a Monthly Payment was
actually applied to the unpaid Stated Principal Balance;
(xv) the original principal amount of the Mortgage Loan;
(xvi) the Stated Principal Balance of the Mortgage Loan as of
the close of business on the Cut-off Date;
(xvii) with respect to each Adjustable Rate Mortgage Loan,
the first Adjustment Date;
(xviii) with respect to each Adjustable Rate Mortgage Loan,
the Gross Margin;
(xix) a code indicating the purpose of the loan (i.e.,
purchase financing, rate/term refinancing, cash-out refinancing);
(xx) with respect to each Adjustable Rate Mortgage Loan, the
Maximum Mortgage Rate under the terms of the Mortgage Note;
(xxi) with respect to each Adjustable Rate Mortgage Loan, the
Minimum Mortgage Rate under the terms of the Mortgage Note;
(xxii) the Mortgage Rate at origination;
(xxiii) with respect to each Adjustable Rate Mortgage Loan,
the Periodic Rate Cap;
(xxiv) with respect to each Adjustable Rate Mortgage Loan, the
first Adjustment Date immediately following the Cut-off Date;
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(xxv) with respect to each Adjustable Rate Mortgage Loan, the
Index;
(xxvi) the date on which the first Monthly Payment was due on
the Mortgage Loan and, if such date is not consistent with the Due Date
currently in effect, such Due Date;
(xxvii) a code indicating whether the Mortgage Loan is an
Adjustable Rate Mortgage Loan or a fixed rate Mortgage Loan;
(xxviii) a code indicating the documentation style (i.e.,
full, stated or limited);
(xxix) a code indicating if the Mortgage Loan is subject to a
primary insurance policy or lender paid mortgage insurance policy and the name
of the insurer;
(xxx) the Appraised Value of the Mortgaged Property;
(xxxi) the sale price of the Mortgaged Property, if
applicable;
(xxxii) a code indicating whether the Mortgage Loan is subject
to a Prepayment Charge, the term of such Prepayment Charge and the amount of
such Prepayment Charge;
(xxxiii) the product type (e.g., 2/28, 15 year fixed, 30
year fixed, 15/30 balloon, etc.);
(xxxiv) the Mortgagor's debt to income ratio; and
(xxxv) the related Servicer.
The Mortgage Loan Schedule shall set forth the following information
with respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the current principal balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule
shall be amended from time to time by the Depositor in accordance with the
provisions of this Agreement. With respect to any Qualified Substitute Mortgage
Loan, the Cut-off Date shall refer to the related Cut-off Date for such Mortgage
Loan, determined in accordance with the definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate with
respect to each Adjustable Rate Mortgage Loan (A) as of any date of
determination until the first Adjustment Date following the Cut-off Date shall
be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate in
effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the
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most recent Adjustment Date equal to the sum, rounded to the nearest 0.125% as
provided in the Mortgage Note, of the Index, as most recently available as of a
date prior to the Adjustment Date as set forth in the related Mortgage Note,
plus the related Gross Margin; provided that the Mortgage Rate on such
Adjustable Rate Mortgage Loan on any Adjustment Date shall never be more than
the lesser of (i) the sum of the Mortgage Rate in effect immediately prior to
the Adjustment Date plus the related Periodic Rate Cap, if any, and (ii) the
related Maximum Mortgage Rate, and shall never be less than the greater of (i)
the Mortgage Rate in effect immediately prior to the Adjustment Date less the
Periodic Rate Cap, if any, and (ii) the related Minimum Mortgage Rate. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Overcollateralization Reduction Amount for
such Distribution Date and (ii) the excess of (x) the Available Distribution
Amount for such Distribution Date over (y) the sum for such Distribution Date of
(A) the aggregate Senior Interest Distribution Amounts payable to the holders of
the Class A Certificates, (B) the aggregate Interest Distribution Amounts
payable to the holders of the Mezzanine Certificates and the Class B
Certificates and (C) the Principal Remittance Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus
the Administration Fee Rate.
"Net WAC Pass-Through Rate": With respect to the Class A-1
Certificates and any Distribution Date, a rate per annum equal to the product of
(x) the weighted average of the Expense Adjusted Mortgage Rates on the then
outstanding Group I Mortgage Loans, weighted based on their Stated Principal
Balances as of the first day of the calendar month preceding the month in which
the Distribution Date occurs and (y) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Interest Accrual Period. For federal income tax purposes, the economic
equivalent of such rate shall be expressed as the weighted average of (adjusted
for the actual number of days elapsed in the related Interest Accrual Period)
the REMIC I Remittance Rate on REMIC I Regular Interest I-LT1B, weighted on the
basis of the Uncertificated Balance of such REMIC I Regular Interest.
With respect to the Class A-2 Certificates and any
Distribution Date, a rate per annum equal to the product of (x) the weighted
average of the Expense Adjusted Mortgage Rates on the then outstanding Group II
Mortgage Loans, weighted based on their Stated Principal Balances as of the
first day of the calendar month preceding the month in which the Distribution
Date occurs and (y) a fraction, the numerator of which is 30 and the denominator
of which is the actual number of days elapsed in the related Interest Accrual
Period. For federal income tax purposes, the economic equivalent of such rate
shall be expressed as the weighted average of (adjusted for the actual number
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of days elapsed in the related Interest Accrual Period) the REMIC I Remittance
Rate on REMIC I Regular Interest I-LT2B, weighted on the basis of the
Uncertificated Balance of such REMIC I Regular Interest.
With respect to the Class A-3 Certificates and any
Distribution Date, a rate per annum equal to the product of (x) the weighted
average of the Expense Adjusted Mortgage Rates on the then outstanding Group I
Mortgage Loans, weighted based on their Stated Principal Balances as of the
first day of the calendar month preceding the month in which the Distribution
Date occurs and (y) a fraction, the numerator of which is 30 and the denominator
of which is the actual number of days elapsed in the related Interest Accrual
Period. For federal income tax purposes, the economic equivalent of such rate
shall be expressed as the weighted average of (adjusted for the actual number of
days elapsed in the related Interest Accrual Period) the REMIC I Remittance Rate
on REMIC I Regular Interest I-LT1B, weighted on the basis of the Uncertificated
Balance of such REMIC I Regular Interest.
With respect to the Mezzanine Certificates and any
Distribution Date, a rate per annum equal to the product of (x) the weighted
average of the Expense Adjusted Mortgage Rates on the then outstanding Mortgage
Loans, weighted based on their Stated Principal Balances as of the first day of
the calendar month preceding the month in which the Distribution Date occurs and
(y) a fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Interest Accrual Period. For
federal income tax purposes, the economic equivalent of such rate shall be
expressed as the weighted average of (adjusted for the actual number of days
elapsed in the related Interest Accrual Period) the REMIC I Remittance Rates on
(a) REMIC I Regular Interest I- LT1A, subject to a cap and a floor equal to the
weighted average of the Expense Adjusted Mortgage Rates of the Group I Mortgage
Loans and (b) REMIC I Regular Interest I-LT2A, subject to a cap and a floor
equal to the weighted average of the Expense Adjusted Mortgage Rates of the
Group II Mortgage Loans, weighted on the basis of the Uncertificated Balance of
each such REMIC I Regular Interest.
With respect to the Class B Certificates and any Distribution
Date, a rate per annum equal to the weighted average of the Expense Adjusted
Mortgage Rates on the then outstanding Mortgage Loans, weighted based on their
Stated Principal Balances as of the first day of the calendar month preceding
the month in which the Distribution Date occurs. For federal income tax
purposes, the economic equivalent of such rate shall be expressed as the
weighted average of the REMIC I Remittance Rates on (a) REMIC I Regular Interest
I-LT1A, subject to a cap and a floor equal to the weighted average of the
Expense Adjusted Mortgage Rates of the Group I Mortgage Loans and (b) REMIC I
Regular Interest I-LT2A, subject to a cap and a floor equal to the weighted
average of the Expense Adjusted Mortgage Rates of the Group II Mortgage Loans,
weighted on the basis of the Uncertificated Balance of each such REMIC I Regular
Interest.
"Net WAC Rate Carryover Amount": With respect to any Class A
Certificate, Mezzanine Certificate or Class B Certificate and any Distribution
Date on which the Pass-Through Rate is limited to the applicable Net WAC
Pass-Through Rate, an amount equal to the sum of (i) the excess of (x) the
amount of interest such Class would have been entitled to receive on such
Distribution Date if the applicable Net WAC Pass-Through Rate would not have
been applicable to such Class on such Distribution Date over (y) the amount of
interest paid to such Class on such
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Distribution Date at the applicable Net WAC Pass-Through Rate plus (ii) the
related Net WAC Rate Carryover Amount for the previous Distribution Date not
previously distributed to such Class together with interest thereon at a rate
equal to the Pass-Through Rate for such Class for the most recently ended
Interest Accrual Period.
"New Lease": Any lease of REO Property entered into on behalf
of REMIC I, including any lease renewed or extended on behalf of REMIC I, if
REMIC I has the right to renegotiate the terms of such lease.
"Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the related Servicer or a successor Servicer
(including the Trustee or the Master Servicer) will not or, in the case of a
proposed P&I Advance, would not be ultimately recoverable from related Late
Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein or in the WFHM Servicing Agreement.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Servicer, will not or,
in the case of a proposed Servicing Advance, would not be ultimately recoverable
from related Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein or in the WFHM Servicing
Agreement.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount": With respect to the Class CE Certificates
and any Distribution Date, the Uncertificated Balance of the REMIC I Regular
Interests (other than REMIC I Regular Interest I-LTP) for such Distribution
Date.
"Ocwen": Ocwen Federal Bank FSB or any successor thereto
appointed hereunder in connection with the servicing and administration of the
Ocwen Mortgage Loans.
"Ocwen Mortgage Loans": Those Mortgage Loans serviced by Ocwen
pursuant to the terms of this Agreement as specified on the Mortgage Loan
Schedule.
"Offered Certificates": The Class A Certificates and the
Mezzanine Certificates, collectively.
"Officer's Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), or by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"One-Month LIBOR": With respect to the Class A Certificates,
the Mezzanine Certificates, the Class B Certificates, REMIC I Regular Interest
I-LTA1, REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B,
REMIC I Regular Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
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Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5,
REMIC I Regular Interest I-LTM6 and REMIC I Regular Interest I-LTB, and any
Interest Accrual Period therefor, the rate determined by the Securities
Administrator on the related Interest Determination Date on the basis of the
offered rate for one-month U.S. dollar deposits, as such rate appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest Determination
Date; provided that if such rate does not appear on Telerate Page 3750, the rate
for such date will be determined on the basis of the offered rates of the
Reference Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London
time) on such Interest Determination Date. In such event, the Securities
Administrator will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If on such Interest Determination
Date, two or more Reference Banks provide such offered quotations, One-Month
LIBOR for the related Interest Accrual Period shall be the arithmetic mean of
such offered quotations (rounded upwards if necessary to the nearest whole
multiple of 1/16). If on such Interest Determination Date, fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Securities Administrator shall select an alternative comparable index
(over which the Securities Administrator has no control), used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent party. The establishment of
One-Month LIBOR by the Securities Administrator and the Securities
Administrator's subsequent calculation of the One-Month LIBOR Pass-Through Rates
for the relevant Interest Accrual Period, shall, in the absence of manifest
error, be final and binding.
"One-Month LIBOR Pass-Through Rate": With respect to the Class
A-1 Certificates and, for purposes of the definition of "Marker Rate", REMIC I
Regular Interest I-LTA1, a per annum rate equal to One-Month LIBOR plus the
related Certificate Margin.
With respect to the Class A-2A Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA2A, a per
annum rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class A-2B Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA2B, a per
annum rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class A-3 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA3, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-1 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM1, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
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With respect to the Class M-2 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM2, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-3 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM3, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-4 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM4, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-5 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM5, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-6 Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM6, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class B Certificates and, for purposes of
the definition of "Marker Rate", REMIC I Regular Interest I-LTB, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor, the Servicer, the
Securities Administrator or the Master Servicer, acceptable to the Trustee,
except that any opinion of counsel relating to (a) the qualification of any
REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an opinion
of Independent counsel.
"Optional Termination Date": The Distribution Date on which
the aggregate principal balance of the Mortgage Loans (and properties acquired
in respect thereof) remaining in the Trust Fund is reduced to less than 10% of
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.
"Originators":shall mean any of Accredited Home Lenders, Inc.,
Ameriquest Mortgage Company, CIT Group, Inc., First Street Financial, Inc.,
Fremont Investment and Loan, HomeLoanCenter.com, Millennium Mortgage Services
Corporation, New Century Mortgage Corporation, NovaStar Mortgage, Inc., Oakmont
Mortgage, People's Choice Home Loan, Inc., Town & Country Credit Corporation and
WFHM.
"Overcollateralization Amount": With respect to any
Distribution Date, the excess, if any, of (a) the aggregate Stated Principal
Balances of the Mortgage Loans and REO Properties immediately following such
Distribution Date over (b) the sum of the aggregate Certificate Principal
Balances of the Class A Certificates, the Mezzanine Certificates, the Class B
Certificates and the
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Class P Certificates as of such Distribution Date (after taking into account the
payment of the Principal Remittance Amount on such Distribution Date).
"Overcollateralization Increase Amount": With respect to the
Class A Certificates, the Mezzanine Certificates and the Class B Certificates
and any Distribution Date is any amount of Net Monthly Excess Cashflow actually
applied as an accelerated payment of principal to the extent the Required
Overcollateralization Amount exceeds the Overcollateralization Amount.
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, is the lesser of (i) the amount by which the
Overcollateralization Amount exceeds the Required Overcollateralization Amount
and (ii) the Principal Remittance Amount; provided however that on any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Reduction Amount shall equal zero.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the related Servicer in respect of any Determination Date
pursuant to Section 5.03 of this Agreement or pursuant to the WFHM Servicing
Agreement, an advancing person pursuant to Section 3.25 or in respect of any
Distribution Date by a successor Servicer (including the Master Servicer)
pursuant to Section 8.02 or the WFHM Servicing Agreement (which advances shall
not include principal or interest shortfalls due to bankruptcy proceedings or
application of the Relief Act or similar state or local laws.)
"Pass-Through Rate": With respect to the Class A Certificates,
the Mezzanine Certificates and the Class B Certificates, and any Distribution
Date, a rate per annum equal to the lesser of (i) the related One-Month LIBOR
Pass-Through Rate for such Distribution Date and (ii) the related Net WAC
Pass-Through Rate for such Distribution Date.
With respect to the Class CE Certificates and any Distribution
Date, a rate per annum equal to the percentage equivalent of a fraction, the
numerator of which is the sum of the amounts calculated pursuant to clauses (i)
through (xiv) below, and the denominator of which is the aggregate
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTA1, REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest
I-LTA2B, REMIC I Regular Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC
I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular
Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular Interest
I-LTM6, REMIC I Regular Interest I-LTB, and REMIC I Regular Interest I-LTZZ. For
purposes of calculating the Pass-Through Rate for the Class CE Certificates, the
numerator is equal to the sum of the following components:
(i) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTAA minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC II Regular Interest I-LTAA;
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(ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA1;
(iii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA2A minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA2A;
(iv) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA2B minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA2B;
(v) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA3;
(vi) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM1;
(vii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM2;
(viii) the REMIC I Remittance Rate for REMIC I Regular
Interest I-LTM3 minus the Marker Rate, applied to an amount equal to
the Uncertificated Balance of REMIC I Regular Interest I-LTM3;
(ix) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM4;
(x) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM5 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM5;
(xi) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM6 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM6;
(xii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTB minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTB;
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(xiii) the REMIC I Remittance Rate for REMIC I Regular
Interest I-LTZZ minus the Marker Rate, applied to an amount equal to
the Uncertificated Balance of REMIC I Regular Interest I-LTZZ; and
(xiv) 100% of the interest on REMIC I Regular Interest I-LTP.
"Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
represented by such Certificate and the denominator of which is the aggregate
initial Certificate Principal Balance or Notional Amount of all of the
Certificates of such Class. The Class A Certificates, the Mezzanine Certificates
and the Class B Certificates are issuable only in minimum Percentage Interests
corresponding to minimum initial Certificate Principal Balances of $25,000 and
integral multiples of $1.00 in excess thereof. The Class P Certificates are
issuable only in Percentage Interests corresponding to initial Certificate
Principal Balances of $20 and integral multiples thereof. The Class CE
Certificates are issuable only in minimum Percentage Interests corresponding to
minimum initial Certificate Principal Balances of $10,000 and integral multiples
of $1.00 in excess thereof; provided, however, that a single Certificate of each
such Class of Certificates may be issued having a Percentage Interest
corresponding to the remainder of the aggregate initial Certificate Principal
Balance of such Class or to an otherwise authorized denomination for such Class
plus such remainder. With respect to any Residual Certificate, the undivided
percentage ownership in such Class evidenced by such Certificate, as set forth
on the face of such Certificate. The Residual Certificates are issuable in
Percentage Interests of 20% and integral multiples of 5% in excess thereof.
"Periodic Rate Cap": With respect to each Adjustable Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Adjustable Rate Mortgage Loan may increase or decrease (without
regard to the Maximum Mortgage Rate or the Minimum Mortgage Rate) on such
Adjustment Date from the Mortgage Rate in effect immediately prior to such
Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, a Servicer, the Master Servicer,
the Trustee or any of their respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed
as to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of
deposit of, bankers' acceptances issued by or federal funds sold by any
depository institution or trust company (including the Trustee or its
agent acting in their respective commercial capacities) incorporated
under the laws of the United States of America or any state thereof and
subject to supervision and examination by federal and/or state
authorities, so long as, at the time of such investment or contractual
commitment providing for such investment, such depository
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institution or trust company (or, if the only Rating Agency is S&P, in
the case of the principal depository institution in a depository
institution holding company, debt obligations of the depository
institution holding company) or its ultimate parent has a short-term
uninsured debt rating in the highest available rating category of
Moody's and S&P and provided that each such investment has an original
maturity of no more than 365 days; and provided further that, if the
only Rating Agency is S&P and if the depository or trust company is a
principal subsidiary of a bank holding company and the debt
obligations of such subsidiary are not separately rated, the
applicable rating shall be that of the bank holding company; and,
provided further that, if the original maturity of such short-term
obligations of a domestic branch of a foreign depository institution
or trust company shall exceed 30 days, the short-term rating of such
institution shall be A-1+ in the case of S&P if S&P is the Rating
Agency; and (B) any other demand or time deposit or deposit which is
fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30
days with respect to any security described in clause (i) above and
entered into with a depository institution or trust company (acting as
principal) rated A-1+ or higher by S&P and A2 or higher by Moody's,
provided, however, that collateral transferred pursuant to such
repurchase obligation must be of the type described in clause (i) above
and must (A) be valued daily at current market prices plus accrued
interest, (B) pursuant to such valuation, be equal, at all times, to
105% of the cash transferred by a party in exchange for such collateral
and (C) be delivered to such party or, if such party is supplying the
collateral, an agent for such party, in such a manner as to accomplish
perfection of a security interest in the collateral by possession of
certificated securities;
(iv) securities bearing interest or sold at a discount
that are issued by any corporation incorporated under the laws of the
United States of America or any state thereof and that are rated by
each Rating Agency that rates such securities in its highest long-term
unsecured rating categories at the time of such investment or
contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand
or on a specified date not more than 30 days after the date of
acquisition thereof) that is rated by each Rating Agency that rates
such securities in its highest short-term unsecured debt rating
available at the time of such investment;
(vi) units of money market funds that have been rated
"AAA" by Fitch (if rated by Fitch), "AAAm" by S&P or "Aaa" by Moody's
including any such money market fund managed or advised by the Master
Servicer, the Trustee or any of their Affiliates; and
(vii) if previously confirmed in writing to the Trustee,
any other demand, money market or time deposit, or any other
obligation, security or investment, as may be acceptable to the Rating
Agencies as a permitted investment of funds backing securities having
ratings equivalent to its highest initial rating of the Class A
Certificates;
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provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, limited liability company,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan": Any employee benefit plan or certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Keogh plans and bank collective investment funds and insurance company general
or separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.
"Prepayment Assumption": A prepayment rate for the Adjustable
Rate Mortgage Loans of 28% CPR and a prepayment rate of 100% PPC for the fixed
rate Mortgage Loans. The Prepayment Assumption is used solely for determining
the accrual of original issue discount on the Certificates for federal income
tax purposes. A CPR (or Constant Prepayment Rate) represents an annualized
constant assumed rate of prepayment each month of a pool of mortgage loans
relative to its outstanding principal balance for the life of such pool. A 100%
PPC represents (i) a per annum prepayment rate of 4% of the then outstanding
principal balance of the fixed rate Mortgage Loans in the first month of the
life of such Mortgage Loans, (ii) an additional 19%/11 per annum in each month
thereafter through the eleventh month and (iii) a constant prepayment rate of
23% per annum beginning in the twelfth month and in each month thereafter during
the life of the fixed rate Mortgage Loans.
"Prepayment Charge": With respect to any Principal Prepayment,
any prepayment premium, penalty or charge payable by a Mortgagor in connection
with any Principal Prepayment on a Mortgage Loan pursuant to the terms of the
related Mortgage Note.
"Prepayment Charge Schedule": As of any date, the list of
Mortgage Loans providing for a Prepayment Charge included in the Trust Fund on
such date, attached hereto as Schedule 2 (including the prepayment charge
summary attached thereto). The Depositor shall deliver or cause the delivery of
the Prepayment Charge Schedule to the related Servicer, the Master Servicer and
the Trustee on the Closing Date. The Prepayment Charge Schedule shall set 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;
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(iii) the date on which the first Monthly Payment was
due on the related Mortgage Loan;
(iv) the term of the related Prepayment Charge;
(v) the original Stated Principal Balance of the
related Mortgage Loan; and
(vi) the Stated Principal Balance of the related
Mortgage Loan as of the Cut-off Date.
"Prepayment Interest Excess": With respect to each Ocwen
Mortgage Loan that was the subject of a Principal Prepayment in full during the
portion of the related Prepayment Period occurring between the first day of the
calendar month in which such Distribution Date occurs and the Determination Date
of the calendar month in which such Distribution Date occurs, an amount equal to
interest (to the extent received) at the applicable Net Mortgage Rate on the
amount of such Principal Prepayment for the number of days commencing on the
first day of the calendar month in which such Distribution Date occurs and
ending on the last date through which interest is collected from the related
Mortgagor. Ocwen may withdraw such Prepayment Interest Excess from the related
Collection Account in accordance with Section 3.09(a)(x).
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each such Mortgage Loan that was the subject of a
Principal Prepayment in full or in part during the portion of the related
Prepayment Period occurring between the first day of the related Prepayment
Period and the last day of the calendar month preceding the month in which such
Distribution Date occurs that was applied by the related Servicer to reduce the
outstanding principal balance of such Mortgage Loan on a date preceding the Due
Date in the succeeding Prepayment Period, an amount equal to interest at the
applicable Net Mortgage Rate on the amount of such Principal Prepayment for the
number of days commencing on the date on which the prepayment is applied and
ending on the last day of the calendar month preceding such Distribution Date.
The obligations of the related Servicer and the Master Servicer in respect of
any Prepayment Interest Shortfall are set forth in Section 3.22 and Section
4.19, respectively of this Agreement or the WFHM Servicing Agreement.
"Prepayment Period": With respect to any Distribution Date and
(i) Ocwen, the period commencing on the 16th day of the month prior to the month
in which the related Distribution Date occurs (or, on the Cut-off Date, in
connection with the first Prepayment Period) and ending on the 15th day of the
month in which such Distribution Date occurs and (ii) WFHM, the calendar month
immediately preceding such Distribution Date.
"Principal Prepayment": Any voluntary payment of principal
made by the Mortgagor on a Mortgage Loan which is received in advance of its
scheduled Due Date and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment.
"Principal Distribution Amount": With respect to any
Distribution Date is the sum of the Group I Principal Distribution Amount and
the Group II Principal Distribution Amount.
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"Principal Remittance Amount": With respect to any
Distribution Date is the sum of the Group I Principal Remittance Amount and the
Group II Principal Remittance Amount.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.13(c) or Section 10.01, and as confirmed by a certification of a Servicing
Officer to the Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other price as
provided in Section 10.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or a P&I Advance by the related Servicer, which
payment or P&I Advance had as of the date of purchase been distributed pursuant
to Section 5.01, through the end of the calendar month in which the purchase is
to be effected and (y) an REO Property, the sum of (1) accrued interest on such
Stated Principal Balance at the applicable Net Mortgage Rate in effect from time
to time from the Due Date as to which interest was last covered by a payment by
the Mortgagor or a P&I Advance by the related Servicer through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, plus (2) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such purchase
is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase
had been distributed as or to cover REO Imputed Interest pursuant to Section
5.01, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property, (iv) any
amounts previously withdrawn from the Collection Account pursuant to Section
3.09(a)(ix) and Section 3.13(b) and (v) in the case of a Mortgage Loan required
to be purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the related Servicer or the Trustee in respect of the breach or
defect giving rise to the purchase obligation and any costs and damages incurred
by the Trust Fund and the Trustee in connection with any violation by any such
Mortgage Loan of any predatory or abusive lending law.
"QIB": As defined in Section 6.01(c).
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) if the mortgage loan is an Adjustable
Rate Mortgage Loan, have a Maximum Mortgage Rate not less than the Maximum
Mortgage Rate on the Deleted Mortgage Loan, (iv) if the mortgage loan is an
Adjustable Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) if the mortgage loan is
an Adjustable Rate Mortgage Loan, have a Gross Margin equal to the Gross Margin
of the Deleted Mortgage Loan, (vi) if the mortgage loan is an Adjustable Rate
Mortgage Loan, have a next Adjustment Date not more than two months later than
the next Adjustment Date on the Deleted Mortgage Loan, (vii) have a remaining
term to maturity
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not greater than (and not more than one year less than) that of the Deleted
Mortgage Loan, (viii) have the same Due Date as the Due Date on the Deleted
Mortgage Loan, (ix) have a Loan-to-Value Ratio as of the date of substitution
equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (x) be secured by a first lien priority on the related Mortgaged
Property, (xi) have a credit grade at least equal to the credit grading assigned
on the Deleted Mortgage Loan, (xii) be a "qualified mortgage" as defined in the
REMIC Provisions and (xiii) conform to each representation and warranty set
forth in Section 6 of the Mortgage Loan Purchase Agreement applicable to the
Deleted Mortgage Loan. In the event that one or more mortgage loans are
substituted for one or more Deleted Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on the basis of aggregate principal
balances, the Mortgage Rates described in clause (ii) hereof shall be determined
on the basis of weighted average Mortgage Rates, the terms described in clause
(vii) hereof shall be determined on the basis of weighted average remaining term
to maturity, the Loan-to-Value Ratios described in clause (ix) hereof shall be
satisfied as to each such mortgage loan, the credit grades described in clause
(x) hereof shall be satisfied as to each such mortgage loan and, except to the
extent otherwise provided in this sentence, the representations and warranties
described in clause (xii) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than a nominal amount in excess of the existing
first mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for such
nominal amount) to satisfy the then existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.
"Rating Agency or Rating Agencies": Fitch, Moody's and S&P or
their successors. If such agencies or their successors are no longer in
existence, "Rating Agencies" shall be such nationally recognized statistical
rating agencies, or other comparable Persons, designated by the Depositor,
notice of which designation shall be given to the Trustee and the Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero), as reported by the related Servicer to the Master Servicer equal to (i)
the unpaid principal balance of such Mortgage Loan as of the commencement of the
calendar month in which the Final Recovery Determination was made, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan pursuant to Section 3.09(a)(ix) and Section 3.13(b), minus (iv) the
proceeds, if any, received in respect of such Mortgage Loan during the calendar
month in which such Final Recovery Determination was made, net of amounts that
are payable therefrom to the related Servicer with respect to such Mortgage Loan
pursuant to Section 3.09(a)(iii) of this Agreement or pursuant to the WFHM
Servicing Agreement.
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With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the related Collection Account in respect
of the related Mortgage Loan pursuant to Section 3.09(a)(ix) and Section 3.13(b)
of this Agreement or pursuant to the WFHM Servicing Agreement, minus (v) the
aggregate of all P&I Advances and Servicing Advances (in the case of Servicing
Advances, without duplication of amounts netted out of the rental income,
Insurance Proceeds and Liquidation Proceeds described in clause (vi) below) made
by the related Servicer in respect of such REO Property or the related Mortgage
Loan for which the related Servicer has been or, in connection with such Final
Recovery Determination, will be reimbursed pursuant to Section 3.21 of this
Agreement or pursuant to the WFHM Servicing Agreement, out of rental income,
Insurance Proceeds and Liquidation Proceeds received in respect of such REO
Property, minus (vi) the total of all net rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property that has been, or
in connection with such Final Recovery Determination, will be transferred to the
Distribution Account pursuant to Section 3.21 of this Agreement or pursuant to
the WFHM Servicing Agreement.
With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, 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 which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.
To the extent the related Servicer receives Subsequent
Recoveries, with respect to any Mortgage Loan, the amount of Realized Loss with
respect to that Mortgage Loan will be reduced to the extent such recoveries are
applied to reduce the Certificate Principal Balance of any Class on any
Distribution Date.
"Record Date": With respect to each Distribution Date and the
Class A Certificates, the Mezzanine Certificates and the Class B Certificates,
the Business Day immediately preceding such Distribution Date for so long as
such Certificates are Book-Entry Certificates. With respect to each Distribution
Date and any other Class of Certificates, including any Definitive Certificates,
the
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last day of the calendar month immediately preceding the month in which such
Distribution Date occurs.
"Reference Banks": Barclay's Bank PLC, The Tokyo Mitsubishi
Bank and National Westminster Bank PLC and their successors in interest;
provided, however, that if any of the foregoing banks are not suitable to serve
as a Reference Bank, then any leading banks selected by the Securities
Administrator which are engaged in transactions in Eurodollar deposits in the
International Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Depositor or any Affiliate thereof and (iii) which have been designated as
such by the Securities Administrator.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class B Certificate, Class CE Certificate or Class P Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Regulation S Temporary Global Certificate": As defined in
Section 6.01(c).
"Regulation S Permanent Global Certificate": As defined in
Section 6.01(c).
"Release Date": The 40th day after the later of (i)
commencement of the offering of the Class B Certificates and (ii) the Closing
Date.
"Relief Act": The Servicemembers Civil Relief Act, as amended,
or similar state or local laws.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended Due Period as a
result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans and Prepayment Charges as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof; (ii) any REO Property, together
with all collections thereon and proceeds thereof; (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof; (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement, the WFHM
Assignment Agreement and the WFHM Servicing Agreement (including any security
interest created thereby);
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and (v) the Collection Account, the Distribution Account and any REO Account,
and such assets that are deposited therein from time to time and any investments
thereof, together with any and all income, proceeds and payments with respect
thereto. Notwithstanding the foregoing, however, REMIC I specifically excludes
(i) all payments and other collections of principal and interest due on the
Mortgage Loans on or before the Cut-off Date and all Prepayment Charges payable
in connection with Principal Prepayments made before the Cut-off Date; (ii) the
Reserve Fund and any amounts on deposit therein from time to time and any
proceeds thereof and (iii) the Cap Contracts.
"REMIC I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTAA minus the Marker Rate, divided by (b) 12.
"REMIC I Marker Allocation Percentage": 0.50% of any amount
payable or loss attributable from the Mortgage Loans, which shall be allocated
to REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1, REMIC I
Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular
Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC
I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular
Interest I-LTB, REMIC I Regular Interest I-LTZZ and REMIC I Regular Interest
I-LTP.
"REMIC I Overcollateralization Amount": With respect to any
date of determination, (i) 0.50% of the aggregate Uncertificated Balances of the
REMIC I Regular Interests minus (ii) the aggregate of the Uncertificated
Balances of REMIC I Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2A,
REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA3, REMIC I
Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular
Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular Interest
I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular Interest I-LTB and
REMIC I Regular Interest I-LTP, in each case as of such date of determination.
"REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to (a) the product of (i) 0.50% of the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I
Regular Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6 and
REMIC I Regular Interest I-LTB, and the denominator of which is the aggregate of
the Uncertificated Balances of REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest
I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC
I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular
Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular Interest
I-LTB, and REMIC I Regular Interest I-LTZZ.
"REMIC I Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC
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I. Each REMIC I Regular Interest shall accrue interest at the related REMIC I
Remittance Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto. The designations for the respective REMIC I
Regular Interests are set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTAA": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTAA
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA2A": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA2A
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA2B": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA2B
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTB": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTB
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms
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and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM5": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM5
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM6": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM6
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
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"REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTXX": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTXX
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTZZ": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTZZ
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT1A": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1A
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT1B": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1B
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT2A": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2A
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT2B": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2B
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and
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conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to REMIC I Regular
Interest I-LTAA, REMIC I Regular Interest I-LTA1, REMIC I Regular Interest
I-LTA2A, REMIC I Regular Interest I- LTA2B, REMIC I Regular Interest I-LTA3,
REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular
Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC I Regular Interest
I-LTB, REMIC I Regular Interest I-LTZZ, REMIC I Regular Interest I-LTP, REMIC I
Regular Interest I-LT1A, REMIC I Regular Interest I-LT2A and REMIC I Regular
Interest I-LTXX, the weighted average of the Expense Adjusted Mortgage Rates of
the Mortgage Loans. With respect to REMIC I Regular Interest I-LT1B, the
weighted average of the Expense Adjusted Mortgage Rates of the Group I Mortgage
Loans. With respect to REMIC I Regular Interest I-LT2B, the weighted average of
the Expense Adjusted Mortgage Rates of the Group II Mortgage Loans.
"REMIC I Sub WAC Allocation Percentage": 0.50% of any amount
payable or loss attributable from the Mortgage Loans, which shall be allocated
to REMIC I Regular Interest I-LT1A, REMIC I Regular Interest I-LT1B, REMIC I
Regular Interest I-LT2A, REMIC I Regular Interest I-LT2B and REMIC I Regular
Interest I-LTXX.
"REMIC I Subordinated Balance Ratio": The ratio among the
Uncertificated Balances of each REMIC I Regular Interest ending with the
designation "A,", equal to the ratio among, with respect to each such REMIC I
Regular Interest, the excess of (x) the aggregate Stated Principal Balance of
the Group I Mortgage Loans or Group II Mortgage Loans, as applicable over (y)
the current Certificate Principal Balance of related Class A Certificates.
"REMIC I Required Overcollateralization Amount": 1% of the
Required Overcollateralization Amount.
"REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit
of the REMIC II Certificateholders pursuant to Section 2.09, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
"REMIC II Certificate": Any Regular Certificate or Class R
Certificate.
"REMIC II Certificateholder": The Holder of any REMIC II
Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.
"Remittance Report": A report by the Securities Administrator
pursuant to Section 5.03(f).
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"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": The account or accounts maintained, or caused
to be maintained, by the related Servicer in respect of an REO Property pursuant
to Section 3.21 of this Agreement or pursuant to the WFHM Servicing Agreement.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
10.01 that is allocable to such REO Property) or otherwise, net of any portion
of such amounts (i) payable in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the related
Servicer pursuant to Section 3.21(d) of this Agreement or pursuant to the WFHM
Servicing Agreement for unpaid Servicing Fees in respect of the related Mortgage
Loan and unreimbursed Servicing Advances and P&I Advances in respect of such REO
Property or the related Mortgage Loan, over (b) the REO Imputed Interest in
respect of such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the related
Servicer on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.21 of this Agreement or in the WFHM
Servicing Agreement.
"Required Overcollateralization Amount": With respect to any
Distribution Date, the product of (A) 0.60% and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date.
"Reserve Fund": A fund created pursuant to Section 3.24 which
shall be an asset of the Trust Fund but which shall not be an asset of any Trust
REMIC.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Securities Administrator
determines to be either (i) the arithmetic mean (rounded upwards if necessary to
the nearest whole multiple of 1/16%) of the one-month U.S. dollar lending rates
which New York City banks selected by the Securities Administrator, after
consultation with the Depositor, are quoting on the relevant Interest
Determination Date to the principal London
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offices of leading banks in the London interbank market or (ii) in the event
that the Securities Administrator can determine no such arithmetic mean, the
lowest one-month U.S. dollar lending rate which New York City banks selected by
the Securities Administrator are quoting on such Interest Determination Date to
leading European banks.
"Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a Fannie Mae eligible condominium project,
(iv) a manufactured home, or (v) a detached one-family dwelling in a planned
unit development, none of which is a co-operative or mobile home.
"Residual Certificate": Any one of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
any officer of the Trustee having direct responsibility for the administration
of this Agreement and, with respect to a particular matter, to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Rule 144A": As defined in Section 6.01(c).
"S&P": Standard and Poor's, a division of the McGraw-Hill
Companies, Inc.
"Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such REO Property, an amount (not less
than zero) equal to the Scheduled Principal Balance of the related Mortgage Loan
as of the Due Date in the calendar month in which such REO Property was
acquired, minus the aggregate amount of REO Principal
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Amortization, if any, in respect of REO Property for all previously ended
calendar months; and (b) as of any Due Date subsequent to the occurrence of a
Liquidation Event with respect to such REO Property, zero.
"Securities Act": The Securities Act of 1933, as amended.
"Securities Administrator": As of the Closing Date, Wells
Fargo Bank, N.A. and thereafter, its respective successors in interest that meet
the qualifications of this Agreement. The Securities Administrator and the
Master Servicer shall at all times be the same Person.
"Seller": Deutsche Bank AG New York Branch or its successor in
interest, in its capacity as seller under the Mortgage Loan Purchase Agreement.
"Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A Certificates and (ii) the
Interest Carry Forward Amount, if any, for such Distribution Date for the Class
A Certificates.
"Servicer": Either Ocwen or WFHM.
"Servicer Event of Default": With respect to Ocwen, one or
more of the events described in Section 8.01(a). With respect to WFHM, the
events of default described in the WFHM Servicing Agreement.
"Servicer Remittance Date": With respect to Ocwen, any
Distribution Date, by 12:00 p.m. New York time on the Business Day immediately
preceding the related Distribution Date. With respect to WFHM, the 18th day of
the month in which such Distribution Date occurs, or if such 18th day of the
month is not a Business Day, the Business Day immediately preceding such 18th
day.
"Servicer Report": A report in form and substance acceptable
to the Master Servicer and Securities Administrator on an electronic data file
or tape prepared by the related Servicer pursuant to Section 5.03(a) or pursuant
to the WFHM Servicing Agreement with such additions, deletions and modifications
as agreed to by the Master Servicer, the Securities Administrator and the
related Servicer.
"Servicing Advances": The customary and reasonable
"out-of-pocket" costs and expenses incurred by a Servicer in connection with a
default, delinquency or other unanticipated event by such Servicer in the
performance of its servicing obligations, 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 but not
limited to foreclosures, in respect of a particular Mortgage Loan, including any
expenses incurred in relation to any such proceedings that result from the
Mortgage Loan being registered on the MERS(R) System, (iii) the management
(including reasonable fees in connection therewith) and liquidation of any REO
Property and (iv) the performance of its obligations under Section 3.01, Section
3.07, Section 3.11, Section 3.13 and Section 3.21 of this Agreement or the WFHM
Servicing Agreement. Servicing Advances also include any reasonable
"out-of-pocket" cost and expenses (including legal fees) incurred by a
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Servicer in connection with executing and recording instruments of satisfaction,
deeds of reconveyance or Assignments to the extent not recovered from the
Mortgagor or otherwise payable under this Agreement or the WFHM Servicing
Agreement. Such Servicer shall not be required to make any Nonrecoverable
Servicing Advances.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one twelfth of the product of the
Servicing Fee Rate multiplied by the Scheduled Principal Balance of the Mortgage
Loans as of the Due Date in the preceding calendar month. The Servicing Fee is
payable solely from collections of interest on the Mortgage Loans.
"Servicing Fee Rate": In the case of Ocwen, 0.50% per annum
and in the case of WFHM, 0.375% per annum.
"Servicing Officer": Any officer of a Servicer involved in, or
responsible for, the administration and servicing or master servicing of
Mortgage Loans, whose name and specimen signature appear on a list of Servicing
Officers furnished by such Servicer to the Trustee, the Master Servicer, the
Securities Administrator and the Depositor on the Closing Date, as such list may
from time to time be amended.
"Single Certificate": With respect to any Class of
Certificates (other than the Residual Certificates), a hypothetical Certificate
of such Class evidencing a Percentage Interest for such Class corresponding to
an initial Certificate Principal Balance of $1,000. With respect to the Residual
Certificates, a hypothetical Certificate of such Class evidencing a 100%
Percentage Interest in such Class.
"Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 11.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the extent received from the Mortgagor
or advanced by the related Servicer or a successor Servicer (including the
Master Servicer) and distributed pursuant to Section 5.01 of this Agreement on
or before such date of determination, (ii) all Principal Prepayments received
after the Cut-off Date, to the extent distributed pursuant to Section 5.01 of
this Agreement on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by the related Servicer as recoveries of
principal in accordance with the provisions of Section 3.13, to the extent
distributed pursuant to Section 5.01 of this Agreement on or before such date of
determination, and (iv) any Realized Loss incurred with respect thereto as a
result of a Deficient Valuation made during or prior to the Prepayment Period
for the most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date
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on which the proceeds, if any, of a Liquidation Event with respect to such REO
Property would be distributed, an amount (not less than zero) equal to the
Stated Principal Balance of the related Mortgage Loan as of the date on which
such REO Property was acquired on behalf of REMIC I, minus the sum of (i) if
such REO Property was acquired before the Distribution Date in any calendar
month, the principal portion of the Monthly Payment due on the Due Date in the
calendar month of acquisition, to the extent advanced by the related Servicer or
a successor Servicers (including the Master Servicer) and distributed pursuant
to Section 5.01 of this Agreement on or before such date of determination and
(ii) the aggregate amount of REO Principal Amortization in respect of such REO
Property for all previously ended calendar months, to the extent distributed
pursuant to Section 4.01 of this Agreement on or before such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stepdown Date": The earlier to occur of (i) the later to
occur of (a) the Distribution Date occurring in April 2007 and (b) the first
Distribution Date on which the Credit Enhancement Percentage (calculated for
this purpose only after taking into account distributions of principal on the
Mortgage Loans but prior to any distribution of the Principal Distribution
Amount to the Certificates then entitled to distributions of principal on such
Distribution Date) is equal to or greater than 43.00% and (ii) the first
Distribution Date on which the aggregate Certificate Principal Balance of the
Class A Certificates has been reduced to zero.
"Subordinate Certificates": Collectively, the Mezzanine
Certificates, the Class B Certificates and the Class CE Certificates.
"Subsequent Recoveries": As of any Distribution Date, amounts
received during the related Prepayment Period by the related Servicer
specifically related to a defaulted Mortgage Loan or disposition of an REO
Property prior to the related Prepayment Period that resulted in a Realized
Loss, after the liquidation or disposition of such defaulted Mortgage Loan.
"Sub-Servicer": Any Person with which a Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicers pursuant to Section 3.02 of this Agreement or the WFHM Servicing
Agreement.
"Sub-Servicing Agreement": The written contract between a
Servicer and a Sub- Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02 of this Agreement or the WFHM
Servicing Agreement.
"Substitution Shortfall Amount": As defined in Section 2.03.
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust REMICs under the REMIC Provisions, together
with any and all other information reports or returns that may be required to be
furnished to the Certificateholders or filed with the Internal Revenue Service
or any other governmental taxing authority under any applicable provisions of
federal, state or local tax laws.
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"Telerate Page 3750": The display designated as page "3750" on
the Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).
"Termination Price": As defined in Section 10.01.
"Terminator": As defined in Section 10.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect to
a Distribution Date if either (x) the Delinquency Percentage exceeds 38.50% of
the Credit Enhancement Percentage with respect to such Distribution Date or (y)
the aggregate amount of Realized Losses incurred since the Cut-off Date through
the last day of the related Due Period divided by the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date exceeds the applicable
percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE PERCENTAGE
April 2007 to March 2008 3.25%, plus 1/12 of 1.50% for each month
thereafter
April 2008 to March 2009 4.75%, plus 1/12 of 1.00% for each month
thereafter
April 2009 and thereafter 5.75%
"Trust": ACE Securities Corp., Home Equity Loan Trust, Series
2004-HE1, the trust created hereunder.
"Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II and the Reserve Fund and any amounts on deposit therein and any
proceeds thereof, the Prepayment Charges and the Cap Contracts.
"Trust REMIC": REMIC I or REMIC II.
"Trustee": HSBC Bank USA, a New York banking corporation, or
its successor in interest, or any successor trustee appointed as herein
provided.
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"Uncertificated Balance": The amount of the REMIC I Regular
Interests outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Balance of each REMIC I Regular Interest shall equal the
amount set forth in the Preliminary Statement hereto as its initial
uncertificated balance. On each Distribution Date, the Uncertificated Balance of
the REMIC I Regular Interest shall be reduced by all distributions of principal
made on such REMIC I Regular Interest on such Distribution Date pursuant to
Section 5.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 5.04 and the Uncertificated Balance of REMIC I Regular Interest I-LTZZ
shall be increased by interest deferrals as provided in Section 5.01(a)(1)(i).
The Uncertificated Balance of each REMIC I Regular Interest shall never be less
than zero.
"Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance or Uncertificated
Notional Amount, as applicable, thereof immediately prior to such Distribution
Date. Uncertificated Interest in respect of the REMIC I Regular Interests shall
accrue on the basis of a 360-day year consisting of twelve 30-day months.
Uncertificated Interest with respect to each Distribution Date, as to any REMIC
I Regular Interest, shall be reduced by an amount equal to the sum of (a) the
aggregate Prepayment Interest Shortfall, if any, for such Distribution Date to
the extent not covered by payments pursuant to Section 3.22 or Section 4.19 of
this Agreement or pursuant to the WFHM Servicing Agreement and (b) the aggregate
amount of any Relief Act Interest Shortfall, if any allocated, in each case, to
such REMIC I Regular Interest or REMIC I Regular Interest pursuant to Section
1.02. In addition, Uncertificated Interest with respect to each Distribution
Date, as to any Uncertificated REMIC Regular Interest, shall be reduced by
Realized Losses, if any, allocated to such Uncertificated REMIC Regular Interest
pursuant to Section 1.02 and Section 5.04.
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.11.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof
(except, in the case of a partnership, to the extent provided in regulations)
provided that, for purposes solely of the restrictions on the transfer of any
Class R Certificate, no partnership or other entity treated as a partnership for
United States federal income tax purposes shall be treated as a United States
Person unless all persons that own an interest in such partnership either
directly or through any entity that is not a corporation for United States
federal income tax purposes are required to be United States Persons, or an
estate whose income is subject to United States federal income tax regardless of
its source, 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 the authority to control all substantial decisions of the
trust. To the extent prescribed in regulations by the Secretary of the Treasury,
a trust which was in existence on August 20, 1996 (other than a trust treated as
owned by the grantor under subpart E of part I of subchapter J of chapter I of
the Code), and which was treated as a United States person on August 20, 1996
may elect to continue to be treated as a United States person notwithstanding
the previous sentence. The term "United States" shall have the meaning set forth
in Section 7701 of the Code.
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"Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as determined by an appraisal made for
the originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of Fannie Mae and Freddie
Mac and (b) the value thereof as determined by a review appraisal conducted by
the originator of the Mortgage Loan in accordance with such originator's
underwriting guidelines, and (ii) the purchase price paid for the related
Mortgaged Property by the Mortgagor with the proceeds of the Mortgage Loan;
provided, however, (A) in the case of a Refinanced Mortgage Loan, such value of
the Mortgaged Property is based solely upon the lesser of (1) the value
determined by an appraisal made for the originator of the Mortgage Loan of such
Refinanced Mortgage Loan at the time of origination of such Refinanced Mortgage
Loan by an appraiser who met the minimum requirements of Fannie Mae and Freddie
Mac and (2) the value thereof as determined by a review appraisal conducted by
the originator of the Mortgage Loan in accordance with such originator's
underwriting guidelines, and (B) in the case of a Mortgage Loan originated in
connection with a "lease-option purchase," such value of the Mortgaged Property
is based on the lower of the value determined by an appraisal made for the
originator of such Mortgage Loan at the time of origination or the sale price of
such Mortgaged Property if the "lease option purchase price" was set less than
12 months prior to origination, and is based on the value determined by an
appraisal made for the originator of such Mortgage Loan at the time of
origination if the "lease option purchase price" was set 12 months or more prior
to origination.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any such Certificate. With respect to any
date of determination, 98% of all Voting Rights will be allocated among the
holders of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated among the holders of the Class P Certificates and 1% of all Voting
Rights will be allocated among the holders of the Class R Certificates. The
Voting Rights allocated to each Class of Certificate shall be allocated among
Holders of each such Class in accordance with their respective Percentage
Interests as of the most recent Record Date.
"Wells Fargo": Wells Fargo Bank, N.A. or any successor
thereto.
"WFHM": Wells Fargo Home Mortgage, Inc. or any successor
thereto.
"WFHM Assignment Agreement": The Assignment, Assumption and
Recognition Agreement, dated March 30, 2004, by and among the Seller, the
Depositor and WFHM, evidencing the assignment of the WFHM Servicing Agreement
and the WFHM Mortgage Loans to the Depositor.
"WFHM Mortgage Loans": Those Mortgage Loans subject to this
Agreement that were purchased by the Seller from WFHM pursuant to the WFHM
Servicing Agreement.
"WFHM Servicing Agreement": The Seller's Warranties and
Servicing Agreement, dated as of October 1, 2003, by and between WFHM and the
Seller, as modified by the WFHM Assignment Agreement.
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SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates, the Mezzanine Certificates, the Class B Certificates and the Class
CE Certificates for any Distribution Date, (1) the aggregate amount of any
Prepayment Interest Shortfalls (to the extent not covered by payments by the
related Servicer pursuant to Section 3.22 of this Agreement or pursuant to the
WFHM Servicing Agreement or the Master Servicer pursuant to Section 4.19 and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to the Class CE Certificates,
second, to the Class B Certificates, third, to the Class M-6 Certificates,
fourth, to the Class M-5 Certificates, fifth, to the Class M-4 Certificates,
sixth, to the Class M-3 Certificates, seventh, to the Class M-2 Certificates,
eighth, to the Class M-1 Certificates and ninth, to the Class A Certificates, on
a PRO RATA basis, in each case based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Certificate Principal Balance or Notional Amount, as applicable, of each such
Certificate and (2) the aggregate amount of any Realized Losses allocated to the
Class B Certificates, the Mezzanine Certificates and Net WAC Rate Carryover
Amounts paid to the Class A Certificates, the Mezzanine Certificates and the
Class B Certificates incurred for any Distribution Date shall be allocated to
the Class CE Certificates on a PRO RATA basis based on, and to the extent of,
one month's interest at the then applicable respective Pass-Through Rate on the
respective Certificate Principal Balance or Notional Amount thereof, as
applicable.
For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date:
(A) The REMIC I Marker Allocation Percentage of the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the related Servicer pursuant to Section 3.22 of this Agreement or
pursuant to the WFHM Servicing Agreement or the Master Servicer pursuant to
Section 4.19) and the REMIC I Marker Allocation Percentage of any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Interest payable
to REMIC I Regular Interest I-LTAA and REMIC II Regular Interest I-LTZZ up to an
aggregate amount equal to the REMIC I Interest Loss Allocation Amount, 98.00%
and 2.00%, respectively, and thereafter among REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I
Regular Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC
I Regular Interest I-LTB and REMIC I Regular Interest I-LTZZ PRO RATA based on,
and to the extent of, one month's interest at the then applicable respective
REMIC I Remittance Rate on the respective Uncertificated Balance of each such
REMIC I Regular Interest; and
(B) The REMIC I Sub WAC Allocation Percentage of the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the related Servicer pursuant to Section 3.22 of this Agreement or
pursuant to the WFHM Servicing Agreement or the Master Servicer pursuant to
Section 4.19) and the REMIC I Sub WAC Allocation Percentage of any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date
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shall be allocated first, to Uncertificated Interest payable
to REMIC I Regular Interest I-LT1A, REMIC I Regular Interest I-LT1B, REMIC I
Regular Interest I-LT2A, REMIC I Regular Interest I-LT2B, and REMIC I Regular
Interest I-LTXX, PRO RATA based on, and to the extent of, one month's interest
at the then applicable respective REMIC I Remittance Rate on the respective
Uncertificated Balance of each such REMIC I Regular Interest.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of the Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, on behalf of the Trust, without recourse, for the benefit of the
Certificateholders, all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in and
to the Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement (including, without
limitation the right to enforce the obligations of the other parties thereto
thereunder), and all other assets included or to be included in REMIC I. Such
assignment includes all interest and principal received by the Depositor or the
related Servicer on or with respect to the Mortgage Loans (other than payments
of principal and interest due on such Mortgage Loans on or before the Cut-off
Date). The Depositor herewith delivers to the Trustee and the Servicers an
executed copy of the Mortgage Loan Purchase Agreement, the WFHM Assignment
Agreement and the WFHM Servicing Agreement.
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with the Custodian pursuant to the Custodial
Agreement the documents with respect to each Mortgage Loan as described under
Section 2 of the Custodial Agreement (the "Mortgage Loan Documents"). In
connection with such delivery and as further described in the Custodial
Agreement, the Custodian will be required to review such Mortgage Loan Documents
and deliver to the Trustee, the Depositor, the Servicers and the Seller
certifications (in the forms attached to the Custodial Agreement) with respect
to such review with exceptions noted thereon. In addition, under the Custodial
Agreement the Depositor will be required to cure certain defects with respect to
the Mortgage Loan Documents for the related Mortgage Loans after the delivery
thereof by the Depositor to the Custodian as more particularly set forth
therein.
Notwithstanding anything to the contrary contained herein, the
parties hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Mortgage Files, including,
but not limited to certain insurance policies and documents contemplated by
Section 4.12, and preparation and delivery of the certifications shall be
performed by the Custodian pursuant to the terms and conditions of the Custodial
Agreement.
The Depositor shall deliver or cause the Originators to
deliver to the related Servicer copies of all trailing documents required to be
included in the Mortgage File at the same time the originals or certified copies
thereof are delivered to the Trustee or Custodian, such documents including the
mortgagee policy of title insurance and any Mortgage Loan Documents upon return
from the recording office. The Servicers shall not be responsible for any
custodian fees or other costs incurred in obtaining such documents and the
Depositor shall cause the Servicers to be reimbursed for any such costs the
Servicers may incur in connection with performing their respective obligations
under this Agreement or the WFHM Servicing Agreement.
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The Mortgage Loans permitted by the terms of this Agreement to
be included in the Trust are limited to (i) Mortgage Loans (which the Depositor
acquired pursuant to the Mortgage Loan Purchase Agreement, which contains, among
other representations and warranties, a representation and warranty of the
Mortgage Loan Seller that no Mortgage Loan is a "High-Cost Home Loan" as defined
in the New Jersey Home Ownership Act effective November 27, 2003 or as defined
in the New Mexico Home Loan Protection Act effective January 1, 2004) and (ii)
Qualified Substitute Mortgage Loans (which, by definition as set forth herein
and referred to in the Mortgage Loan Purchase Agreement, are required to conform
to, among other representations and warranties, the representation and warranty
of the Mortgage Loan Seller that no Qualified Substitute Mortgage Loan is a
"High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective
November 27, 2003 or as defined in the New Mexico Home Loan Protection Act
effective January 1, 2004. The Depositor and the Trustee on behalf of the Trust
understand and agree that it is not intended that any mortgage loan be included
in the Trust that is a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership Act effective November 27, 2003 or as defined in the New Mexico Home
Loan Protection Act effective January 1, 2004.
SECTION 2.02. Acceptance of REMIC I by Trustee.
The Trustee acknowledges receipt, subject to the provisions of
Section 2.01 hereof and Section 2 of the Custodial Agreement, of the Mortgage
Loan Documents and all other assets included in the definition of "REMIC I"
under clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited into
the Distribution Account) and declares that it holds (or the Custodian on its
behalf holds) and will hold such documents and the other documents delivered to
it constituting a Mortgage Loan Document, and that it holds (or the Custodian on
its behalf holds) or will hold all such assets and such other assets included in
the definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
a breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
and adversely affects the value of such Mortgage Loan or the interest therein of
the Certificateholders, the Trustee shall promptly notify the Seller and the
related Servicer of such defect, missing document or breach and request that the
Seller deliver such missing document, cure such defect or breach within 60 days
from the date the Seller was notified of such missing document, defect or
breach, and if the Seller does not deliver such missing document or cure such
defect or breach in all material respects during such period, the Trustee shall
enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement
to repurchase such Mortgage Loan from REMIC I at the Purchase Price within 90
days after the date on which the Seller was notified of such missing document,
defect or breach, if and to the extent that the Seller is obligated to do so
under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be remitted to the related Servicer for deposit
in the Collection Account and the Trustee, upon receipt of written certification
from the related Servicer of such deposit, shall release or cause the Custodian
(upon receipt of a request for release in the form attached to the Custodial
Agreement) to release to the Seller the related Mortgage File and the Trustee
shall execute
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and deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as the Seller shall furnish to it and as
shall be necessary to vest in the Seller any Mortgage Loan released pursuant
hereto, and the Trustee shall not have any further responsibility with regard to
such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided
above, if so provided in the Mortgage Loan Purchase Agreement, the Seller may
cause such Mortgage Loan to be removed from REMIC I (in which case it shall
become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner and subject to the limitations set forth in Section
2.03(b). It is understood and agreed that the obligation of the Seller to cure
or to repurchase (or to substitute for) any Mortgage Loan as to which a document
is missing, a material defect in a constituent document exists or as to which
such a breach has occurred and is continuing shall constitute the sole remedy
respecting such omission, defect or breach available to the Trustee and the
Certificateholders.
In addition, promptly upon the earlier of discovery by Ocwen
or receipt of notice by Ocwen of the breach of the representation or covenant of
the Seller set forth in Section 5(xiv) of the Mortgage Loan Purchase Agreement
which materially and adversely affects the interests of the Holders of the Class
P Certificates in any Prepayment Charge, Ocwen shall promptly notify the Seller
and the Trustee of such breach. The Trustee shall enforce the obligations of the
Seller under the Mortgage Loan Purchase Agreement to remedy such breach to the
extent and in the manner set forth in the Mortgage Loan Purchase Agreement.
(b) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the date which is two years after the Startup Day for REMIC I.
As to any Deleted Mortgage Loan for which the Seller,
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Seller delivering to the Trustee or the Custodian on
behalf of the Trustee, for such Qualified Substitute Mortgage Loan or Loans, the
Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other
documents and agreements, with all necessary endorsements thereon, as are
required by Section 2 of the Custodial Agreement, as applicable, together with
an Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Custodian on behalf of the Trustee shall acknowledge receipt of such Qualified
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
review such documents and deliver to the Depositor, the Trustee and the related
Servicer, with respect to such Qualified Substitute Mortgage Loan or Loans, an
initial certification pursuant to the Custodial Agreement, with any applicable
exceptions noted thereon. Within one year of the date of substitution, the
Custodian on behalf of the Trustee shall deliver to the Depositor, the Trustee
and the related Servicer a final certification pursuant to the Custodial
Agreement with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
REMIC I and will be retained by the Seller. For the month of substitution,
distributions to Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of substitution,
and the Seller shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Depositor shall give or
cause to be given
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written notice to the Certificateholders that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of such
amended Mortgage Loan Schedule to the Trustee and the related Servicer. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall
constitute part of the Trust Fund and shall be subject in all respects to the
terms of this Agreement and the Mortgage Loan Purchase Agreement including all
applicable representations and warranties thereof included herein or in the
Mortgage Loan Purchase Agreement.
For any month in which the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
related Servicer will determine the amount (the "Substitution Shortfall
Amount"), if any, by which the aggregate Purchase Price of all such Deleted
Mortgage Loans exceeds the aggregate of, as to each such Qualified Substitute
Mortgage Loan, the Scheduled Principal Balance thereof as of the date of
substitution, together with one month's interest on such Scheduled Principal
Balance at the applicable Net Mortgage Rate, plus all outstanding P&I Advances
and Servicing Advances (including Nonrecoverable P&I Advances and Nonrecoverable
Servicing Advances) related thereto. On the date of such substitution, the
Seller will deliver or cause to be delivered to the related Servicer for deposit
in the Collection Account an amount equal to the Substitution Shortfall Amount,
if any, and the Trustee or the Custodian on behalf of the Trustee, upon receipt
of the related Qualified Substitute Mortgage Loan or Loans, upon receipt of a
request for release in the form attached to the Custodial Agreement and
certification by the related Servicer of such deposit, shall release to the
Seller the related Mortgage File or Files and the Trustee shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as the Seller shall deliver to it and as
shall be necessary to vest therein any Deleted Mortgage Loan released pursuant
hereto.
In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on any Trust
REMIC, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) any Trust REMIC
to fail to qualify as a REMIC at any time that any Certificate is outstanding.
(c) Upon discovery by the Depositor, the Seller, the related
Servicer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties. In connection therewith, the Seller shall repurchase or
substitute one or more Qualified Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of such
notice with respect to such affected Mortgage Loan. Such repurchase or
substitution shall be made by (i) the Seller if the affected Mortgage Loan's
status as a non-qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Seller under the Mortgage Loan
Purchase Agreement or (ii) the Depositor, if the affected Mortgage Loan's status
as a non-qualified mortgage is a breach of no representation or warranty. Any
such repurchase or substitution shall be made in the same manner as set forth in
Section 2.03(a). The Trustee shall reconvey to the Seller the Mortgage Loan to
be released pursuant
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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.
(d) With respect to a breach of the representations made
pursuant to Section 5(xiv) of the Mortgage Loan Purchase Agreement that
materially and adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Seller shall be required to take the
actions set forth in this Section 2.03.
(e) Within 90 days of the earlier of discovery by Ocwen or
receipt of notice by Ocwen of the breach of any representation, warranty or
covenant of Ocwen set forth in Section 2.05 which materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan or
Prepayment Charge, Ocwen shall cure such breach in all material respects.
SECTION 2.04. Representations and Warranties of the Master
Servicer.
The Master Servicer hereby represents, warrants and covenants
to Ocwen, the Depositor and the Trustee, for the benefit of each of the Trustee
and the Certificateholders, that as of the Closing Date or as of such date
specifically provided herein:
(i) The Master Servicer is a national banking association duly
formed, validly existing and in good standing under the laws of the United
States of America and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Master Servicer;
(ii) The Master Servicer has the full power and authority to
conduct its business as presently conducted by it and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated by this
Agreement. The Master Servicer has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
other parties hereto, constitutes a legal, valid and binding obligation of the
Master Servicer, enforceable against it in accordance with its terms except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity;
(iii) The execution and delivery of this Agreement by the
Master Servicer, the consummation by the Master Servicer of any other of the
transactions herein contemplated, 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 breach of any term or provision of charter and by-laws
of the Master Servicer or (B) conflict with, result in a breach, violation or
acceleration of, or result in a 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 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 a party to, bound by, or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over it, which materially and adversely affects or, to
the
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Master Servicer's knowledge, would in the future materially and adversely
affect, (x) the ability of the Master Servicer to perform its obligations under
this Agreement or (y) the business, operations, financial condition, properties
or assets of the Master Servicer taken as a whole;
(iv) The Master Servicer does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
made by it and contained in this Agreement;
(v) No litigation is pending 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 perform any of its
other obligations hereunder in accordance with the terms hereof,
(vi) There are no actions or proceedings against, or
investigations known to it of, the Master Servicer before any court,
administrative or other tribunal (A) that might prohibit its entering into this
Agreement, (B) seeking to prevent the consummation of the transactions
contemplated by this Agreement or (C) that might prohibit or materially and
adversely affect the performance by the Master Servicer of its obligations
under, or validity or enforceability of, this Agreement; and
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the consummation by it of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations or
orders, if any, that have been obtained prior to the Closing Date.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.04 shall survive the
resignation or termination of the parties hereto and the termination of this
Agreement and shall inure to the benefit of the Trustee, the Depositor and the
Certificateholders.
SECTION 2.05. Representations, Warranties and Covenants of
Ocwen.
Ocwen hereby represents, warrants and covenants to the Master
Servicer, the Securities Administrator, the Depositor and the Trustee, for the
benefit of each of such Persons and the Certificateholders that as of the
Closing Date or as of such date specifically provided herein:
(i) Ocwen is a federally chartered savings bank duly organized
and validly existing under the laws of the United States and is duly
authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by Ocwen in any state in which a
Mortgaged Property related to an Ocwen 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 Ocwen Mortgage Loan and to service the Ocwen
Mortgage Loans in accordance with the terms of this Agreement;
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(ii) Ocwen has the full power and authority to conduct its
business as presently conducted by it and to execute, deliver and
perform, and to enter into and consummate, all transactions
contemplated by this Agreement. Ocwen has duly authorized the
execution, delivery and performance of this Agreement, has duly
executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of Ocwen, enforceable
against it in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity;
(iii) The execution and delivery of this Agreement by Ocwen,
the servicing of the Ocwen Mortgage Loans by Ocwen hereunder, the
consummation by Ocwen of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms
hereof are in the ordinary course of business of Ocwen and will not (A)
result in a breach of any term or provision of the charter or by-laws
of Ocwen or (B) conflict with, result in a breach, violation or
acceleration of, or result in a default under, the terms of any other
material agreement or instrument to which Ocwen is a party or by which
it may be bound, or any statute, order or regulation applicable to
Ocwen of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Ocwen; and Ocwen is not a
party to, bound by, or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to Ocwen's knowledge, would in the
future materially and adversely affect, (x) the ability of Ocwen to
perform its obligations under this Agreement, (y) the business,
operations, financial condition, properties or assets of Ocwen taken as
a whole or (z) the legality, validity or enforceability of this
Agreement;
(iv) Ocwen does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant made
by it and contained in this Agreement;
(v) No litigation is pending against Ocwen that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of Ocwen to service the
Ocwen Mortgage Loans or to perform any of its other obligations
hereunder in accordance with the terms hereof;
(vi) There are no actions or proceedings against, or
investigations known to it of, Ocwen before any court, administrative
or other tribunal (A) that might prohibit its entering into this
Agreement, (B) seeking to prevent the consummation of the transactions
contemplated by this Agreement or (C) that might prohibit or materially
and adversely affect the performance by Ocwen of its obligations under,
or the validity or enforceability of, this Agreement;
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Ocwen of, or compliance by Ocwen with, this
Agreement or the consummation by it of the transactions
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contemplated by this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
Closing Date;
(viii) Ocwen has fully furnished and will continue to fully
furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax,
Experian and Trans Union Credit Information Company or their successors
on a monthly basis; and
(ix) Ocwen will not waive any Prepayment Charge with respect
to any Ocwen Mortgage Loan other than in accordance with the standard
set forth in Section 3.01.
Notwithstanding anything to the contrary contained in this Agreement, if the
covenant of Ocwen set forth in Section 2.05(ix) above is breached, Ocwen will
pay the amount of such waived Prepayment Charge, from its own funds without any
right of reimbursement, for the benefit of the Holders of the Class P
Certificates, by depositing such amount into the Collection Account within 90
days of the earlier of discovery by Ocwen or receipt of notice by Ocwen of such
breach. Furthermore, notwithstanding any other provisions of this Agreement, any
payments made by Ocwen in respect of any waived Prepayment Charges pursuant to
this paragraph shall be deemed to be paid outside of the Trust Fund.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive the
resignation or termination of the parties hereto, the termination of this
Agreement and the delivery of the Mortgage Files to the Custodian and shall
inure to the benefit of the Trustee, the Master Servicer, the Securities
Administrator, the Depositor and the Certificateholders. Upon discovery by any
such Person or Ocwen of a breach of any of the foregoing representations,
warranties and covenants which materially and adversely affects the value of any
Ocwen Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the Trustee. Subject to Section 8.01, unless such breach shall not be
susceptible of cure within 90 days, the obligation of Ocwen set forth in Section
2.03(e) to cure breaches shall constitute the sole remedy against Ocwen
available to the Certificateholders, the Depositor or the Trustee on behalf of
the Certificateholders respecting a breach of the representations, warranties
and covenants contained in this Section 2.05.
SECTION 2.06. Issuance of the REMIC I Regular
Interests and the Class R-I
Interest.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to the Custodian on its behalf of the Mortgage Loan
Documents, subject to the provisions of Section 2.01 and Section 2.02 hereof and
Section 2 of the Custodial Agreement, together with the assignment to it of all
other assets included in REMIC I, the receipt of which is hereby acknowledged.
The interests evidenced by the Class R-I Interest, together with the REMIC I
Regular Interests, constitute the entire beneficial ownership interest in REMIC
I. The rights of the Holders of the Class R-I Interest and REMIC I (as holder of
the REMIC I Regular Interests) to receive distributions from the proceeds of
REMIC I in respect of the Class R-I Interest and the REMIC I
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Regular Interests, respectively, and all ownership interests evidenced or
constituted by the Class R-I Interest and the REMIC I Regular Interests, shall
be as set forth in this Agreement.
SECTION 2.07. Conveyance of the REMIC I
Regular Interests; Acceptance of
REMIC I by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests). The Trustee
acknowledges receipt of the REMIC I Regular Interests and declares that it holds
and will hold the same in trust for the exclusive use and benefit of all present
and future Holders of the Class R-II Interest and REMIC II (as holder of the
REMIC I Regular Interests). The rights of the Holder of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC II in respect of the Class R-II
Interest and REMIC II Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-II Interest and the REMIC II
Regular Interests, shall be as set forth in this Agreement. The Class R-II
Interest and the REMIC II Regular Interests shall constitute the entire
beneficial ownership interest in REMIC II.
SECTION 2.08. Issuance of Class R Certificates.
The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Securities Administrator has executed and authenticated and the Trustee has
delivered to or upon the order of the Depositor, the Class R Certificates in
authorized denominations. The Class R Certificates evidence ownership in the
Class R-I Interest and the Class R-II Interest.
SECTION 2.09. Establishment of the Trust.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "ACE Securities Corp., Home Equity Loan
Trust, Series 2004-HE1" and does hereby appoint HSBC Bank USA, as Trustee in
accordance with the provisions of this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE OCWEN MORTGAGE LOANS; ACCOUNTS
SECTION 3.01. Ocwen to Act as a Servicer.
Ocwen shall service and administer the Ocwen Mortgage Loans on
behalf of the Trust Fund and in the best interests of and for the benefit of the
Certificateholders (as determined by Ocwen in its reasonable judgment) in
accordance with the terms of this Agreement and the respective Ocwen Mortgage
Loans and all applicable law and regulations and, to the extent consistent with
such terms, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary and
usual standards of practice of prudent mortgage lenders and loan servicers
administering similar mortgage loans but without regard to:
(i) any relationship that Ocwen or any Affiliate of Ocwen may
have with the related Mortgagor;
(ii) the ownership of any Certificate by Ocwen or any
Affiliate of the Servicer;
(iii) Ocwen's obligation to make P&I Advances or Servicing
Advances; or
(iv) Ocwen's right to receive compensation for its services
hereunder.
To the extent consistent with the foregoing, Ocwen shall also
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes related to the Ocwen Mortgage Loans and shall waive (or
permit a Sub-Servicers to waive) a Prepayment Charge only under the following
circumstances: (i) such waiver is standard and customary in servicing similar
Mortgage Loans and such waiver is related to a default or reasonably foreseeable
default and would, in the reasonable judgement of Ocwen, maximize recovery of
total proceeds taking into account the value of such Prepayment Charge and the
related Ocwen Mortgage Loan and, if such waiver is made in connection with a
refinancing of the related Ocwen Mortgage Loan, such refinancing is related to a
default or a reasonably foreseeable default or (ii) such Prepayment Charge is
unenforceable in accordance with applicable law or the collection of such
related Prepayment Charge would otherwise violate applicable law.
Notwithstanding any provision in this Agreement to the contrary, in the event
the Prepayment Charge payable under the terms of the Mortgage Note related to an
Ocwen Mortgage Loan is less than the amount of the Prepayment Charge set forth
in the Prepayment Charge Schedule or other information provided to Ocwen, Ocwen
shall not have any liability or obligation with respect to such difference, and
in addition shall not have any liability or obligation to pay the amount of any
uncollected Prepayment Charge if the failure to collect such amount is the
direct result of inaccurate or incomplete information on the Prepayment Charge
Schedule.
Subject only to the above-described servicing standards (the
"Accepted Servicing Practices") and the terms of this Agreement and of the
respective Ocwen Mortgage Loans, Ocwen shall have full power and authority, to
do or cause to be done any and all things in connection with
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such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, Ocwen in its own name is
hereby authorized and empowered by the Trustee when Ocwen believes it
appropriate in its best judgment, to execute and deliver, on behalf of the Trust
Fund, the Certificateholders and the Trustee or any of them, and upon written
notice to the Trustee, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge or subordination, and all other
comparable instruments, with respect to the Ocwen Mortgage Loans and the
Mortgaged Properties and to institute foreclosure proceedings or obtain a
deed-in-lieu of foreclosure so as to convert the ownership of such properties,
and to hold or cause to be held title to such properties, on behalf of the
Trustee, for the benefit of the Trust Fund and the Certificateholders. Ocwen
shall service and administer the Ocwen Mortgage Loans in accordance with
applicable state and federal law and shall provide to the Mortgagors any reports
required to be provided to them thereby. Ocwen shall also comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any standard hazard insurance policy. Subject to Section 3.14, the
Trustee shall execute, at the written request of Ocwen, and furnish to Ocwen any
special or limited powers of attorney and other documents necessary or
appropriate to enable Ocwen to carry out its servicing and administrative duties
hereunder and furnished to the Trustee by Ocwen, and the Trustee shall not be
liable for the actions of Ocwen under such powers of attorney and shall be
indemnified by Ocwen for any cost, liability or expense incurred by the Trustee
in connection with Ocwen's use or misuse of any such power of attorney.
In accordance with Accepted Servicing Practices, Ocwen shall
make or cause to be made Servicing Advances as necessary for the purpose of
effecting the payment of taxes and assessments on the Mortgaged Properties
related to the Ocwen Mortgage Loans, which Servicing Advances shall be
reimbursable in the first instance from related collections from the related
Mortgagors pursuant to Section 3.07, and further as provided in Section 3.09;
provided, however, Ocwen shall only make such Servicing Advance if the related
Mortgagor has not made such payment and if the failure to make such Servicing
Advance would result in the loss of the related Mortgaged Property due to a tax
sale or foreclosure as result of a tax lien. Any cost incurred by Ocwen in
effecting the payment of taxes and assessments on a Mortgaged Property related
to an Ocwen Mortgage Loan shall not, for the purpose of calculating the Stated
Principal Balance of such Ocwen Mortgage Loan or distributions to
Certificateholders, be added to the unpaid principal balance of the related
Ocwen Mortgage Loan, notwithstanding that the terms of such Ocwen Mortgage Loan
so permit.
Notwithstanding anything in this Agreement to the contrary,
Ocwen may not make any future advances with respect to an Ocwen Mortgage Loan
and Ocwen shall not permit any modification with respect to any related Ocwen
Mortgage Loan that would change the Mortgage Rate, reduce or increase the
principal balance (except for reductions resulting from actual payments of
principal) or change the final maturity date on such related Ocwen Mortgage Loan
(unless, as provided in Section 3.06, the related Mortgagor is in default with
respect to the related Ocwen Mortgage Loan or such default is, in the judgment
of the Servicer, reasonably foreseeable) or any modification, waiver or
amendment of any term of any Mortgage Loan that would both (A) effect an
exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or
final, temporary or proposed Treasury regulations promulgated thereunder) and
(B) cause any Trust REMIC created hereunder to fail to qualify as a REMIC under
the Code or the imposition of any tax on "prohibited transactions" or
"contributions after the startup date" under the REMIC Provisions.
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SECTION 3.02. Sub-Servicing Agreements Between Ocwen
and Sub-Servicers.
Ocwen may arrange for the subservicing of any Ocwen Mortgage
Loan by a Sub- Servicer pursuant to a Sub-Servicing Agreement; provided that
such sub-servicing arrangement and the terms of the related Sub-Servicing
Agreement must provide for the servicing of such Ocwen Mortgage Loans in a
manner consistent with the servicing arrangements contemplated hereunder. Each
Sub-Servicer shall be (i) authorized to transact business in the state or states
where the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Sub-Servicer to perform its
obligations hereunder and under the Sub-Servicing Agreement and (ii) a Freddie
Mac or Fannie Mae approved mortgage servicer. Notwithstanding the provisions of
any Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between Ocwen or a Sub-Servicer or reference to
actions taken through Ocwen or otherwise, Ocwen shall remain obligated and
liable to the Depositor, the Trustee and the Certificateholders for the
servicing and administration of the Ocwen Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if Ocwen alone were servicing and administering the
Ocwen Mortgage Loans. Every Sub-Servicing Agreement entered into by Ocwen shall
contain a provision giving the successor Servicer the option to terminate such
agreement in the event a successor Servicer is appointed. All actions of each
Sub-Servicer performed pursuant to the related Sub-Servicing Agreement shall be
performed as an agent of Ocwen with the same force and effect as if performed
directly by Ocwen.
For purposes of this Agreement, Ocwen shall be deemed to have
received any collections, recoveries or payments with respect to the Ocwen
Mortgage Loans that are received by a Sub-Servicer regardless of whether such
payments are remitted by the Sub-Servicer to the Servicer.
SECTION 3.03. Successor Sub-Servicers.
Any Sub-Servicing Agreement shall provide that Ocwen shall be
entitled to terminate any Sub-Servicing Agreement and to either itself directly
service the related Ocwen Mortgage Loans or enter into a Sub-Servicing Agreement
with a successor Sub-Servicer which qualifies under Section 3.02. Any
Sub-Servicing Agreement shall include the provision that such agreement may be
immediately terminated by any successor to Ocwen (which may be the Trustee or
the Master Servicer) without fee, in accordance with the terms of this
Agreement, in the event that Ocwen (or any successor to Ocwen) shall, for any
reason, no longer be the Servicer of the Ocwen Mortgage Loans, (including
termination due to a Servicer Event of Default).
SECTION 3.04. No Contractual Relationship Between
Sub-Servicer, Trustee
or the Certificateholders.
Any Sub-Servicing Agreement and any other transactions or
services relating to the Ocwen Mortgage Loans involving a Sub-Servicer shall be
deemed to be between the Sub-Servicer and Ocwen alone and the Master Servicer,
the Trustee and the Certificateholders shall not be deemed
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parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Sub-Servicer except as set forth in Section
3.05.
SECTION 3.05. Assumption or Termination of Sub-
Servicing Agreement by Successor
Servicer.
In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of Ocwen hereunder
by a successor Servicer (which may be the Trustee or the Master Servicer)
pursuant to Section 8.02, it is understood and agreed that the Ocwen's rights
and obligations under any Sub-Servicing Agreement then in force between Ocwen
and a Sub-Servicer shall be assumed simultaneously by such successor Servicer
without act or deed on the part of such successor Servicer; provided, however,
that any successor Servicer may terminate the Sub- Servicer.
Ocwen shall, upon the reasonable request of the Master
Servicer, but at its own expense, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
The Servicing Fee payable to any such successor Servicer shall
be payable from payments received on the Ocwen Mortgage Loans in the amount and
in the manner set forth in this Agreement.
SECTION 3.06. Collection of Certain Mortgage Loan
Payments.
Ocwen shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Ocwen Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
Accepted Servicing Practices, follow such collection procedures as it would
follow with respect to mortgage loans comparable to the Ocwen Mortgage Loans and
held for its own account. Consistent with the foregoing, Ocwen may in its
discretion (i) waive any late payment charge or, if applicable, penalty interest
or (ii) extend the due dates for the Monthly Payments due on a Mortgage Note
related to an Ocwen Mortgage Loan for a period of not greater than 180 days;
provided that any extension pursuant to this clause shall not affect the
amortization schedule of any Ocwen Mortgage Loan for purposes of any computation
hereunder. Notwithstanding the foregoing, in the event that any Ocwen Mortgage
Loan is in default or, in the judgment of Ocwen, such default is reasonably
foreseeable, Ocwen, consistent with Accepted Servicing Practices may waive,
modify or vary any term of such Mortgage Loan (including modifications that
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Ocwen Mortgage Loan), accept payment from the
related Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Ocwen Mortgage Loan, or consent to the postponement of
strict compliance with any such term or otherwise grant indulgence to any
Mortgagor if in Ocwen's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the Certificateholders
(taking into account any estimated Realized Loss that might result absent such
action).
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SECTION 3.07. Collection of Taxes, Assessments and
Similar Items; Servicing Accounts.
To the extent the terms of a Mortgage related to an Ocwen
Mortgage Loan provide for Escrow Payments, Ocwen shall establish and maintain
one or more accounts (the "Servicing Accounts"), into which all collections from
the related Mortgagors (or related advances from Sub- Servicers) for the payment
of taxes, assessments, fire, flood, and hazard insurance premiums, and
comparable items for the account of the Mortgagors ("Escrow Payments") shall be
deposited and retained. Servicing Accounts shall be Eligible Accounts. Ocwen
shall deposit in the Servicing Accounts on a daily basis and in no event later
than the second Business Day after receipt, and retain therein, all Escrow
Payments collected on account of the Ocwen Mortgage Loans, for the purpose of
effecting the timely payment of any such items as required under the terms of
this Agreement. Withdrawals of amounts from a Servicing Account may be made only
to (i) effect timely payment of taxes, assessments, fire, flood, and hazard
insurance premiums, and comparable items; (ii) reimburse itself out of related
collections for any Servicing Advances made pursuant to Section 3.01 (with
respect to taxes and assessments) and Section 3.11 (with respect to fire, flood
and hazard insurance); (iii) refund to Mortgagors any sums as may be determined
to be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; or (v) clear and terminate the
Servicing Account at the termination of Ocwen's obligations and responsibilities
in respect of the Ocwen Mortgage Loans under this Agreement in accordance with
Article X. As part of its servicing duties, Ocwen shall pay to the Mortgagors
interest on funds in Servicing Accounts, to the extent required by law and, to
the extent that interest earned on funds in the Servicing Accounts is
insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. Notwithstanding the foregoing, Ocwen shall not be
obligated to collect Escrow Payments if the related Ocwen Mortgage Loan does not
require such payments but Ocwen shall nevertheless be obligated to make
Servicing Advances as provided in Section 3.01 and Section 3.11. In the event
Ocwen shall deposit in the Servicing Accounts any amount not required to be
deposited therein, it may at any time withdraw such amount from the Servicing
Accounts, any provision to the contrary notwithstanding.
To the extent that a Mortgage related to an Ocwen Mortgage
Loan does not provide for Escrow Payments, Ocwen (i) shall determine whether any
such payments are made by the Mortgagor in a manner and at a time that is
necessary to avoid the loss of the Mortgaged Property due to a tax sale or the
foreclosure as a result of a tax lien and (ii) shall ensure that all insurance
required to be maintained on the Mortgaged Property pursuant to this Agreement
is maintained. If any such payment has not been made and Ocwen receives notice
of a tax lien with respect to the Ocwen Mortgage Loan being imposed, Ocwen
shall, promptly and to the extent required to avoid loss of the Mortgaged
Property, advance or cause to be advanced funds necessary to discharge such lien
on the Mortgaged Property unless Ocwen determines the advance to be
nonrecoverable. Ocwen assumes full responsibility for the payment of all such
bills and shall effect payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make Servicing Advances to effect such payments
subject to its determination of recoverability.
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SECTION 3.08. Collection Account and Distribution
Account.
(a) On behalf of the Trust Fund, Ocwen shall establish and
maintain one or more Collection Accounts, held in trust for the benefit of the
Trustee and the Certificateholders. On behalf of the Trust Fund, Ocwen shall
deposit or cause to be deposited in the related Collection Account on a daily
basis and in no event later than two Business Days after receipt, as and when
received or as otherwise required hereunder, the following payments and
collections received or made by it on or subsequent to the Cut-off Date other
than amounts attributable to a Due Date on or prior to the Cut-off Date:
(i) all payments on account of principal, including
Principal Prepayments, on the Ocwen Mortgage Loans;
(ii) all payments on account of interest (net of the
related Servicing Fee and any Prepayment Interest Excess) on
each Ocwen Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds
(other than proceeds collected in respect of any particular
REO Property) and all Subsequent Recoveries;
(iv) any amounts required to be deposited by Ocwen
pursuant to Section 3.10 in connection with any losses
realized on Permitted Investments with respect to funds held
in the Collection Account;
(v) any amounts required to be deposited by Ocwen
pursuant to the second paragraph of Section 3.11(a) in respect
of any blanket policy deductibles;
(vi) any Purchase Price or Substitution Shortfall
Amount delivered to Ocwen and all proceeds (net of amounts
payable or reimbursable to Ocwen, the Master Servicer, the
Trustee, the Custodian or the Securities Administrator) of
Ocwen Mortgage Loans purchased in accordance with Section
2.03, Section 3.13 or Section 10.01; and
(vii) any Prepayment Charges collected by Ocwen in
connection with the Principal Prepayment of any of the Ocwen
Mortgage Loans or amounts required to be deposited by Ocwen in
connection with a breach of its obligations under Section
2.05.
The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, assumption fees or other similar fees need not be deposited by Ocwen in
the Collection Account and may be retained by Ocwen as additional compensation.
In the event Ocwen shall deposit in the Collection Account any amount not
required to be deposited therein, it may at any time withdraw such amount from
the Collection Account, any provision herein to the contrary notwithstanding.
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(b) On behalf of the Trust Fund, the Securities Administrator
shall establish and maintain one or more accounts (such account or accounts, the
"Distribution Account"), held in trust for the benefit of the Trustee, the Trust
Fund and the Certificateholders. On behalf of the Trust Fund, Ocwen shall
deliver to the Securities Administrator in immediately available funds for
deposit in the Distribution Account on or before 12:00 noon New York time on the
Servicer Remittance Date, that portion of the Available Distribution Amount
(calculated without regard to the references in clause (2) of the definition
thereof to amounts that may be withdrawn from the Distribution Account) for the
related Distribution Date then on deposit in the Collection Account and the
amount of all Prepayment Charges collected by Ocwen in connection with the
Principal Prepayment of any of the Ocwen Mortgage Loans then on deposit in the
Collection Account and the amount of any funds reimbursable to an Advance
Financing Person pursuant to Section 3.25 of this Agreement. If the balance on
deposit in a Collection Account exceeds $100,000 as of the commencement of
business on any Business Day and the Collection Account constitute an Eligible
Account solely pursuant to clause (ii) of the definition of "Eligible Account,"
Ocwen shall, on or before 5:00 p.m. New York time on such Business Day, withdraw
from the Collection Account any and all amounts payable or reimbursable
to the Depositor, Ocwen, the Trustee, the Master Servicer, the Securities
Administrator or the Seller pursuant to Section 3.09(a) and shall pay such
amounts to the Persons entitled thereto.
With respect to any remittance received by the Securities
Administrator on or after the first Business Day following the Business Day on
which such payment was due, the Securities Administrator shall send written
notice thereof to the related Servicer. Ocwen shall pay to the Securities
Administrator interest on any such late payment by Ocwen at an annual rate equal
to Prime Rate (as defined in the Wall Street Journal) plus one percentage point,
but in no event greater than the maximum amount permitted by applicable law.
Such interest shall be paid by Ocwen to the Securities Administrator on the date
such late payment is made and shall cover the period commencing with the day
following such first Business Day and ending with the Business Day on which such
payment is made, both inclusive. The payment by Ocwen of any such interest, or
the failure of the Securities Administrator to notify Ocwen of such interest,
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by Ocwen.
(d) Funds in the Collection Account maintained by Ocwen and
funds in the Distribution Account may be invested in Permitted Investments in
accordance with the provisions set forth in Section 3.10. Ocwen shall give
notice to the Trustee, the Securities Administrator and the Master Servicer of
the location of the Collection Account maintained by it when established and
prior to any change thereof. The Securities Administrator shall give notice to
the Servicers and the Depositor of the location of the Distribution Account when
established and prior to any change thereof.
(e) Funds held in the Collection Account maintained by Ocwen
at any time may be delivered by Ocwen in immediately available funds to the
Securities Administrator for deposit in the Distribution Account. In the event
Ocwen shall deliver to the Securities Administrator for deposit in the
Distribution Account any amount not required to be deposited therein, it may at
any time request that the Securities Administrator withdraw such amount from the
Distribution Account and remit to it any such amount, any provision herein to
the contrary notwithstanding. In no event shall the Securities Administrator
incur liability as a result of withdrawals from the Distribution Account at the
direction of Ocwen in accordance with the immediately preceding sentence. In
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addition, Ocwen shall deliver to the Securities Administrator no later than the
Servicer Remittance Date the amounts set forth in clauses (i) through (iv)
below:
(i) any P&I Advances, as required pursuant to Section
5.03;
(ii) any amounts required to be deposited pursuant to
Section 3.21(d) or 3.21(f) in connection with any REO Property
related to an Ocwen Mortgage Loan;
(iii) any amounts to be paid in connection with a
purchase of Ocwen Mortgage Loans and REO Properties pursuant
to Section 10.01; and
(iv) any amounts required to be deposited pursuant to
Section 3.22 in connection with any Prepayment Interest
Shortfalls with respect to an Ocwen Mortgage Loan.
SECTION 3.09. Withdrawals from the Collection
Account and Distribution Account.
(a) Ocwen shall, from time to time, make withdrawals
from the related Collection Account for any of the following purposes or as
described in Section 5.03:
(i) to remit to the Securities Administrator for
deposit in the Distribution Account the amounts required to be
so remitted pursuant to Section 3.08(b) or permitted to be so
remitted pursuant to the first sentence of Section 3.08(d);
(ii) subject to Section 3.13(d), to reimburse itself
(including any successor Servicer) for P&I Advances made by
it, but only to the extent of amounts received which represent
Late Collections (net of the related Servicing Fees) of
Monthly Payments on related Ocwen Mortgage Loans with respect
to which such P&I Advances were made in accordance with the
provisions of Section 5.03;
(iii) subject to Section 3.13(d), to pay itself any
unpaid Servicing Fees and reimburse itself any unreimbursed
Servicing Advances with respect to each Mortgage Loan, but
only to the extent of any Liquidation Proceeds and Insurance
Proceeds received with respect to such related Ocwen Mortgage
Loan;
(iv) to pay to itself as servicing compensation (in
addition to the Servicing Fee) on the Servicer Remittance Date
any interest or investment income earned on funds deposited in
the related Collection Account;
(v) to pay itself or the Seller, as the case may be,
with respect to each related Ocwen Mortgage Loan that has
previously been purchased or replaced pursuant to Section 2.03
or Section 3.13(c) all amounts received thereon not included
in the Purchase Price or the Substitution Shortfall Amount;
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(vi) to reimburse itself (including any successor
Servicer) for any P&I Advance or Servicing Advance previously
made by it which it has determined to be a Nonrecoverable P&I
Advance or a Nonrecoverable Servicing Advance in accordance
with the provisions of Section 5.03;
(vii) to reimburse itself or the Depositor for
expenses incurred by or reimbursable to it or the Depositor,
as the case may be, pursuant to Section 3.01 or Section 7.03;
(viii) to reimburse itself or the Trustee, as the
case may be, for expenses reasonably incurred in respect of
the breach or defect giving rise to the purchase obligation
under Section 2.03 of this Agreement that were included in the
Purchase Price of the related Ocwen Mortgage Loan, including
any expenses arising out of the enforcement of the purchase
obligation;
(ix) to pay, or to reimburse itself for advances in
respect of, expenses incurred in connection with any Mortgage
Loan pursuant to Section 3.13(b);
(x) to pay to itself any Prepayment Interest Excess
on the Ocwen Mortgage Loans to the extent not retained
pursuant to Section 3.08(a)(ii)); and
(xi) to clear and terminate the related Collection
Account pursuant to Section 10.01.
Ocwen shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (vii), (viii), (ix) and (x)
above.
(b) The Securities Administrator shall, from time to
time, make withdrawals from the Distribution Account, for any of the following
purposes, without priority:
(i) to make distributions to Certificateholders in
accordance with Section 5.01;
(ii) to pay to itself, the Custodian, the Master
Servicer and the Trustee amounts to which it is entitled
pursuant to Section 9.05 or any other provision of this
Agreement and any Extraordinary Trust Fund Expenses;
(iii) to reimburse itself or the Master Servicer
pursuant to Section 8.02;
(v) to pay to an Advance Financing Person
reimbursements for P&I Advances and/or Servicing Advances
pursuant to Section 3.25;
(vi) to pay any amounts in respect of taxes pursuant
to Section 11.01(g)(v);
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(vii) to pay the Master Servicing Fee to the Master
Servicer;
(viii) to pay the Credit Risk Management Fee to the
Credit Risk Manager; and
(ix) to clear and terminate the Distribution Account
pursuant to Section 10.01.
SECTION 3.10. Investment of Funds in the
Investment Accounts.
(a) Ocwen may direct, by means of written directions
(which may be standing directions), any depository institution maintaining the
related Collection Account to invest the funds in such Collection Account (for
purposes of this Section 3.10, an "Investment Account") in one or more Permitted
Investments bearing interest or sold at a discount, and maturing, unless payable
on demand, (i) no later than the Business Day immediately preceding the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if a Person other than the Securities Administrator is the obligor
thereon, and (ii) no later than the date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if the Securities
Administrator is the obligor on such Permitted Investment. Amounts in the
Distribution Account may be invested in Permitted Investments as directed in
writing by the Master Servicer and maturing, unless payable on demand, (i) no
later than the Business Day immediately preceding the date on which such funds
are required to be withdrawn from such account pursuant to this Agreement, if a
Person other than the Securities Administrator is the obligor thereon, and (ii)
no later than the date on which such funds are required to be withdrawn from
such account pursuant to this Agreement, if the Securities Administrator is the
obligor thereon. All such Permitted Investments shall be held to maturity,
unless payable on demand. Any investment of funds shall be made in the name of
the Trustee (in its capacity as such) or in the name of a nominee of the
Trustee. The Securities Administrator shall be entitled to sole possession over
each such investment in the Distribution Account and, subject to subsection (b)
below, the income thereon, and any certificate or other instrument evidencing
any such investment shall be delivered directly to the Securities Administrator
or its agent, together with any document of transfer necessary to transfer title
to such investment to the Trustee or its nominee. In the event amounts on
deposit in the Collection Account maintained by Ocwen are at any time invested
in a Permitted Investment payable on demand, the party with investment
discretion over such Investment Account shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the last
day such Permitted Investment may otherwise mature hereunder
in an amount equal to the lesser of (1) all amounts then
payable thereunder and (2) the amount required to be withdrawn
on such date; and
(y) demand payment of all amounts due thereunder
promptly upon receipt by such party of written notice from
Ocwen that such Permitted Investment would not constitute a
Permitted Investment in respect of funds thereafter on deposit
in the Investment Account.
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(b) All income and gain realized from the investment
of funds deposited in the Collection Account held by or on behalf of Ocwen,
shall be for the benefit of Ocwen and shall be subject to its withdrawal in
accordance with Section 3.09. Ocwen shall deposit in the Collection Account
maintained by Ocwen the amount of any loss incurred in respect of any such
Permitted Investment made with funds in such account immediately upon
realization of such loss. All earnings and gain realized from the investment of
funds deposited in the Distribution Account shall be for the benefit of the
Master Servicer. The Master Servicer shall remit from its own funds for deposit
into the Distribution Account the amount of any loss incurred on Permitted
Investments in the Distribution Account.
(c) Except as otherwise expressly provided in this
Agreement, if any default occurs in the making of a payment due under any
Permitted Investment, or if a default occurs in any other performance required
under any Permitted Investment, the Trustee may and, subject to Section 9.01 and
Section 9.02(a)(v), shall, at the written direction of the Servicer, take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings.
(d) The Trustee, the Master Servicer or their
respective Affiliates are permitted to receive additional compensation that
could be deemed to be in the Trustee's or the Master Servicer's economic
self-interest for (i) serving as investment adviser, administrator, shareholder
servicing agent, custodian or sub-custodian with respect to certain of the
Permitted Investments, (ii) using Affiliates to effect transactions in certain
Permitted Investments and (iii) effecting transactions in certain Permitted
Investments. Such compensation shall not be considered an amount that is
reimbursable or payable to the Trustee or the Master Servicer pursuant to
Section 3.09 or 3.10 or otherwise payable in respect of Extraordinary Trust Fund
Expenses. Such additional compensation shall not be an expense of the Trust
Fund.
SECTION 3.11. Maintenance of Hazard Insurance,
Errors and Omissions and Fidelity
Coverage and Primary Mortgage
Insurance.
(a) The terms of each Mortgage Note require the related
Mortgagor to maintain fire, flood and hazard insurance policies. To the extent
such policies are not maintained, Ocwen shall cause to be maintained for each
Mortgaged Property that is related to an Ocwen Mortgage Loan fire and hazard
insurance with extended coverage as is customary in the area where the Mortgaged
Property is located in an amount which is at least equal to the lesser of the
current principal balance of such Ocwen Mortgage Loan and the amount necessary
to compensate fully for any damage or loss to the improvements which are a part
of such property on a replacement cost basis, in each case in an amount not less
than such amount as is necessary to avoid the application of any coinsurance
clause contained in the related hazard insurance policy. Ocwen shall also cause
to be maintained fire and hazard insurance on each REO Property with extended
coverage as is customary in the area where the Mortgaged Property is located in
an amount which is at least equal to the lesser of (i) the maximum insurable
value of the improvements which are a part of such property and (ii) the
outstanding principal balance of the related Ocwen Mortgage Loan at the time it
became an REO Property. Ocwen will comply in the performance of this Agreement
with all reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by Ocwen under any such policies (other
than amounts to be applied to the restoration or repair of the property
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subject to the related Mortgage or amounts to be released to the Mortgagor in
accordance with Accepted Servicing Practices, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
related Collection Account, subject to withdrawal pursuant to Section 3.09, if
received in respect of an Ocwen Mortgage Loan, or in the REO Account, subject to
withdrawal pursuant to Section 3.21, if received in respect of an REO Property.
Any cost incurred by Ocwen in maintaining any such insurance shall not, for the
purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Ocwen Mortgage Loan, notwithstanding
that the terms of such Ocwen Mortgage Loan so permit. It is understood and
agreed that no earthquake or other additional insurance is to be required of any
Mortgagor 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 or REO Property is at any time in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, Ocwen will cause to be maintained a flood insurance policy in
respect thereof. Such flood insurance shall be in an amount equal to the lesser
of (i) the unpaid principal balance of the related Mortgage Loan and (ii) the
maximum amount of such insurance available for the related Ocwen Mortgaged
Property under the national flood insurance program (assuming that the area in
which such Mortgaged Property is located is participating in such program).
In the event that Ocwen shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of A:X or better in Best's
Key Rating Guide or otherwise acceptable to Fannie Mae or Freddie Mac insuring
against hazard losses on all of the Ocwen Mortgage Loans, it shall conclusively
be deemed to have satisfied its obligations to cause fire and hazard insurance
to be maintained on the Mortgaged Properties, it being understood and agreed
that such policy may contain a deductible clause, in which case Ocwen shall, in
the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.11, and there shall have been one or more losses which would have been
covered by such policy, deposit to the related Collection Account from its own
funds the amount not otherwise payable under the blanket policy because of such
deductible clause. In connection with its activities as administrator and
servicer of the Mortgage Loans, Ocwen agrees to prepare and present, on behalf
of itself, the Trustee, the Trust Fund and the Certificateholders, claims under
any such blanket policy in a timely fashion in accordance with the terms of such
policy.
(b) Ocwen shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of its respective obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Fannie Mae or Freddie Mac if it were the purchaser of the Ocwen
Mortgage Loans, unless Ocwen, has obtained a waiver of such requirements from
Fannie Mae or Freddie Mac. Ocwen shall also maintain a fidelity bond in the form
and amount that would meet the requirements of Fannie Mae or Freddie Mac, unless
Ocwen has obtained a waiver of such requirements from Fannie Mae or Freddie Mac.
Ocwen shall be deemed to have complied with this provision if an Affiliate of
Ocwen, 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 Ocwen. Any such errors and omissions policy and fidelity
bond shall by its terms not be cancelable without thirty days' prior written
notice to the Trustee.
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(c) Ocwen shall not take any action that would result in
noncoverage under any applicable primary mortgage insurance policy of any loss
which, but for the actions of Ocwen would have been covered thereunder. Ocwen
shall use its best efforts to keep in force and effect any applicable primary
mortgage insurance policy and, to the extent that the related Ocwen Mortgage
Loan requires the Mortgagor to maintain such insurance, any other primary
mortgage insurance applicable to any Ocwen Mortgage Loan. Except as required by
applicable law or the related Mortgage Loan Documents, Ocwen shall not cancel or
refuse to renew any such primary mortgage insurance policy that is in effect at
the date of the initial issuance of the related Mortgage Note and is required to
be kept in force hereunder.
Ocwen agrees to present on behalf of the Trustee and the
Certificateholders claims to the applicable insurer under any other primary
mortgage insurance policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any primary mortgage insurance
policies respecting defaulted Ocwen Mortgage Loans. Pursuant to Section 3.08,
any amounts collected by Ocwen under any primary mortgage insurance policies
shall be deposited in the related Collection Account, subject to withdrawal
pursuant to Section 3.09.
SECTION 3.12. Enforcement of Due-on-Sale Clauses;
Assumption Agreements.
Ocwen shall, to the extent it has knowledge of any conveyance
of any Mortgaged Property related to an Ocwen Mortgage Loan by any related
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Ocwen
Mortgage Loan under the "due-on-sale" clause, if any, applicable thereto;
provided, however, that Ocwen shall not exercise any such rights if prohibited
by law from doing so. If Ocwen reasonably believes it is unable under applicable
law to enforce such "due-on-sale" clause, or if any of the other conditions set
forth in the proviso to the preceding sentence apply, Ocwen shall enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. Ocwen is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note, provided that no such substitution shall be effective unless such person
satisfies the then current underwriting criteria of Ocwen for mortgage loans
similar to the Ocwen Mortgage Loans. In connection with any assumption or
substitution, Ocwen shall apply such underwriting standards and follow such
practices and procedures as shall be normal and usual in its general mortgage
servicing activities and as it applies to other mortgage loans owned solely by
it. Ocwen shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable in the circumstances) it
shall have received confirmation, in writing, of the continued effectiveness of
any applicable hazard insurance policy. Any fee collected by Ocwen in respect of
an assumption or substitution of liability agreement will be retained by Ocwen
as additional servicing compensation. In connection with any such assumption, no
material term of the Mortgage Note (including but not limited to the related
Mortgage Rate and the amount of the Monthly Payment) may be amended or modified,
except as otherwise required pursuant to the terms thereof. Ocwen shall notify
the Trustee (or the Custodian) that any such
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substitution or assumption agreement has been completed by forwarding to the
Trustee the executed original of such substitution or assumption agreement,
which document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, Ocwen shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of an
Ocwen Mortgage Loan by operation of law or by the terms of the Mortgage Note or
any assumption which Ocwen may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.12, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
SECTION 3.13. Realization Upon Defaulted Mortgage
Loans.
(a) Ocwen shall use its best efforts, consistent with Accepted
Servicing Practices, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Ocwen Mortgage Loans as come into
and continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments pursuant to Section 3.06. Ocwen shall be
responsible for all costs and expenses incurred by it in any such proceedings;
provided, however, that such costs and expenses will be recoverable as Servicing
Advances by Ocwen as contemplated in Sections 3.09 and 3.21. The foregoing is
subject to the provision that, in any case in which a Mortgaged Property shall
have suffered damage from an Uninsured Cause, Ocwen shall not be required to
expend its own funds toward the restoration of such property unless it shall
determine in its discretion that such restoration will increase the proceeds of
liquidation of the related Ocwen Mortgage Loan after reimbursement to itself for
such expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.13 or any other provision of this Agreement, with respect to any Ocwen
Mortgage Loan as to which Ocwen has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, Ocwen shall not, on behalf of the Trust Fund, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trust Fund, the Trustee or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless Ocwen has also previously
determined, based on its reasonable judgment and a prudent report prepared by an
Independent Person who regularly conducts environmental audits using customary
industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
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(2) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes or petroleum-based
materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal, state or
local law or regulation, or that if any such materials are present for
which such action could be required, that it would be in the best
economic interest of the Trust Fund to take such actions with respect
to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by
this Section 3.13 shall be advanced by Ocwen, subject to Ocwen's right to be
reimbursed therefor from the related Collection Account as provided in Section
3.09(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Ocwen Mortgage Loans.
If Ocwen determines, as described above, that it is in the
best economic interest of the Trust Fund to take such actions as are necessary
to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
Ocwen shall take such action as it deems to be in the best economic interest of
the Trust Fund. The cost of any such compliance, containment, cleanup or
remediation shall be advanced by Ocwen, subject to Ocwen's right to be
reimbursed therefor from the related Collection Account as provided in Sections
3.09(a)(iii) or 3.09(a)(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the related Collection
Account received in respect of the affected Ocwen Mortgage Loan or other Ocwen
Mortgage Loans.
(c) Ocwen shall have the right to purchase from REMIC I any
defaulted Ocwen Mortgage Loan that is 90 days or more delinquent, which Ocwen
determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee, in form and substance satisfactory to Ocwen and the Trustee, prior to
purchase), at a price equal to the Purchase Price. The Purchase Price for any
Ocwen Mortgage Loan purchased hereunder shall be deposited in the related
Collection Account, and the Trustee, upon receipt of written certification from
Ocwen of such deposit, shall release or cause to be released to Ocwen the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, representation or
warranty, as Ocwen shall furnish and as shall be necessary to vest in Ocwen
title to any Ocwen Mortgage Loan released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Ocwen Mortgage
Loan, will be applied in the following order of priority: first, to reimburse
Ocwen for any related unreimbursed Servicing Advances and P&I Advances, pursuant
to Section 3.09(a)(ii) or (a)(iii); second, to accrued and unpaid interest on
the Ocwen Mortgage Loan, to the date of the Final Recovery Determination, or to
the Due Date prior to the Distribution Date on which such amounts are to be
distributed if not in connection with a Final Recovery Determination; and third,
as a recovery of principal of the Ocwen Mortgage Loan. If the
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amount of the recovery so allocated to interest is less than the full amount of
accrued and unpaid interest due on such Ocwen Mortgage Loan, the amount of such
recovery will be allocated by Ocwen as follows: first, to unpaid Servicing Fees;
and second, to the balance of the interest then due and owing. The portion of
the recovery so allocated to unpaid Servicing Fees shall be reimbursed to Ocwen
pursuant to Section 3.09(a)(iii). The portion of the recovery allocated to
interest (net of unpaid Servicing Fees) and the portion of the recovery
allocated to principal of the Ocwen Mortgage Loan shall be applied as follows:
first, to reimburse Ocwen for any related unreimbursed Advances in accordance
with Section 3.09(a)(ii) and any other amounts reimbursable to Ocwen pursuant to
Section 3.09, and second, as part of the amounts to be transferred to the
Distribution Account in accordance with Section 3.08(b).
SECTION 3.14. Trustee to Cooperate; Release of
Mortgage Files.
(a) Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the related Servicer of a notification that payment in
full has been escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the related Servicer will
promptly furnish to the Custodian, on behalf of the Trustee, two copies of a
request for release substantially in the form attached to the Custodial
Agreement signed by a Servicing Officer or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payment that are required to
be deposited in the related Collection Account have been or will be so
deposited) and shall request that the Custodian, on behalf of the Trustee,
deliver to the related Servicer the related Mortgage File. Upon receipt of such
certification and request, the Custodian, on behalf of the Trustee, shall within
five (5) Business Days release the related Mortgage File to the related Servicer
and the Trustee and Custodian shall have no further responsibility with regard
to such Mortgage File. Upon any such payment in full, the related Servicer is
authorized, to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the Mortgaged Property
subject to the Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the related Collection
Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the related Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Custodian, on behalf of the Trustee, shall, upon the
request of the Servicer, and delivery to the Custodian, on behalf of the
Trustee, of two copies of a request for release signed by a Servicing Officer
substantially in the form attached to the Custodial Agreement (or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer), release within five (5) Business Days the
related Mortgage File held in its possession or control to the Servicer. Such
trust receipt shall obligate the related Servicer to return the Mortgage File to
the Custodian on behalf of the Trustee, when the need therefor by the related
Servicer no longer exists unless the Mortgage Loan shall be liquidated, in which
case, upon
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receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the Mortgage File shall be released by the Custodian, on behalf of
the Trustee, to the Servicer.
Notwithstanding the foregoing, in connection with a Principal
Prepayment in full of any Mortgage Loan, the Master Servicer may request release
of the related Mortgage File from the Custodian, in accordance with the
provisions of the Custodial Agreement, in the event the related Servicer fails
to do so.
Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the related Servicer, any court pleadings, requests
for trustee's sale or other documents prepared and delivered to the Trustee and
reasonably acceptable to it and necessary to the foreclosure or trustee's sale
in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale. So long as no Servicing Termination Event shall have occurred
and be continuing, the related Servicer shall have the right to execute any and
all such court pleadings, requests and other documents as attorney-in-fact for,
and on behalf of the Trustee.
SECTION 3.15. Servicing Compensation.
As compensation for the activities of Ocwen, hereunder, Ocwen
shall be entitled to the Servicing Fee with respect to each Ocwen Mortgage Loan
payable solely from payments of interest in respect of such Ocwen Mortgage Loan,
subject to Section 3.22. In addition, Ocwen shall be entitled to recover unpaid
Servicing Fees out of Insurance Proceeds or Liquidation Proceeds to the extent
permitted by Section 3.09(a)(iii) and out of amounts derived from the operation
and sale of an REO Property to the extent permitted by Section 3.21. The right
to the Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of Ocwen's responsibilities under this
Agreement to the extent permitted herein.
Additional servicing compensation in the form of assumption
fees, late payment charges and other miscellaneous fees (other than Prepayment
Charges) shall be retained by Ocwen only to the extent such fees or charges are
received by Ocwen. Ocwen shall also be entitled pursuant to Section 3.09(a)(iv)
to withdraw from the related Collection Account and pursuant to Section 3.21(b)
to withdraw from any REO Account, as additional servicing compensation, interest
or other income earned on deposits therein, subject to Section 3.10. In
addition, Ocwen shall be entitled to retain or withdraw from the related
Collection Account, pursuant to Section 3.09(a)(x), any Prepayment Interest
Excess with respect to the Ocwen Mortgage Loans as additional servicing
compensation. Ocwen shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided herein.
SECTION 3.16. Collection Account Statements.
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Not later than fifteen days after each Distribution Date,
Ocwen shall forward to the Master Servicer, the Securities Administrator, the
Trustee and the Depositor a statement prepared by the institution at which the
related Collection Account is maintained setting forth the status of the related
Collection Account as of the close of business on such Distribution Date and
showing, for the period covered by such statement, the aggregate amount of
deposits into and withdrawals from the related Collection Account of each
category of deposit specified in Section 3.08(a) and each category of withdrawal
specified in Section 3.09. Copies of such statement shall be provided by the
Securities Administrator to any Certificateholder and to any Person identified
to the Securities Administrator as a prospective transferee of a Certificate,
upon request at the expense of the requesting party, provided such statement is
delivered by Ocwen to the Securities Administrator.
SECTION 3.17. Statement as to Compliance.
Not later than March 15th of each calendar year commencing in
2005, Ocwen shall deliver to the Trustee, the Master Servicer and the Depositor
an Officers' Certificate (upon which the Master Servicer can conclusively rely
in connection with its obligations under Section 5.06) stating, as to each
signatory thereof, that (i) a review of the activities of Ocwen during the
preceding year and of performance under this Agreement has been made under such
officers' supervision and (ii) to the best of such officer's knowledge, based on
such review, Ocwen has fulfilled all of 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. Copies of any such statement shall be provided by the
Trustee to any Certificateholder, upon request at the expense of the requesting
party, provided such statement is delivered by Ocwen to the Trustee.
SECTION 3.18. Independent Public Accountants'
Servicing Report.
Not later than March 15th of each calendar year commencing in
2005, Ocwen, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to Ocwen a report stating
that (i) it has obtained a letter of representation regarding certain matters
from the management of Ocwen which includes an assertion that Ocwen has complied
with certain minimum residential mortgage loan servicing standards, identified
in the Uniform Single Attestation Program for Mortgage Bankers established by
the Mortgage Bankers Association of America, with respect to the servicing of
residential mortgage loans during the most recently completed fiscal year
and (ii) on the basis of an examination conducted by such firm in accordance
with standards established by the American Institute of Certified Public
Accountants, such representation is fairly stated and such firm has determined
that Ocwen has complied in all material respects, subject to such exceptions and
other qualifications that may be appropriate. Immediately upon receipt of such
report, Ocwen shall furnish a copy of such report to the Master Servicer, the
Trustee and each Rating Agency. Copies of such statement shall be provided by
the Trustee to any Certificateholder upon request at Ocwen's expense, provided
that such statement is delivered by Ocwen to the Trustee.
SECTION 3.19 Annual Certification.
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(a) Ocwen shall deliver to the Master Servicer, on or before
March 15th of each calendar year beginning in 2005 (or, if any such day is not a
Business Day, the immediately preceding Business Day) or such alternative date
reasonably specified by the Master Servicer which shall occur not earlier than
15 days prior to the date any Form 10-K is required to be filed with the
Commission in connection with the transactions contemplated by this Agreement, a
certification in the form attached hereto as Exhibit C. Such certification shall
be signed by the senior officer in charge of servicing of Ocwen. In addition,
Ocwen shall provide such other information with respect to the Ocwen Mortgage
Loans and the servicing and administration thereof within the control of Ocwen
which shall be required to enable the Master Servicer to comply with the
reporting requirements of the Securities and Exchange Act of 1934, as amended
pursuant to Section 5.06 hereof.
(b) Ocwen shall indemnify and hold harmless the Master
Servicer, the Securities Administrator, the Trustee, the Depositor and their
respective officers, directors, agents and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by Ocwen or any of its officers, directors, agents or affiliates
of its obligations under this Section 3.19 or Ocwen's negligence, bad faith or
willful misconduct in connection therewith. Such indemnity shall survive the
termination or resignation of the parties hereto or the termination of this
Agreement. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Master Servicer, the Securities Administrator,
the Trustee and the Depositor, then Ocwen agrees that it shall contribute to the
amount paid or payable by the Master Servicer, the Securities Administrator, the
Trustee and the Depositor as a result of the losses, claims, damages or
liabilities of the Master Servicer, the Securities Administrator, the Trustee
and the Depositor in such proportion as is appropriate to reflect the relative
fault of the Master Servicer, the Securities Administrator, the Trustee and the
Depositor on the one hand and Ocwen on the other in connection with a breach of
Ocwen's obligations under this Section 3.19.
SECTION 3.20. Access to Certain Documentation.
Ocwen shall provide to the Office of Thrift Supervision, the
FDIC, and any other federal or state banking or insurance regulatory authority
that may exercise authority over any Certificate Owner, access to the
documentation regarding the Ocwen Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of Ocwen
designated by it. Nothing in this Section 3.20 shall limit the obligation of
Ocwen to comply with any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of Ocwen to provide access as provided
in this Section as a result of such obligation shall not constitute a breach of
this Section. Nothing in this Section 3.20 shall require Ocwen to collect,
create, collate or otherwise generate any information that it does not generate
in its usual course of business. Ocwen shall not be required to make copies of
or ship documents to any Person unless provisions have been made for the
reimbursement of the costs thereof.
SECTION 3.21. Title, Management and Disposition of
REO Property.
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(a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, on behalf of the Trust Fund
and for the benefit of the Certificateholders. Ocwen, on behalf of REMIC I,
shall either sell any REO Property by the close of the third calendar year
following the calendar year in which REMIC I acquires ownership of such REO
Property for purposes of Section 860G(a)(8) of the Code or request from the
Internal Revenue Service, no later than 60 days before the day on which the
three-year grace period would otherwise expire an extension of the three-year
grace period, unless Ocwen had delivered to the Trustee an Opinion of Counsel,
addressed to the Trustee and the Depositor, to the effect that the holding by
REMIC I of such REO Property subsequent to three years after its acquisition
will not result in the imposition on any Trust REMIC created hereunder of taxes
on "prohibited transactions" thereof, as defined in Section 860F of the Code, or
cause any Trust REMIC hereunder to fail to qualify as a REMIC under Federal law
at any time that any Certificates are outstanding. Ocwen shall manage, conserve,
protect and operate each REO Property for the Certificateholders solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by any Trust REMIC
created hereunder of any "income from non-permitted assets" within the meaning
of Section 860F(a)(2)(B) of the Code, or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions.
(b) Ocwen shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall establish and maintain with
respect to REO Properties an account held in trust for the Trustee, on behalf of
the Trust Fund and for the benefit of the Certificateholders (the "REO
Account"), which shall be an Eligible Account. Ocwen shall be permitted to allow
the related Collection Account to serve as the REO Account, subject to separate
ledgers for each REO Property. Ocwen shall be entitled to retain or withdraw any
interest income paid on funds deposited in the REO Account.
(c) Ocwen shall have full power and authority, subject only to
the specific requirements and prohibitions of this Agreement, to do any and all
things in connection with any REO Property as are consistent with the manner in
which Ocwen manages and operates similar property owned by it or any of its
Affiliates, all on such terms and for such period as Ocwen deems to be in the
best interests of Certificateholders. In connection therewith, Ocwen shall
deposit, or cause to be deposited, on a daily basis in the REO Account all
revenues received by it with respect to an REO Property and shall withdraw
therefrom funds necessary for the proper operation, management and maintenance
of such REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of such
REO Property;
(ii) all real estate taxes and assessments in respect of such
REO Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with
respect to an REO Property are insufficient for the purposes set forth in
clauses (i) through (iii) above with respect to such REO Property, Ocwen shall
advance from its own funds such amount as is necessary for such
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purposes if, but only if, Ocwen would make such advances if Ocwen owned the REO
Property and if in Ocwen's judgment, the payment of such amounts will be
recoverable from the rental or sale of the REO Property.
Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding the foregoing, Ocwen, on
behalf of the Trust Fund, shall not:
(i) enter into, renew or extend any New Lease with respect to
any REO Property, if the New Lease by its terms will give rise to any
income that does not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO
Property, other than the completion of a building or other improvement
thereon, and then only if more than ten percent of the construction of
such building or other improvement was completed before default on the
related Ocwen Mortgage Loan became imminent, all within the meaning of
Section 856(e)(4)(B) of the Code; or
(iv) allow any Person to Directly Operate any REO Property on
any date more than 90 days after its date of acquisition by the Trust
Fund;
unless, in any such case, Ocwen has obtained an Opinion of Counsel, provided to
Ocwen and the Trustee, to the effect that such action will not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by REMIC I, in which
case Ocwen may take such actions as are specified in such Opinion of Counsel.
Ocwen may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered
to require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above and remit all related revenues
(net of such costs and expenses) to Ocwen as soon as practicable, but
in no event later than thirty days following the receipt thereof by
such Independent Contractor;
(iii) none of the provisions of this Section 3.21(c) relating
to any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve Ocwen of any of its duties and
obligations to the Trustee on behalf of the Trust Fund and for the
benefit of the Certificateholders with respect to the operation and
management of any such REO Property; and
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(iv) Ocwen shall be obligated with respect thereto to the same
extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
Ocwen shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of Ocwen by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. Ocwen shall be solely liable for all fees owed by it to
any such Independent Contractor, irrespective of whether Ocwen's compensation
pursuant to Section 3.15 is sufficient to pay such fees. Any such agreement
shall include a provision that such agreement may be immediately terminated by
the Trustee (as successor Servicer) or any other successor Servicer (including
the Master Servicer) without fee, in the event Ocwen shall for any reason, no
longer be the Servicer of the Ocwen Mortgage Loans (including termination due to
a Servicer Event of Default).
(d) In addition to the withdrawals permitted under Section
3.21(c), Ocwen may from time to time make withdrawals from the REO Account for
any REO Property: (i) to pay itself unpaid Servicing Fees in respect of the
related Ocwen Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer
for unreimbursed Servicing Advances and Advances made in respect of such REO
Property or the related Ocwen Mortgage Loan. On the Servicer Remittance Date,
Ocwen shall withdraw from each REO Account maintained by it and deposit into the
Distribution Account in accordance with Section 3.08(d)(ii), for distribution on
the related Distribution Date in accordance with Section 5.01, the income from
the related REO Property received during the prior calendar month, net of any
withdrawals made pursuant to Section 3.21(c) or this Section 3.21(d).
(e) Subject to the time constraints set forth in Section
3.21(a), each REO Disposition shall be carried out by Ocwen at such price and
upon such terms and conditions as Ocwen shall deem necessary or advisable, as
shall be normal and usual in accordance with Accepted Servicing Practices.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Ocwen Mortgage
Loan and net of any payment or reimbursement to Ocwen as provided above, shall
be deposited in the Distribution Account in accordance with Section 3.08(d)(ii)
on the Servicer Remittance Date in the month following the receipt thereof for
distribution on the related Distribution Date in accordance with Section 5.01.
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration).
(g) Ocwen shall file information returns (and shall provide a
certification of a Servicing Officer to the Master Servicer that such filings
have been made) with respect to the receipt of mortgage interest received in a
trade or business, reports of foreclosures and abandonments of any Mortgaged
Property and cancellation of indebtedness income with respect to any Mortgaged
Property as required by Sections 6050H, 6050J and 6050P of the Code,
respectively. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code.
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SECTION 3.22. Obligations of Ocwen in Respect of
Prepayment Interest Shortfalls;
Relief Act Interest Shortfalls.
Ocwen shall deliver to the Securities Administrator for
deposit into the Distribution Account on or before 12:00 noon New York time on
the Servicer Remittance Date from its own funds an amount equal to the lesser of
(i) the aggregate amount of the Prepayment Interest Shortfalls attributable to
prepayments in full on the Ocwen Mortgage Loans for the related Distribution
Date resulting solely from voluntary Principal Prepayments received by Ocwen
during the related Prepayment Period and (ii) the aggregate amount of the
related Servicing Fees payable to Ocwen on such Distribution Date with respect
to the Ocwen Mortgage Loans. Ocwen shall not have the right to reimbursement for
any amounts remitted to the Securities Administrator in respect of this Section
3.22. Ocwen shall not be obligated to pay the amounts set forth in this Section
3.22 with respect to shortfalls resulting from the application of the Relief
Act.
SECTION 3.23. Obligations of Ocwen in Respect of
Mortgage Rates and Monthly Payments.
In the event that a shortfall in any collection on or
liability with respect to any Ocwen Mortgage Loan results from or is
attributable to adjustments to Mortgage Rates, Monthly Payments or Stated
Principal Balances that were made by Ocwen in a manner not consistent with the
terms of the related Mortgage Note and this Agreement, Ocwen, upon discovery or
receipt of notice thereof, immediately shall deliver to the Securities
Administrator 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 Securities Administrator and the Master Servicer, the
Depositor and any successor Servicer in respect of any such liability. Such
indemnities shall survive the termination or discharge of this Agreement.
Notwithstanding the foregoing, this Section 3.23 shall not limit the ability of
Ocwen to seek recovery of any such amounts from the related Mortgagor under the
terms of the related Mortgage Note and Mortgage, to the extent permitted by
applicable law.
SECTION 3.24. Reserve Fund.
(a) No later than the Closing Date, the Securities
Administrator shall establish and maintain a separate, segregated trust account
entitled, "Reserve Fund, Wells Fargo Bank, N.A., in trust for the registered
holders of ACE Securities Corp. Home Equity Loan Trust, Series 2004-HE1, Asset
Backed Pass-Through Certificates." On the Closing Date, the Depositor will
deposit, or cause to be deposited, into the Reserve Fund $1,000. In addition,
the amount deposited in the Reserve Fund shall be increased by any payments
received by the Securities Administrator under the Cap Contract relating to the
Group I Mortgage Loans and deposited into Reserve Fund for the benefit of the
Class A-1 Certificates, Class A-3 Certificates, Mezzanine Certificates and the
Class B Certificates and under the Cap Contract relating to the Group II
Mortgage Loans and deposited in the Reserve Fund for the benefit of the Class
A-2 Certificates, the Mezzanine Certificates and the Class B Certificates.
(b) On each Distribution Date, the Securities Administrator
shall deposit into the Reserve Fund the amounts described in Section
5.01(a)(7)(xxiv), rather than distributing such amounts to the Class CE
Certificateholders, and Section 5.01(a)(7)(xxv). On each such Distribution
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Date, the Securities Administrator shall hold all such amounts for the benefit
of the Holders of the Class A Certificates, the Mezzanine Certificates and the
Class B Certificates and will distribute such amounts to the Holders of the
Class A Certificates, the Mezzanine Certificates and the Class B Certificates,
in the amounts and priorities set forth in Section 5.01(a). If no Net WAC Rate
Carryover Amounts are payable on a Distribution Date, the Securities
Administrator shall deposit, into the Reserve Fund on behalf of the Class CE
Certificateholders, from amounts otherwise distributable to the Class CE
Certificateholders, an amount such that when added to other amounts already on
deposit in the Reserve Fund, the aggregate amount on deposit therein is equal to
$1,000.
(c) For federal and state income tax purposes, the Class CE
Certificateholders will be deemed to be the owners of the Reserve Fund and all
amounts deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) shall be treated as amounts distributed by REMIC II to the Holders of
the Class CE Certificates. Upon the termination of the Trust Fund, or the
payment in full of the Class A Certificates, the Mezzanine Certificates and the
Class B Certificates, all amounts remaining on deposit in the Reserve Fund will
be released by the Trust Fund and distributed to the Class CE Certificateholders
or their designees. The Reserve Fund will be part of the Trust Fund but not part
of any REMIC and any payments to the Holders of the Class A Certificates, the
Mezzanine Certificates or the Class B Certificates of Net WAC Rate Carryover
Amounts will not be payments with respect to a "regular interest" in a REMIC
within the meaning of Code Section 860(G)(a)(1).
(d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees that the Securities Administrator will deposit
into the Reserve Fund the amounts described above on each Distribution Date
rather than distributing such amounts to the Class CE Certificateholders. By
accepting a Class CE Certificate, each Class CE Certificateholder further agrees
that its agreement to such action by the Securities Administrator is given for
good and valuable consideration, the receipt and sufficiency of which is
acknowledged by such acceptance.
(e) At the direction of the Holders of a majority in
Percentage Interest in the Class CE Certificates, the Securities Administrator
shall direct any depository institution maintaining the Reserve Fund to invest
the funds in such account in one or more Permitted Investments bearing interest
or sold at a discount, and maturing, unless payable on demand, (i) no later than
the Business Day immediately preceding the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement, if a Person other
than the Securities Administrator or an Affiliate manages or advises such
investment, and (ii) no later than the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if the Securities
Administrator or an Affiliate manages or advises such investment. All income and
gain earned upon such investment shall be deposited into the Reserve Fund. In no
event shall the Securities Administrator be liable for any investments made
pursuant to this clause (e). If the Holders of a majority in Percentage Interest
in the Class CE Certificates fail to provide investment instructions, funds on
deposit in the Reserve Fund shall be held uninvested by the Securities
Administrator without liability for interest or compensation.
(f) For federal tax return and information reporting, the
right of the Class A Certificateholders, the Mezzanine Certificateholders and
Class B Certificateholders to receive
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payments from the Reserve Fund in respect of any Net WAC Rate Carryover Amount
shall be assigned a value of zero.
SECTION 3.25. Advance Facility.
(a) Notwithstanding anything to the contrary contained herein,
(i) Ocwen is hereby authorized to enter into an advance facility ("Advance
Facility") but no more than two Advance Facilities without the prior written
consent of the Trustee, which consent shall not be unreasonably withheld, under
which (A) Ocwen sells, assigns or pledges to an advancing person (an "Advance
Financing Person") Ocwen's rights under this Agreement to be reimbursed for any
P&I Advances or Servicing Advances and/or (B) an Advance Financing Person agrees
to finance some or all P&I Advances or Servicing Advances required to be made by
Ocwen pursuant to this Agreement and (ii) Ocwen is hereby authorized to assign
its rights to the Servicing Fee (which rights shall terminate upon the
resignation, termination or removal of Ocwen pursuant to the terms of this
Agreement); it being understood that neither the Trust Fund nor any party hereto
shall have a right or claim (including without limitation any right of offset)
to any amounts for reimbursement of P&I Advances or Servicing Advances so
assigned or to the portion of the Servicing Fee so assigned. Subject to the
provisions of the first sentence of this Section 3.25(a), no consent of the
Depositor, Trustee, Certificateholders or any other party is required before
Ocwen may enter into an Advance Facility, but Ocwen shall provide notice to the
Depositor, Master Servicer and the Trustee of the existence of any such Advance
Facility promptly upon the consummation thereof stating (a) the identity of the
Advance Financing Person and (b) the identity of any Person ("Servicer's
Assignee") who has the right to receive amounts in reimbursement of previously
unreimbursed P&I Advances or Servicing Advances. Notwithstanding the existence
of any Advance Facility under which an advancing person agrees to finance P&I
Advances and/or Servicing Advances on Ocwen's behalf, Ocwen shall remain
obligated pursuant to this Agreement to make P&I Advances and Servicing Advances
pursuant to and as required by this Agreement, and shall not be relieved of such
obligations by virtue of such Advance Facility.
(b) Reimbursement amounts shall consist solely of amounts in
respect of P&I Advances and/or Servicing Advances made with respect to the Ocwen
Mortgage Loans for which Ocwen would be permitted to reimburse itself in
accordance with this Agreement, assuming Ocwen had made the related P&I
Advance(s) and/or Servicing Advance(s).
(c) Ocwen shall maintain and provide to any successor Servicer
(with, upon request, a copy to the Trustee) a detailed accounting on a
loan-by-loan basis as to amounts advanced by, pledged or assigned to, and
reimbursed to any advancing person. The successor Servicer shall be entitled to
rely on any such information provided by the predecessor Servicer, and the
successor Servicer shall not be liable for any errors in such information.
(d) Reimbursement amounts distributed with respect to each
Ocwen Mortgage Loan shall be allocated to outstanding unreimbursed P&I Advances
or Servicing Advances (as the case may be) made with respect to that Ocwen
Mortgage Loan on a "first-in, first out" (FIFO) basis. The documentation
establishing any Advance Facility shall require Ocwen to provide to the related
advancing person or its designee loan-by-loan information with respect to each
such reimbursement amount distributed to such advancing person or Advance
Facility trustee on each Distribution Date,
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to enable the advancing person or Advance Facility trustee to make the FIFO
allocation of each such reimbursement amount with respect to each Ocwen Mortgage
Loan. Ocwen shall remain entitled to be reimbursed by the advancing person or
Advance Facility trustee for all P&I Advances and Servicing Advances funded by
Ocwen to the extent the related rights to be reimbursed therefor have not been
sold, assigned or pledged to an advancing person.
(e) Any amendment to this Section 3.25 or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 3.25,
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee, the Depositor, and Ocwen without the consent of any
Certificateholder, notwithstanding anything to the contrary in this Agreement,
provided, that the Trustee has been provided an Opinion of Counsel that such
amendment is authorized hereunder and has no material adverse effect on the
Certificateholders, which opinion shall be an expense of the party requesting
such opinion but in any case shall not be an expense of the Trustee or the Trust
Fund; provided, further, that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders if the
Person requesting the amendment obtains a letter from each Rating Agency
(instead of obtaining an Opinion of Counsel to such effect) stating that the
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 rating 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. Prior to entering into an
Advance Facility, Ocwen shall notify the lender under such facility in writing
that: (a) the P&I Advances and/or Servicing Advances financed by and/or pledged
to the lender are obligations owed to Ocwen on a non-recourse basis payable only
from the cash flows and proceeds received under this Agreement for reimbursement
of P&I Advances and/or Servicing Advances only to the extent provided herein,
and neither the Master Servicer, the Securities Administrator, the Trustee nor
the Trust are otherwise obligated or liable to repay any P&I Advances and/or
Servicing Advances financed by the lender; (b) Ocwen will be responsible for
remitting to the lender the applicable amounts collected by it as Servicing Fees
and as reimbursement for P&I Advances and/or Servicing Advances funded by the
lender, as applicable, subject to the restrictions and priorities created in
this Agreement; and (c) neither the Master Servicer, the Securities
Administrator nor the Trustee shall have any responsibility to calculate any
amount payable under an Advance Facility or to track or monitor the
administration of the financing arrangement between Ocwen and the lender or the
payment of any amount under an Advance Facility.
(f) Ocwen shall indemnify the Master Servicer, the Securities
Administrator, the Trustee and the Trust Fund for any cost, liability or expense
relating to the Advance Facility including, without limitation, a claim, pending
or threatened, by an Advance Financing Person.
SECTION 3.26. Ocwen Indemnification.
Ocwen agrees to indemnify the Trustee, Master Servicer and the
Securities Administrator, from, and hold the Trustee, Master Servicer and the
Securities Administrator harmless against, any loss, liability or expense
(including reasonable attorney's fees and expenses) incurred by any such Person
by reason of the Servicer's willful misfeasance, bad faith or gross
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negligence in the performance of its duties under this Agreement or by reason of
Ocwen's reckless disregard of its obligations and duties under this Agreement.
Such indemnity shall survive the termination or discharge of this Agreement and
the resignation or removal of Ocwen, the Trustee, the Master Servicer and the
Securities Administrator. Any payment hereunder made by Ocwen to any such Person
shall be from Ocwen's own funds, without reimbursement from REMIC I therefor.
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ARTICLE IV
ADMINISTRATION AND MASTER SERVICING
OF THE MORTGAGE LOANS BY THE MASTER SERVICER
SECTION 4.01. Master Servicer.
The Master Servicer shall supervise, monitor and oversee the
obligation of the Servicers to service and administer the Mortgage Loans in
accordance with the terms of this Agreement and the WFHM Servicing Agreement and
shall have full power and authority to do any and all things which it may deem
necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer
shall act in a manner consistent with Accepted Master Servicing Practices.
Furthermore, the Master Servicer shall oversee and consult with the Servicers as
necessary from time-to-time to carry out the Master Servicer's obligations
hereunder, shall receive, review and evaluate all reports, information and other
data provided to the Master Servicer by the Servicers and shall cause the
Servicers to perform and observe the covenants, obligations and conditions to be
performed or observed by the Servicers under this Agreement and the WFHM
Servicing Agreement, as applicable. The Master Servicer shall independently and
separately monitor each Servicer's servicing activities with respect to each
related Mortgage Loan, reconcile the results of such monitoring with such
information provided in the previous sentence on a monthly basis and coordinate
corrective adjustments to the Servicer's and Master Servicer's records, and
based on such reconciled and corrected information, prepare the statements
specified in Section 5.03 and any other information and statements required to
be provided by the Master Servicer hereunder. The Master Servicer shall
reconcile the results of its Mortgage Loan monitoring with the actual
remittances of the related Servicer to the Distribution Account pursuant to the
terms hereof based on information provided to the Master Servicer by the
Servicer.
The Trustee shall furnish each Servicer and the Master
Servicer with any limited powers of attorney and other documents in form as
provided to it necessary or appropriate to enable each Servicer and the Master
Servicer to service and administer the related Mortgage Loans and REO Property.
The Trustee shall have no responsibility for any action of the Master Servicer
or the related Servicer pursuant to any such limited power of attorney and shall
be indemnified by the Master Servicer or the related Servicer, as applicable,
for any cost, liability or expense incurred by the Trustee in connection with
such Person's misuse of any such power of attorney.
The Trustee, the Custodian and the Securities Administrator
shall provide access to the records and documentation in possession of the
Trustee, the Custodian or the Securities Administrator regarding the related
Mortgage Loans and REO Property and the servicing thereof to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC, such access being afforded only upon reasonable prior written request and
during normal business hours at the office of the Trustee, the Custodian or the
Securities Administrator; provided, however, that, unless otherwise required by
law, none of the Trustee, the Custodian or the Securities Administrator shall be
required to provide access to such records and documentation if the provision
thereof would violate the legal right to privacy of any Mortgagor. The Trustee,
the Custodian and the Securities Administrator shall allow representatives of
the above entities to photocopy any of the records and
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documentation and shall provide equipment for that purpose at a charge that
covers the Trustee's, the Custodian's or the Securities Administrator's actual
costs.
The Trustee shall execute and deliver to the related Servicer
or the Master Servicer upon request any court pleadings, requests for trustee's
sale or other documents necessary or desirable to (i) the foreclosure or
trustee's sale with respect to a Mortgaged Property; (ii) any legal action
brought to obtain judgment against any Mortgagor on the Mortgage Note or any
other Mortgage Loan Document; (iii) obtain a deficiency judgment against the
Mortgagor; or (iv) enforce any other rights or remedies provided by the Mortgage
Note or any other Mortgage Loan Document or otherwise available at law or
equity.
SECTION 4.02 REMIC-Related Covenants.
For as long as each REMIC shall exist, the Trustee and the
Securities Administrator shall act in accordance herewith to treat such REMIC as
a REMIC, and the Trustee and the Securities Administrator shall comply with any
directions of the Seller, the Servicers or the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received a REMIC
Opinion prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to the Mortgage Loan Purchase Agreements or
Section 2.03 of this Agreement, as applicable, accept any contribution to any
REMIC after the Startup Day without receipt of a Opinion of Counsel stating that
such contribution will not result in an Adverse REMIC Event as defined in
Section 11.01(f).
SECTION 4.03 Monitoring of Servicers.
(a) The Master Servicer shall be responsible for monitoring
the compliance by each Servicer with its duties under this Agreement or the WFHM
Servicing Agreement. In the review of the Servicer's activities, the Master
Servicer may rely upon an officer's certificate of the related Servicer with
regard to the related Servicer's compliance with the terms of this Agreement or
the WFHM Servicing Agreement. In the event that the Master Servicer, in its
judgment, determines that the related Servicer should be terminated in
accordance with the terms hereof or the WFHM Servicing Agreement, or that a
notice should be sent pursuant to the terms hereof with respect to the
occurrence of an event that, unless cured, would constitute an Event of Default
by such Servicer, the Master Servicer shall notify the related Servicer, the
Seller and the Trustee thereof and the Master Servicer shall issue such notice
or take such other action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and
the Certificateholders, shall enforce the obligations of each Servicer under
this Agreement or the WFHM Servicing Agreement, and shall, in the event that the
related Servicer fails to perform its obligations in accordance with this
Agreement or the WFHM Servicing Agreement, as applicable, subject to this
Section and Article VIII, cause the Trustee to terminate the rights and
obligations of the related Servicer hereunder in accordance with the provisions
of Article VIII or in accordance with the WFHM Servicing Agreement, as
applicable. Such enforcement, including, without limitation, the legal
prosecution of claims and the pursuit of other appropriate remedies, shall be in
such form and
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carried out to such an extent and at such time as the Master Servicer, in its
good faith business judgment, would require were it the owner of the related
Mortgage Loans. The Master Servicer shall pay the costs of such enforcement at
its own expense, provided that the Master Servicer shall not be required to
prosecute or defend any legal action except to the extent that the Master
Servicer shall have received reasonable indemnity for its costs and expenses in
pursuing such action.
With respect to the WFHM Servicing Agreement, upon termination of WFHM
as servicer pursuant to the terms of such agreement, the Master Servicer will
either assume the obligations of WFHM as Servicer thereunder, including, without
limitation, WFHM's obligations to make P&I Advances thereunder, or appoint a
Person that satisfies the eligibility criteria set forth in the WFHM Servicing
Agreement as the successor to WFHM; provided, however, that if the Master
Servicer is prohibited by law or regulation from obligating itself to make
advances regarding delinquent mortgage loans, then the Master Servicer shall not
be obligated to make such P&I Advances; and provided further that (1) it is
understood and acknowledged by the parties hereto that there will be a period of
transition (not to exceed 90 days) before the actual servicing functions can be
fully transferred to the Master Servicer or any successor Servicer appointed in
accordance with this Section and (2) any failure of the Master Servicer to
perform such duties or responsibilities caused by WFHM's failure to provide
information required to effect the servicing transfer shall not be considered a
default by the Master Servicer as successor to WFHM.
(c) The Master Servicer shall be entitled to be reimbursed by
the related Servicer (or from amounts on deposit in the Distribution Account if
the related Servicer is unable to fulfill its obligations hereunder) for all
reasonable out-of-pocket or third party costs associated with the transfer of
servicing from the predecessor Servicer (or if the predecessor Servicer is the
Master Servicer, from the related Servicer immediately preceding the Master
Servicer), including without limitation, any reasonable out-of-pocket or third
party costs or expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Master Servicer to correct any errors or insufficiencies
in the servicing data or otherwise to enable the Master Servicer to service the
Mortgage Loans properly and effectively, upon presentation of reasonable
documentation of such costs and expenses.
(d) The Master Servicer shall require the each Servicer to
comply with the remittance requirements and other obligations set forth in this
Agreement and the WFHM Servicing Agreement, as applicable.
(e) If the Master Servicer acts as successor to a Servicer, it
will not assume liability for the representations and warranties of the
terminated Servicer.
SECTION 4.04 Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect
a blanket fidelity bond and an errors and omissions insurance policy, affording
coverage with respect to all directors, officers, employees and other Persons
acting on such Master Servicer's behalf, and covering errors and omissions in
the performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.
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SECTION 4.05 Power to Act; Procedures.
The Master Servicer shall master service the Mortgage Loans
and shall have full power and authority, subject to the REMIC Provisions and the
provisions of Article XI, to do any and all things that it may deem necessary or
desirable in connection with the master servicing and administration of the
Mortgage Loans, including but not limited to the power and authority (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, (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan, in each
case, in accordance with the provisions of this Agreement; provided, however,
that the Master Servicer shall not (and, consistent with its responsibilities
under Section 4.03, shall not permit the related Servicer to) knowingly or
intentionally take any action, or fail to take (or fail to cause to be taken)
any action reasonably within its control and the scope of duties more
specifically set forth herein, that, under the REMIC Provisions, if taken or not
taken, as the case may be, would cause REMIC I or REMIC II to fail to qualify as
a REMIC or result in the imposition of a tax upon the Trust Fund (including but
not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) unless the Master Servicer has received an Opinion
of Counsel (but not at the expense of the Master Servicer) to the effect that
the contemplated action will not would cause REMIC I or REMIC II to fail to
qualify as a REMIC or result in the imposition of a tax upon REMIC I or REMIC
II, as the case may be. The Trustee shall furnish the Master Servicer, upon
written request from a Servicing Officer, with any powers of attorney prepared
and delivered to it and reasonably acceptable to it by empowering the Master
Servicer or the related Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with this Agreement, and the Trustee shall
execute and deliver such other documents prepared and delivered to it and
reasonably acceptable to it, as the Master Servicer or the related Servicer may
request, to enable the Master Servicer to master service and administer the
Mortgage Loans and carry out its duties hereunder, in each case in accordance
with Accepted Master Servicing Practices (and the Trustee shall have no
liability for misuse of any such powers of attorney by the Master Servicer or
the related Servicer and shall be indemnified by the Master Servicer or the
related Servicer, as applicable, for any cost, liability or expense incurred by
the Trustee in connection with such Person's use or misuse of any such power of
attorney). If the Master Servicer or the Trustee has been advised that it is
likely that the laws of the state in which action is to be taken prohibit such
action if taken in the name of the Trustee or that the Trustee would be
adversely affected under the "doing business" or tax laws of such state if such
action is taken in its name, the Master Servicer shall join with the Trustee in
the appointment of a co-trustee pursuant to Section 9.10. In the performance of
its duties hereunder, the Master Servicer shall be an independent contractor and
shall not, except in those instances where it is taking action in the name of
the Trustee, be deemed to be the agent of the Trustee.
SECTION 4.06 Due-on-Sale Clauses; Assumption
Agreements.
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To the extent Mortgage Loans contain enforceable due-on-sale
clauses, the Master Servicer shall cause each Servicer to enforce such clauses
in accordance with this Agreement or the WFHM Servicing Agreement. If applicable
law prohibits the enforcement of a due-on-sale clause or such clause is
otherwise not enforced in accordance with this Agreement or the WFHM Servicing
Agreement and, as a consequence, a Mortgage Loan is assumed, the original
Mortgagor may be released from liability in accordance with this Agreement or
the WFHM Servicing Agreement.
SECTION 4.07 Reserved.
SECTION 4.08 Documents, Records and Funds in
Possession of Master Servicer To Be
Held for Trustee.
(a) The Master Servicer shall transmit to the Trustee or
Custodian such documents and instruments coming into the possession of the
Master Servicer from time to time as are required by the terms hereof to be
delivered to the Trustee or Custodian. Any funds received by the Master Servicer
in respect of any Mortgage Loan or which otherwise are collected by the Master
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan shall be remitted to the Securities Administrator for deposit in
the Distribution Account. The Master Servicer shall, and, subject to Section
3.20, shall cause the related Servicer to, provide access to information and
documentation regarding the Mortgage Loans to the Trustee, its agents and
accountants at any time upon reasonable request and during normal business
hours, and to Certificateholders that are savings and loan associations, banks
or insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners of
any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or other
regulatory authority, such access to be afforded without charge but only upon
reasonable request in writing and during normal business hours at the offices of
the Master Servicer designated by it. In fulfilling such a request the Master
Servicer shall not be responsible for determining the sufficiency of such
information.
(b) 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 Insurance Proceeds, shall be remitted to the Trustee for
deposit in the Distribution Account.
SECTION 4.09 Standard Hazard Insurance and Flood
Insurance Policies.
For each Mortgage Loan, the Master Servicer shall enforce the
obligation of the related Servicer under this Agreement or the WFHM Servicing
Agreement to maintain or cause to be maintained standard fire and casualty
insurance and, where applicable, flood insurance, all in accordance with the
provisions of this Agreement or the WFHM Servicing Agreement. It is understood
and agreed that such insurance shall be with insurers meeting the eligibility
requirements set forth in Section 3.11 and that no earthquake or other
additional insurance is to be required of any Mortgagor or to be maintained on
property acquired in respect of a defaulted loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
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SECTION 4.10 Presentment of Claims and Collection
of Proceeds.
The Master Servicer shall enforce each Servicer's obligations
under this Agreement or the WFHM Servicing Agreement, as applicable, to, prepare
and present on behalf of the Trustee and the Certificateholders all claims under
the Insurance Policies and take such actions (including the negotiation,
settlement, compromise or enforcement of the insured's claim) as shall be
necessary to realize recovery under such policies. Any proceeds disbursed to the
Master Servicer in respect of such policies, bonds or contracts shall be
promptly remitted to the Trustee for deposit in the Distribution Account upon
receipt, except that any amounts realized that are to be applied to the repair
or restoration of the related Mortgaged Property as a condition precedent to the
presentation of claims on the related Mortgage Loan to the insurer under any
applicable insurance policy need not be so or remitted.
SECTION 4.11 Maintenance of Primary Mortgage
Insurance Policies.
(a) The Master Servicer shall not take, or permit either Servicer to
take (to the extent such action is prohibited by this Agreement or the WFHM
Servicing Agreement), any action that would result in noncoverage under any
primary mortgage insurance policy of any loss which, but for the actions of the
Master Servicer or the related Servicer, would have been covered thereunder. The
Master Servicer shall use its best reasonable efforts to cause the related
Servicer to keep in force and effect (to the extent that the Mortgage Loan
requires the Mortgagor to maintain such insurance), primary mortgage insurance
applicable to each Mortgage Loan in accordance with the provisions of this
Agreement or the WFHM Servicing Agreement. The Master Servicer shall not, and
shall not permit the related Servicer to, cancel or refuse to renew any primary
mortgage insurance policy that is in effect at the date of the initial issuance
of the Mortgage Note and is required to be kept in force hereunder except in
accordance with the provisions of this Agreement or the WFHM Servicing
Agreement.
(b) The Master Servicer agrees to cause the related Servicer to
present, on behalf of the Trustee and the Certificateholders, claims to the
insurer under any primary mortgage insurance policies and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
primary mortgage insurance policies respecting defaulted Mortgage Loans.
SECTION 4.12 Trustee to Retain Possession of
Certain Insurance Policies and
Documents.
The Trustee or the applicable Custodian, shall retain
possession and custody of the originals (to the extent available) of any primary
mortgage insurance policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer and the
related Servicer have otherwise fulfilled their respective obligations under
this Agreement or the WFHM Servicing Agreement, the Trustee or the Custodian
shall also retain possession and custody of each Mortgage File in accordance
with and subject to the terms and conditions of this Agreement, the WFHM
Servicing Agreement and the Custodial Agreement. The Master Servicer shall
promptly deliver or cause to be delivered to the Trustee or the Custodian, upon
the execution or receipt thereof the
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originals of any primary mortgage insurance policies, any certificates of
renewal, and such other documents or instruments that constitute Mortgage Loan
Documents that come into the possession of the Master Servicer from time to
time.
SECTION 4.13 Realization Upon Defaulted Mortgage
Loans.
The Master Servicer shall cause the related Servicer to
foreclose upon, repossess or otherwise comparably convert the ownership of
Mortgaged 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, all in accordance with this Agreement or the
WFHM Servicing Agreement.
SECTION 4.14 Compensation for the Master
Servicer.
As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Master Servicing Fee and
the income from investment of or earnings on the funds from time to time in the
Distribution Account, as provided in Section 3.10. The Master Servicing Fee
payable to the Master Servicer in respect of any Distribution Date shall be
reduced in accordance with Section 4.19. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
and shall not be entitled to reimbursement therefor except as provided in this
Agreement.
SECTION 4.15 REO Property.
(a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall cause the related Servicer to
sell, any REO Property as expeditiously as possible and in accordance with the
provisions of this Agreement or the WFHM Servicing Agreement. Further, the
Master Servicer shall cause the related Servicer to sell any REO Property prior
to three years after the end of the calendar year of its acquisition by REMIC I
unless (i) the Trustee shall have been supplied by the related Servicer with an
Opinion of Counsel to the effect that the holding by the Trust Fund of such REO
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of any REMIC hereunder as defined in
section 860F of the Code or cause any REMIC hereunder to fail to qualify as a
REMIC at any time that any Certificates are outstanding, in which case the Trust
Fund may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel) or (ii) the related Servicer shall have
applied for, prior to the expiration of such three-year period, an extension of
such three-year period in the manner contemplated by Section 856(e)(3) of the
Code, in which case the three-year period shall be extended by the applicable
extension period. The Master Servicer shall cause the related Servicer to
protect and conserve, such REO Property in the manner and to the extent required
by this Agreement or the WFHM Servicing Agreement, in accordance with the REMIC
Provisions and in a manner that does not result in a tax on "net income from
foreclosure property" or cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code.
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(b) The Master Servicer shall cause the related Servicer to
deposit all funds collected and received in connection with the operation of any
REO Property in the related Collection Account.
SECTION 4.16 Annual Officer's Certificate as to
Compliance.
(a) The Master Servicer shall deliver to the Trustee and the
Rating Agencies on or before March 15 of each year, commencing on March 15,
2005, an Officer's Certificate, certifying that with respect to the period
ending December 31 of the prior year: (i) such Servicing Officer has reviewed
the activities of such Master Servicer during the preceding calendar year or
portion thereof and its performance under this Agreement, (ii) to the best of
such Servicing Officer's knowledge, based on such review, such Master Servicer
has performed and fulfilled its duties, responsibilities and obligations under
this Agreement in all material respects throughout such year, or, if there has
been a default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof, (iii) nothing has come to the attention of such
Servicing Officer to lead such Servicing Officer to believe that the Master
Servicer has failed to perform any of its duties, responsibilities and
obligations under this Agreement in all material respects throughout such year,
or, if there has been a material default in the performance or fulfillment of
any such duties, responsibilities or obligations, specifying each such default
known to such Servicing Officer and the nature and status thereof.
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).
SECTION 4.17 Annual Independent Accountant's
Servicing Report.
If the Master Servicer has, during the course of any calendar
year, directly serviced any of the Mortgage Loans, then the Master Servicer at
its expense shall cause a nationally recognized firm of independent certified
public accountants to furnish a statement to the Trustee, the Rating Agencies
and the Seller on or before March 15 of each year, commencing on March 15, 2005
to the effect that, with respect to the most recently ended fiscal year, such
firm has examined certain records and documents relating to the Master
Servicer's performance of its servicing obligations under this Agreement and
pooling and servicing and trust agreements in material respects similar to this
Agreement and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
Freddie Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by Freddie Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder upon request by the Master Servicer, or by the Trustee at the
expense of the Master Servicer if the Master Servicer shall fail to provide such
copies (unless
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(i) the Master Servicer shall have failed to provide the Trustee with such
statement or (ii) the Trustee shall be unaware of the Master Servicer's failure
to provide such statement). If such report discloses exceptions that are
material, the Master Servicer shall advise the Trustee whether such exceptions
have been or are susceptible of cure, and will take prompt action to do so.
SECTION 4.18 UCC.
The Depositor agrees to file continuation statements for any
Uniform Commercial Code financing statements which the Seller has informed the
Depositor were filed on the Closing Date in connection with the Trust. The
Depositor shall file any financing statements or amendments thereto required by
any change in the Uniform Commercial Code.
SECTION 4.19 Obligation of the Master Servicer in
Respect of Prepayment Interest
Shortfalls.
In the event of any Prepayment Interest Shortfalls, the Master
Servicer shall deposit into the Distribution Account not later than the related
Distribution Date an amount equal to the lesser of (i) the aggregate amounts
required to be paid by the Servicers with respect to Prepayment Interest
Shortfalls attributable to Principal Prepayments on the related Mortgage Loans
for the related Distribution Date, and not so paid by the Servicers and (ii) the
aggregate amount of the related Master Servicing Fees for such Distribution
Date, without reimbursement therefor.
SECTION 4.20 Reserved.
SECTION 4.21 Prepayment Penalty Verification.
On or prior to each Servicer Remittance Date, Ocwen shall
provide in an electronic format acceptable to the Master Servicer and it the
data necessary for the Master Servicer to perform its verification duties set
forth in this Section 4.21. The Master Servicer or a third party reasonably
acceptable to the Master Servicer and the Depositor (the "Verification Agent")
will perform such verification duties and will use its best efforts to issue its
findings in a report (the "Verification Report") delivered to the Master
Servicer and the Depositor within ten (10) Business Days following the related
Distribution Date; provided, however, that if the Verification Agent is unable
to issue the Verification Report within ten (10) Business Days following the
Distribution Date, the Verification Agent may issue and deliver to the Master
Servicer and the Depositor the Verification Report upon the completion of its
verification duties. The Master Servicer shall forward the Verification Report
to the Servicers and shall notify the related Servicer if the Master Servicer
has determined that such Servicer did not deliver the appropriate Prepayment
Charge to the Securities Administrator in accordance with this Agreement. Such
written notification from the Master Servicer shall include the loan number,
prepayment penalty code and prepayment penalty amount as calculated by the
Master Servicer or the Verification Agent, as applicable, of each Mortgage Loan
for which there is a discrepancy. If Ocwen agrees with the verified amounts,
Ocwen shall adjust the immediately succeeding Servicer Report and the amount
remitted to the Trustee with respect to prepayments accordingly. If Ocwen
disagrees with the determination of the Master Servicer, Ocwen shall, within
five (5) Business Days of its receipt of the Verification Report, notify the
Master Servicer of such
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disagreement and provide the Master Servicer with detailed information to
support its position. Ocwen and the Master Servicer shall cooperate to resolve
any discrepancy on or prior to the immediately succeeding Servicer Remittance
Date, and Ocwen will indicate the effect of such resolution on the related
Servicer Report and shall adjust the amount remitted with respect to prepayments
on such Servicer Remittance Date accordingly.
During such time as Ocwen and the Master Servicer are
resolving discrepancies with respect to the Prepayment Charges, no payments in
respect of any disputed Prepayment Charges will be remitted to the Securities
Administrator for deposit in the Distribution Account and the Master Servicer
shall not be obligated to deposit such payments, unless otherwise required
pursuant to Section 8.01 hereof. In connection with such duties, the Master
Servicer shall be able to rely solely on the information provided to it by the
Servicers in accordance with this Section. The Master Servicer shall not be
responsible for verifying the accuracy of any of the information provided to it
by the Servicers.
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ARTICLE V
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 5.01 Distributions.
(a)(1) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates, in respect
of the Class R-I Interest, as the case may be:
(i) to Holders of REMIC I Regular Interest I-LTAA, REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2A, REMIC I Regular
Interest I-LTA2B, REMIC I Regular Interest I-LTA3, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6, REMIC I Regular Interest I-LTB, REMIC I Regular Interest I-LTZZ
and REMIC I Regular Interest I-LTP, PRO RATA, in an amount equal to (A) the
Uncertificated Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates. Amounts
payable as Uncertificated Interest in respect of REMIC I Regular Interest I-LTZZ
shall be reduced when the REMIC I Overcollateralization Amount is less than the
REMIC I Required Overcollateralization Amount, by the lesser of (x) the amount
of such difference and (y) the Maximum I-LTZZ Uncertificated Interest Deferral
Amount and such amount will be payable to the Holders of REMIC I Regular
Interest I-LTA1, REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest
I-LTA2B, REMIC I Regular Interest I-LTA3, REMIC I Regular Interest I- LTM1,
REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I
Regular Interest I-LTM4, REMIC I Regular Interest I-LTM5, REMIC I Regular
Interest I-LTM6 and REMIC I Regular Interest I-LTB, in the same proportion as
the Overcollateralization Increase Amount is allocated to the Corresponding
Certificates and the Uncertificated Balance of REMIC I Regular Interest I-LTZZ
shall be increased by such amount;
(ii) to Holders of REMIC I Regular Interest I-LT1A, REMIC I
Regular Interest I-LT1B, REMIC I Regular Interest I-LT2A, REMIC I
Regular Interest I-LT2B and REMIC I Regular Interest I-LTXX, pro rata,
in an amount equal to (A) the Uncertificated Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining
unpaid from previous Distribution Dates;
(iii) to the Holders of REMIC I Regular Interests, in an
amount equal to the remainder of the REMIC I Marker Allocation
Percentage of the Available Funds for such Distribution Date after the
distributions made pursuant to clause (i) above, allocated as follows:
(a) to the Holders of REMIC I Regular Interest I-LTAA, 98.00%
of such remainder, until the Uncertificated Balance of such Uncertificated REMIC
I Regular Interest is reduced to zero;
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(b) to the Holders of REMIC I Regular Interest I-LTA1, REMIC I
Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular
Interest I-LTA3, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC
I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6 and REMIC I Regular
Interest I-LTB, 1.00% of such remainder, in the same proportion as principal
payments are allocated to the Corresponding Certificates, until the
Uncertificated Balances of such REMIC I Regular Interests are reduced to zero;
(c) to the Holders of REMIC I Regular Interest I-LTZZ, 1.00%
of such remainder, until the Uncertificated Balance of such REMIC I Regular
Interest is reduced to zero;
(d) to the Holders of REMIC I Regular Interest I-LTP, on the
Distribution Date immediately following the expiration of the latest Prepayment
Charge as identified on the Prepayment Charge Schedule or any Distribution Date
thereafter until $100 has been distributed pursuant to this clause; then
(e) any remaining amount to the Holders of the Class R-I
Interest, in respect of the Class R-I Interest;
provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of REMIC I Regular Interest I-LTAA and REMIC I Regular Interest I-LTZZ,
respectively.
(iv) to the Holders of REMIC I Regular Interests, in an amount
equal to the remainder of the REMIC I Sub WAC Allocation Percentage of
Available Funds for such Distribution Date after the distributions made
pursuant to clause (ii) above, such that distributions of principal
shall be deemed to be made to the REMIC I Regular Interests first, so
as to keep the Uncertificated Balance of each REMIC I Regular Interest
ending with the designation "B" equal to 0.01% of the aggregate Stated
Principal Balance of the Mortgage Loans in the related Loan Group;
second, to each REMIC I Regular Interest ending with the designation
"A," so that the Uncertificated Balance of each such REMIC I Regular
Interest is equal to 0.01% of the excess of (x) the aggregate Stated
Principal Balance of the Mortgage Loans in the related Loan Group over
(y) the current Certificate Principal Balance of the Class A
Certificate in the related Loan Group (except that if any such excess
is a larger number than in the preceding distribution period, the least
amount of principal shall be distributed to such REMIC I Regular
Interests such that the REMIC I Subordinated Balance Ratio is
maintained); and third, any remaining principal to REMIC I Regular
Interest I-LTXX.
(v) Notwithstanding the distributions described in Section
5.01(a)(1), distributions of funds shall be made to Certificateholders
only in accordance with Section 5.01(2) through (7) and Section
5.01(b).
(2) On each Distribution Date, the Securities Administrator
shall withdraw from the Distribution Account to the extent on deposit therein an
amount equal to the Group I Interest Remittance Amount and make the following
disbursements and transfers in the order of priority
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described below, in each case to the extent of the Group I Interest Remittance
Amount remaining for such Distribution Date:
FIRST, concurrently, to the Holders of the Class A-1 Certificates and
Class A-3 Certificates, the Senior Interest Distribution Amount
allocable to each such Class, on a PRO RATA basis, based on the
entitlement of each such Class; and
SECOND, concurrently, to the Holders of the Class A-2A Certificates and
Class A-2B Certificates, the Senior Interest Distribution Amount
allocable to each such Class, to the extent remaining unpaid after the
distribution of the Group II Interest Remittance Amount as set forth in
clause FIRST of Section 5.01(a)(3) below on a PRO RATA basis, based on
the entitlement of such Class.
(3) On each Distribution Date, the Securities Administrator
shall withdraw from the Distribution Account to the extent on deposit therein an
amount equal to the Group II Interest Remittance Amount and make the following
disbursements and transfers in the order of priority described below, in each
case to the extent of the Group II Interest Remittance Amount remaining for such
Distribution Date:
FIRST, concurrently, to the Holders of the Class A-2A Certificates and
Class A-2B Certificates, the Senior Interest Distribution Amount
allocable to each such Class, on a PRO RATA basis, based on the
entitlement of each such Class; and
SECOND, concurrently, to the Holders of the Class A-1 Certificates and
Class A-3 Certificates, the Senior Interest Distribution Amount
allocable to each such Class, on a PRO RATA basis, based on the
entitlement of each such Class, to the extent remaining unpaid after
the distribution of the Group I Interest Remittance Amount as set forth
in clause FIRST of Section 5.01(a)(2) above.
(4) On each Distribution Date, the Securities Administrator
shall withdraw from the Distribution Account to the extent on deposit therein an
amount equal to the Group I Interest Remittance Amount and the Group II Interest
Remittance Amount remaining after the distributions required by clauses (2) and
(3) above and make the following disbursements and transfers in the order of
priority described below, in each case to the extent of the Group I Interest
Remittance Amount and Group II Interest Remittance Amount remaining for such
Distribution Date:
FIRST, to the Holders of the Class M-1 Certificates, the Interest
Distribution Amount allocable to the Class M-1 Certificates;
SECOND, to the Holders of the Class M-2 Certificates, the Interest
Distribution Amount allocable to the Class M-2 Certificates;
THIRD, to the Holders of the Class M-3 Certificates, the Interest
Distribution Amount allocable to the Class M-3 Certificates;
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FOURTH, to the Holders of the Class M-4 Certificates, the Interest
Distribution Amount allocable to the Class M-4 Certificates;
FIFTH, to the Holders of the Class M-5 Certificates, the Interest
Distribution Amount allocable to the Class M-5 Certificates;
SIXTH, to the Holders of the Class M-6 Certificates, the Interest
Distribution Amount allocable to the Class M-6 Certificates; and
SEVENTH, to the holders of the Class B Certificates, the Interest
Distribution Amount allocable to the Class B Certificates.
(5) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, the Securities Administrator shall
withdraw from the Distribution Account to the extent on deposit therein an
amount equal to the Group I Principal Distribution Amount and the Group II
Principal Distribution Amount and distribute to the Certificateholders the
following amounts, in the following order of priority:
(i) The Group I Principal Distribution Amount shall
be distributed in the following order of priority:
FIRST, to the Holders of the Class A-1 Certificates
and Class A-3 Certificates as follows:
(A) for each Distribution Date from and
including the Distribution Date in April
2004 to and including the Distribution Date
in March 2007 and for each Distribution Date
on which a Trigger Event is in effect for
such Distribution Date, sequentially, to the
Holders of the Class A-1 Certificates and
Class A-3 Certificates, in that order, until
the Certificate Principal Balance of each
such Class has been reduced to zero; and
(B) for each Distribution Date from and
including the Distribution Date in April
2007 and for each Distribution Date
thereafter, concurrently, to the Holders of
the Class A-1 Certificates and Class A-3
Certificates, on a PRO RATA basis, based on
the Certificate Principal Balance of each
such Class, until the Certificate Principal
Balance of each such Class has been reduced
to zero.
SECOND, to the Holders of the Class A-2A Certificates
and Class A-2B Certificates, after taking into
account the distribution of the Group II Principal
Distribution Amount pursuant to clause FIRST of
Section 5.01(a)(5)(ii) below on a sequential basis,
in that order, until the Certificate Principal
Balance of each such Class has been reduced to zero.
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(ii) The Group II Principal Distribution Amount shall
be distributed in the following order of priority:
FIRST, sequentially, to the Holders of the Class A-2A
Certificates and Class A- 2B Certificates, in that
order, until the Certificate Principal Balance of
each such Class has been reduced to zero; and
SECOND, to the Holders of the Class A-1 Certificates
and Class A-3 Certificates as follows:
(A) for each Distribution Date from and
including the Distribution Date in April
2004 to and including the Distribution Date
in March 2007 and for each Distribution Date
on which Trigger Event is in effect for such
Distribution Date and after taking into
account the distribution of the Group I
Principal Distribution Amount pursuant to
clause FIRST of Section 5.01(a)(5)(i) above,
sequentially, to the Holders of the Class
A-1 Certificates and Class A-3 Certificates,
in that order, until the Certificate
Principal Balance of each such Class has
been reduced to zero; and
(B) for each Distribution Date from and
including the Distribution Date in April
2007 and for each Distribution Date
thereafter and after taking into account the
distribution of the Group I Principal
Distribution Amount pursuant to clause FIRST
of Section 5.01(a)(5)(i) above,
concurrently, to the Holders of the Class
A-1 Certificates and Class A- 3
Certificates, on a PRO RATA basis, based on
the Certificate Principal Balance of each
such Class, until the Certificate Principal
Balance of each such Class has been reduced
to zero.
(iii) The Group I Principal Distribution Amount and
Group II Principal Distribution Amount remaining after distributions
pursuant to Section 5.01(a)(5)(i) and (ii) above shall be distributed
in the following order of priority:
FIRST, to the Holders of the Class M-1 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
SECOND, to the Holders of the Class M-2 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
THIRD, to the Holders of the Class M-3 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
FOURTH, to the Holders of the Class M-4 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
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FIFTH, to the Holders of the Class M-5 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
SIXTH, to the Holders of the Class M-6 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero; and
SEVENTH, to the Holders of the Class B Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero.
(6) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, the Securities
Administrator shall withdraw from the Distribution Account to the extent on
deposit therein an amount equal to the Group I Principal Distribution Amount and
the Group II Principal Distribution Amount and distribute to the
Certificateholders the following amounts, in the following order of priority:
(i) The Group I Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-1 Certificates
and Class A-3 Certificates, an amount equal to the
Class A-1/A-3 Principal Distribution Amount,
concurrently, to the Holders of the Class A-1
Certificates and Class A-3 Certificates, on a PRO
RATA basis, based on the Certificate Principal
Balance of each such Class, until the Certificate
Principal Balance of each such Class has been reduced
to zero.
SECOND, to the extent of the portion, if any, of the
Class A-1/A-3 Principal Distribution Amount remaining
undistributed pursuant to clause FIRST of this
Section 5.01(a)(6)(i), to the Holders of the Class
A-2A Certificates and Class A-2B Certificates and
after taking into account the distribution of the
Group II Principal Distribution Amount pursuant to
clause FIRST of Section 5.01(a)(6)(ii) below on a
sequential basis, in that order, until the
Certificate Principal Balance of each such Class has
been reduced to zero; and
THIRD, to the Holders of the Class A-2A Certificates
and Class A-2B Certificates, after taking into
account the distribution of the Group II Principal
Distribution Amount pursuant to clause FIRST of
Section 5.01(a)(6)(ii) below on a sequential basis,
in that order, up to the amount, if any, of the Class
A-2 Principal Distribution Amount remaining unpaid on
such Distribution Date, until the Certificate
Principal Balance of each such Class has been reduced
to zero.
(ii) The Group II Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, sequentially to the Holders of the Class A-2A
Certificates and Class A- 2B Certificates, in that
order, the Class A-2 Principal Distribution Amount,
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until the Certificate Principal Balance of each such
Class has been reduced to zero;
SECOND, to the extent of the portion, if any, of the
Class A-2 Principal Distribution Amount remaining
undistributed pursuant to clause FIRST of this
Section 5.01(a)(6)(ii) and after taking into account
the distribution of the Group I Principal
Distribution Amount pursuant to clause FIRST of
Section 5.01(a)(6)(i) above, concurrently, to the
Holders of the Class A-1 Certificates and Class A-3
Certificates, on a PRO RATA basis, based on the
Certificate Principal Balance of each such Class,
until the Certificate Principal Balance of each such
Class has been reduced to zero;
THIRD, up to an amount equal to the amount, if any,
of the Class A-1/A-3 Principal Distribution Amount
remaining unpaid on such Distribution Date and after
taking into account the distribution of the Group I
Principal Distribution Amount pursuant to clause
FIRST of Section 5.01(a)(6)(i) above, concurrently,
to the Holders of the Class A-1 Certificates and
Class A-3 Certificates, on a PRO RATA basis, based on
the Certificate Principal Balance of each such Class,
until the Certificate Principal Balance of each such
Class has been reduced to zero.
(iii) The Principal Distribution Amount remaining after
distributions pursuant to Section 5.01(a)(6)(i) and (ii) above shall be
distributed in the following order of priority:
FIRST, to the Class M-1 Certificates, the lesser of
(x) the remaining Principal Distribution Amount and
(y) the Class M-1 Principal Distribution Amount,
until the Certificate Principal Balance of such Class
has been reduced to zero;
SECOND, to the Class M-2 Certificates, the lesser of
(x) the excess of (i) the Principal Distribution
Amount over (ii) the amount distributed to the
Holders of the Class M-1 Certificates pursuant to
clause FIRST of this Section 5.01(a)(6)(iii), and (y)
the Class M-2 Principal Distribution Amount, until
the Certificate Principal Balance of such Class has
been reduced to zero;
THIRD, to the Class M-3 Certificates, the lesser of
(x) the excess of (i) the remaining Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1
Certificates pursuant to clause FIRST of this Section
5.01(a)(6)(iii) and to the Holders of the Class M-2
Certificates pursuant to clause SECOND of this
Section 5.01(a)(6)(iii), and (y) the Class M-3
Principal Distribution Amount, until the Certificate
Principal Balance of such Class has been reduced to
zero;
FOURTH, to the Class M-4 Certificates, the lesser of
(x) the excess of (i) the remaining Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1
Certificates pursuant to clause FIRST of this Section
5.01(a)(6)(iii), to the Holders of the Class M-2
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Certificates pursuant to clause SECOND of this
Section 5.01(a)(6)(iii) and to the Holders of the
Class M-3 Certificates pursuant to clause THIRD of
this Section 5.01(a)(6)(iii) and (y) the Class M-4
Principal Distribution Amount, until the Certificate
Principal Balance of such Class has been reduced to
zero;
FIFTH, to the Class M-5 Certificates, the lesser of
(x) the excess of (i) the remaining Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1
Certificates pursuant to clause FIRST of this Section
5.01(a)(6)(iii), to the Holders of the Class M-2
Certificates pursuant to clause SECOND of this
Section 5.01(a)(6)(iii), to the Holders of the
Class M-3 Certificates pursuant to clause THIRD of
this Section 5.01(a)(6)(iii) and to the Holders of
the Class M-4 Certificates pursuant to clause FOURTH
of this Section 5.01(a)(6)(iii) and (y) the Class M-5
Principal Distribution Amount, until the Certificate
Principal Balance of such Class has been reduced to
zero;
SIXTH, to the Class M-6 Certificates, the lesser of
(x) the excess of (i) the remaining Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1
Certificates pursuant to clause FIRST of this Section
5.01(a)(6)(iii), to the Holders of the Class M-2
Certificates pursuant to clause SECOND of this
Section 5.01(a)(6)(iii), to the Holders of the Class
M-3 Certificates pursuant to clause THIRD of this
Section 5.01(a)(6)(iii), to the Holders of the Class
M-4 Certificates pursuant to clause FOURTH of this
Section 5.01(a)(6)(iii) and to the Holders of the
Class M-5 Certificates pursuant to clause FIFTH of
this Section 5.01(a)(6)(iii) and (y) the Class M-6
Principal Distribution Amount, until the Certificate
Principal Balance of such Class has been reduced to
zero; and
SEVENTH, to the Class B Certificates the lesser of
(x) the excess of (i) the remaining Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class M-1
Certificates pursuant to clause FIRST of this Section
5.01(a)(6)(iii), to the Holders of the Class M-2
Certificates pursuant to clause SECOND of this
Section 5.01(a)(6)(iii), to the Holders of the Class
M-3 Certificates pursuant to clause THIRD of this
Section 5.01(a)(6)(iii), to the Holders of the Class
M-4 Certificates pursuant to clause FOURTH of this
Section 5.01(a)(6)(iii), to the Holders of the Class
M-5 Certificates pursuant to clause FIFTH of this
Section 5.01(a)(6)(iii) and to the Holders of the
Class M- 6 Certificates pursuant to clause SIXTH of
this Section 5.01(a)(6)(iii) and (y) the Class B
Principal Distribution Amount, until the Certificate
Principal Balance of such Class has been reduced to
zero.
(7) On each Distribution Date, the Net Monthly Excess Cashflow
(or, in the case of clause (i) below, the Net Monthly Excess Cashflow exclusive
of any Overcollateralization Reduction Amount) shall be distributed as follows:
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(i) to the Holders of the Class or Classes of
Certificates then entitled to receive distributions
in respect of principal, in an amount equal to any
Extra Principal Distribution Amount, payable to such
Holders in accordance with the priorities set forth
in Section 5.01(b) below;
(ii) to the Holders of the Class M-1 Certificates, in
an amount equal to the Interest Carry Forward Amount
allocable to such Class of Certificates;
(iii) to the Holders of the Class M-2 Certificates,
in an amount equal to the Interest Carry Forward
Amount allocable to such Class of Certificates;
(iv) to the Holders of the Class M-3 Certificates, in
an amount equal to the Interest Carry Forward Amount
allocable to such Class of Certificates;
(v) to the Holders of the Class M-4 Certificates, in
an amount equal to the Interest Carry Forward Amount
allocable to such Class of Certificates;
(vi) to the Holders of the Class M-5 Certificates, in
an amount equal to the Interest Carry Forward Amount
allocable to such Class of Certificates;
(vii) to the Holders of the Class M-6 Certificates,
in an amount equal to the Interest Carry Forward
Amount allocable to such Class of Certificates;
(viii) to the Holders of the Class B Certificates, in
an amount equal to the Interest Carry Forward Amount
allocable to such Class of Certificates;
(ix) to the Holders of the Class M-1 Certificates, in
an amount equal to the Allocated Realized Loss Amount
allocable to the Class M-1 Certificates;
(x) to the Holders of the Class M-2 Certificates, in
an amount equal to the Allocated Realized Loss Amount
allocable to the Class M-2 Certificates;
(xi) to the Holders of the Class M-3 Certificates, in
an amount equal to the Allocated Realized Loss Amount
allocable to the Class M-3 Certificates;
(xii) to the Holders of the Class M-4 Certificates,
in an amount equal to the Allocated Realized Loss
Amount allocable to the Class M-4 Certificates;
(xiii) to the Holders of the Class M-5 Certificates,
in an amount equal to the Allocated Realized Loss
Amount allocable to the Class M-5 Certificates;
(xiv) to the Holders of the Class M-6 Certificates,
in an amount equal to the Allocated Realized Loss
Amount allocable to the Class M-6 Certificates;
(xv) to the holders of the Class B Certificates, in
an amount equal to the Allocated Realized Loss Amount
allocable to the Class B Certificates;
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(xvi) to the Holders of the Class A Certificates, in
an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19)
and any Relief Act Interest Shortfall, in each case
that were allocated to each such Class for such
Distribution Date and for any prior Distribution
Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xvii) to the Holders of the Class M-1 Certificates,
in an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19)
and any Relief Act Interest Shortfall, in each case
that were allocated to such Class for such
Distribution Date and for any prior Distribution
Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xviii) to the Holders of the Class M-2 Certificates,
in an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19)
and any Relief Act Interest Shortfall, in each case
that were allocated to such Class for such
Distribution Date and for any prior Distribution
Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xix) to the Holders of the Class M-3 Certificates,
in an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19)
and any Relief Act Interest Shortfall, in each case
that were allocated to such Class for such
Distribution Date and for any prior Distribution
Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xx) to the Holders of the Class M-4 Certificates, in
an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19)
and any Relief Act Interest Shortfall, in each case
that were allocated to such Class for such
Distribution Date and for any prior Distribution
Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xxi) to the Holders of the Class M-5 Certificates,
in an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19)
and any Relief Act Interest Shortfall, in each case
that were allocated to such Class for such
Distribution Date and for any prior Distribution
Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xxii) to the Holders of the Class M-6 Certificates,
in an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19)
and any Relief Act Interest Shortfall, in each case
that were allocated to such Class for such
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Distribution Date and for any prior Distribution
Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xxiii) to the Holders of the Class B Certificates,
in an amount equal to the aggregate of any Prepayment
Interest Shortfalls (to the extent not covered by
payments pursuant to Section 3.22 or Section 4.19)
and any Relief Act Interest Shortfall, in each case
that were allocated to such Class for such
Distribution Date and for any prior Distribution
Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xxiv) to the Reserve Fund from amounts otherwise
payable to the Class CE Certificates, and then from
the Reserve Fund to the Class A, Class M-1, Class
M-2, Class M-3, Class M-4, Class M-5, Class M-6 and
Class B, in that order, in an amount equal to the
unpaid amount of any Net WAC Rate Carryover Amount
for each such Class for such Distribution Date;
(xxv) to the Reserve Fund, the amount required to be
deposited therein pursuant to Section 3.24(b), after
taking into account amounts received under the Cap
Contracts;
(xxvi) to the Holders of the Class CE Certificates,
the Interest Distribution Amount and any
Overcollateralization Reduction Amount for such
Distribution Date; and
(xxvii) to the Holders of the Class R Certificates,
in respect of the Class R-II Interest, any remaining
amounts; provided that if such Distribution Date is
the Distribution Date immediately following the
expiration of the latest Prepayment Charge term as
identified on the Mortgage Loan Schedule or any
Distribution Date thereafter, then any such remaining
amounts will be distributed first, to the Holders of
the Class P Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
and second, to the Holders of the Class R
Certificates.
On each Distribution Date, after making the distributions of the
Available Distribution Amount as set forth above, the Securities Administrator
will FIRST, withdraw from the Reserve Fund all income from the investment of
funds in the Reserve Fund and distribute such amount to the Holders of the Class
CE Certificates, and SECOND, withdraw from the Reserve Fund, to the extent of
amounts remaining on deposit therein, the amount of any Net WAC Rate Carryover
Amount for such Distribution Date and distribute such amount FIRST, concurrently
to the Class A Certificates, on a pro rata basis; SECOND, to the Class M-1
Certificates, THIRD, to the Class M-2 Certificates, FOURTH, to the Class M-3
Certificates, FIFTH, to the Class M-4 Certificates, SIXTH, to the Class M-5
Certificates, SEVENTH, to the Class M-6 Certificates and EIGHTH, to the Class B
Certificates, in each case to the extent to the extent any Net WAC Rate
Carryover Amount is allocable to each such Class.
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(b) (i) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, the Extra Principal
Distribution Amount shall be distributed in the following order of priority;
FIRST, to the Holders of the Class A Certificates as
follows:
(A) for each Distribution Date from and
including the Distribution Date in April
2004 to and including the Distribution Date
in March 2007 and for any Distribution Date
on which a Trigger Event is in effect,
concurrently to the Holders of the Class A
Certificates, on a PRO RATA basis, based on
the Certificate Principal Balance of each
such Class, until the Certificate Principal
Balance of each such Class has been reduced
to zero; provided, however, that the pro
rata allocation to the Class A-1
Certificates and Class A-3 Certificates
pursuant to this clause shall be based on
the total Certificate Principal Balance of
the Class A-1 Certificates and Class A-3
Certificates, but shall be distributed to
the Class A-1 Certificates and the Class A-3
Certificates on a sequential basis, in that
order, until the Certificate Principal
Balances of the Class A-1 Certificates and
Class A-3 Certificates have been reduced to
zero; provided, further that the pro rata
allocation to the Class A-2A Certificates
and Class A-2B Certificates pursuant to this
clause shall be based on the total
Certificate Principal Balance of the Class
A-2A Certificates and Class A-2B
Certificates, but shall be distributed to
the Class A-2A Certificates and the Class
A-2B Certificates on a sequential basis, in
that order, until the Certificate Principal
Balances of the Class A-2A Certificates and
Class A-2B Certificates have been reduced to
zero; and
(B) for each Distribution Date from and
including the Distribution Date in April
2007 and for each Distribution Date
thereafter so long as a Trigger Event is not
in effect for any such Distribution Date,
concurrently to the Holders of the Class A
Certificates, on a PRO RATA basis, based on
the Certificate Principal Balance of each
such Class, until the Certificate Principal
Balance of each such Class has been reduced
to zero; provided, however that the pro rata
allocation to the Class A-2A Certificates
and Class A-2B Certificates pursuant to this
clause shall be based on the total
Certificate Principal Balance of the Class
A-2A Certificates and Class A-2B
Certificates, but shall be distributed to
the Class A-2A Certificates and the Class
A-2B Certificates on a sequential basis, in
that order, until the Certificate Principal
Balances of the Class A-2A Certificates and
Class A-2B Certificates have been reduced to
zero.
SECOND, to the Holders of the Class M-1 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
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THIRD, to the Holders of the Class M-2 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
FOURTH, to the Holders of the Class M-3 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
FIFTH, to the Holders of the Class M-4 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
SIXTH, to the Holders of the Class M-5 Certificates,
until the Certificate Principal Balance of such Class
has been reduced to zero;
SEVENTH, to the Holders of the Class M-6
Certificates, until the Certificate Principal Balance
of such Class has been reduced to zero; and
EIGHTH, to the Holders of the Class B Certificates,
until the Certificate Principal Balance of the Class
B Certificates has been reduced to zero.
(ii) On each Distribution Date (a) on or after the
Stepdown Date and (b) on which a Trigger Event is not in
effect, distributions of principal to the extent of the Extra
Principal Distribution Amount shall be distributed in the
following order of priority:
FIRST,(a) the lesser of (x) the Group I Principal
Distribution Amount and (y) the Class A-1/A-3
Principal Distribution Amount, shall be distributed
sequentially to the Holders of the Class A-1
Certificates and Class A-3 Certificates, in that
order, until the Certificate Principal Balance of
each such Class has been reduced to zero and (b) the
lesser of (x) the Group II Principal Distribution
Amount and (y) the Class A-2 Principal Distribution
Amount, shall be distributed sequentially to the
Holders of the Class A-2A Certificates and the Class
A-2B Certificates, until the Certificate Principal
Balance of each such Class has been reduced to zero;
SECOND, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the amount
distributed to the Holders of the Class A
Certificates pursuant to clause FIRST of this Section
5.01(b)(ii) and (y) the Class M-1 Principal
Distribution Amount, shall be distributed to the
Holders of the Class M-1 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero;
THIRD, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amounts distributed to the Holders of the Class A
Certificates pursuant to clause FIRST of this Section
5.01(b)(ii) and to the Holders of the Class M-1
Certificates pursuant to clause SECOND of this
Section 5.01(b)(ii) and (y) the Class M-2 Principal
Distribution Amount,
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shall be distributed to the Holders of the Class M-2
Certificates, until the Certificate Principal Balance
of such Class has been reduced to zero;
FOURTH, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amounts distributed to the Holders of the Class A
Certificates pursuant to clause FIRST of this Section
5.01(b)(ii), to the Holders of the Class M-1
Certificates pursuant to clause SECOND of this
Section 5.01(b)(ii) and to the Holders of the Class
M-2 Certificates pursuant to clause THIRD of this
Section 5.01(b)(ii) and (y) the Class M-3 Principal
Distribution Amount, shall be distributed to the
Holders of the Class M-3 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero;
FIFTH, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amounts distributed to the Holders of the Class A
Certificates pursuant to clause FIRST of this Section
5.01(b)(ii), to the Holders of the Class M-1
Certificates pursuant to clause SECOND of this
Section 5.01(b)(ii), to the Holders of the Class M-2
Certificates pursuant to clause THIRD of this Section
5.01(b)(ii) and to the Holders of the Class M-3
Certificates pursuant to clause FOURTH of this
Section 5.01(b)(ii) and (y) the Class M-4 Principal
Distribution Amount, shall be distributed to the
Holders of the Class M-4 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero;
SIXTH, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amounts distributed to the Holders of the Class A
Certificates pursuant to clause FIRST of this Section
5.01(b)(ii), to the Holders of the Class M-1
Certificates pursuant to clause SECOND of this
Section 5.01(b)(ii), to the Holders of the Class M-2
Certificates pursuant to clause THIRD of this Section
5.01(b)(ii), to the Holders of the Class M-3
Certificates pursuant to clause FOURTH of this
Section 5.01(b)(ii) and to the Holders of the Class
M-4 Certificates pursuant to clause FIFTH of this
Section 5.01(b)(ii) and (y) the Class M-5 Principal
Distribution Amount, shall be distributed to the
Holders of the Class M-5 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero;
SEVENTH, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amounts distributed to the Holders of the Class A
Certificates pursuant to clause FIRST of this Section
5.01(b)(ii), to the Holders of the Class M-1
Certificates pursuant to clause SECOND of this
Section 5.01(b)(ii), to the Holders of the Class M-2
Certificates pursuant to clause THIRD of this Section
5.01(b)(ii), to the Holders of the Class M-3
Certificates pursuant to clause FOURTH of this
Section 5.01(b)(ii), to the Holders of the Class M-4
Certificates pursuant to clause FIFTH of this Section
5.01(b)(ii) and to the Holders of the Class M-5
Certificates pursuant to clause SIXTH of this Section
5.01(b)(ii) and (y) the Class M-6 Principal
Distribution Amount,
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shall be distributed to the Holders of the Class M-6
Certificates, until the Certificate Principal Balance
of such Class has been reduced to zero; and
EIGHTH, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amounts distributed to the Holders of the Class A
Certificates pursuant to clause FIRST of this Section
5.01(b)(ii), to the Holders of the Class M-1
Certificates pursuant to clause SECOND of this
Section 5.01(b)(ii), to the Holders of the Class M-2
Certificates pursuant to clause THIRD of this Section
5.01(b)(ii), to the Holders of the Class M-3
Certificates pursuant to clause FOURTH of this
Section 5.01(b)(ii), to the Holders of the Class M-4
Certificates pursuant to clause FIFTH of this Section
5.01(b)(ii), to the Holders of the Class M-5
Certificates pursuant to clause SIXTH of this Section
5.01(b)(ii) and to the Holders of the Class M-6
Certificates pursuant to clause SEVENTH of this
Section 5.01(b)(ii) and (y) the Class B Principal
Distribution Amount, shall be distributed to the
Holders of the Class B Certificates until the
Certificate Principal Balance of such Class has been
reduced to zero.
(c) On each Distribution Date, the Securities Administrator
shall withdraw any amounts then on deposit in the Distribution Account that
represent Prepayment Charges and shall distribute such amounts to the Class P
Certificateholders as described above.
(d) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 5.01(e) or
Section 10.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Securities Administrator in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Certificates having an
initial aggregate Certificate Principal Balance that is in excess of the lesser
of (i) $5,000,000 or (ii) two-thirds of the initial Certificate Principal
Balance of such Class of Certificates, or otherwise by check mailed by first
class mail to the address of such Holder appearing in the Certificate Register.
The final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the Corporate Trust Office
of the Securities Administrator or such other location specified in the notice
to Certifcateholders of such final distribution.
Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be
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responsible for disbursing funds to the Certificate Owners that it represents.
None of the Trustee, the Depositor, the Servicers, the Securities Administrator
or the Master Servicer shall have any responsibility therefor except as
otherwise provided by this Agreement or applicable law.
(e) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trustee, the
Servicers, the Securities Administrator or the Master Servicer shall in any way
be responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.
(f) Except as otherwise provided in Section 10.01, whenever
the Securities Administrator expects that the final distribution with respect to
any Class of Certificates will be made on the next Distribution Date, the
Securities Administrator shall, no later than three (3) days before the related
Distribution Date, mail to each Holder on such date of such Class of
Certificates a notice to the effect that:
(i) the Securities Administrator expects that the final
distribution with respect to such Class of Certificates will be made on
such Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Securities Administrator therein
specified, and
(ii) no interest shall accrue on such Certificates from and
after the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Securities Administrator and credited to the
account of the appropriate non-tendering Holder or Holders. If any Certificates
as to which notice has been given pursuant to this Section 5.01(f) shall not
have been surrendered for cancellation within six months after the time
specified in such notice, the Securities Administrator shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Securities
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates but shall continue to hold any remaining funds for the benefit of
non-tendering Certificateholders. The costs and expenses of maintaining the
funds in trust and of contacting such Certificateholders shall be paid out of
the assets remaining in such trust fund. If within one year after the final
notice any such Certificates shall not have been surrendered for cancellation,
the Securities Administrator shall pay to the Depositor all such amounts, and
all rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust by the Securities Administrator as a result of such
Certificateholder's failure to surrender its Certificate(s) on the final
Distribution Date for final payment thereof in accordance with this Section
5.01(f). Any such amounts held in trust by the Securities Administrator shall be
held uninvested in an Eligible Account.
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(g) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate, a
Mezzanine Certificate or a Class B Certificate be reduced more than once in
respect of any particular amount both (a) allocated to such Certificate in
respect of Realized Losses pursuant to Section 5.04 and (b) distributed to the
Holder of such Certificate in reduction of the Certificate Principal Balance
thereof pursuant to this Section 5.01 from Net Monthly Excess Cashflow and (ii)
in no event shall the Uncertificated Balance of a REMIC Regular Interest be
reduced more than once in respect of any particular amount both (a) allocated to
such REMIC Regular Interest in respect of Realized Losses pursuant to Section
5.04 and (b) distributed on such REMIC Regular Interest in reduction of the
Uncertificated Balance thereof pursuant to this Section 5.01.
SECTION 5.02 Statements to Certificateholders.
On each Distribution Date, the Securities Administrator (based
on the information set forth in the Servicer Report for such Distribution Date
and information provided by the Trustee or the counterparty to the Cap Contracts
with respect to payments made pursuant to the Cap Contracts) shall make
available to each Holder of the Certificates, a statement as to the
distributions made on such Distribution Date setting forth:
(i) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
principal, and the amount of the distribution made on such Distribution
Date to the Holders of the Class P Certificates allocable to Prepayment
Charges;
(ii) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
interest;
(iii) the aggregate Servicing Fee received by the Servicers
and Master Servicing Fee received by the Master Servicer during the
related Due Period;
(iv) the aggregate amount of P&I Advances for such
Distribution Date;
(v) Reserved;
(vi) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans as of the related Due Date;
(vii) the number and aggregate unpaid principal balance of
Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
days, (c) delinquent 90 or more days, in each case, as of the last day
of the preceding calendar month, (d) as to which foreclosure
proceedings have been commenced and (e) with respect to which the
related Mortgagor has filed for protection under applicable bankruptcy
laws, with respect to whom bankruptcy proceedings are pending or with
respect to whom bankruptcy protection is in force;
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(viii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number of such
Mortgage Loan, the unpaid principal balance and the Scheduled Principal
Balance of such Mortgage Loan;
(ix) if available, the book value of any REO Property as of
the close of business on the last Business Day of the calendar month
preceding the Distribution Date;
(x) the aggregate amount of Principal Prepayments made during
the related Prepayment Period and the aggregate amount of any
Prepayment Charges received in respect thereof;
(xi) the aggregate amount of Realized Losses incurred during
the related Prepayment Period and the aggregate amount of Realized
Losses incurred since the Closing Date;
(xii) the aggregate amount of Extraordinary Trust Fund
Expenses withdrawn from the Distribution Account for such Distribution
Date;
(xiii) the aggregate Certificate Principal Balance of each
Class of Certificates, after giving effect to the distributions, and
allocations of Realized Losses, made on such Distribution Date,
separately identifying any reduction thereof due to allocations of
Realized Losses;
(xiv) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
(xv) the Interest Distribution Amount in respect of the Class
A Certificates, the Mezzanine Certificates, the Class B Certificates,
and the Class CE Certificates for such Distribution Date and the
Interest Carry Forward Amount, if any, with respect to the Class A
Certificates, the Mezzanine Certificates and the Class B Certificates
on such Distribution Date, and in the case of the Class A Certificates,
the Mezzanine Certificates and the Class B Certificates separately
identifying any reduction thereof due to allocations of Realized
Losses, Prepayment Interest Shortfalls, Relief Act Interest Shortfalls
and Net WAC Rate Carryover Amounts;
(xvi) the aggregate amount of any Prepayment Interest
Shortfall for such Distribution Date, to the extent not covered by
payments by the related Servicer pursuant to Section 3.22 of this
Agreement or pursuant to the WFHM Servicing Agreement or the Master
Servicer pursuant to Section 4.19;
(xvii) the aggregate amount of Relief Act Interest Shortfalls
for such Distribution Date;
(xviii) the Required Overcollateralization Amount and the
Credit Enhancement Percentage for such Distribution Date;
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(xix) the Overcollateralization Increase Amount, if any, for
such Distribution Date;
(xx) the Overcollateralization Reduction Amount, if any, for
such Distribution Date;
(xxi) the Net WAC Rate Carryover Amount, if any, for such
Distribution Date;
(xxii) the Net WAC Rate Carryover Amount, if any, outstanding
after reimbursements therefor on such Distribution Date and any amounts
received under the Cap Contracts;
(xxiii) the respective Pass-Through Rates applicable to the
Class A Certificates, the Mezzanine Certificates, the Class B
Certificates, and the Class CE Certificates for such Distribution Date;
(xxiv) the amount of any deposit to the Reserve Fund
contemplated by Section 3.24(b);
(xxv) the balance of the Reserve Fund prior to the deposit or
withdrawal of any amounts on such Distribution Date;
(xxvi) the amount of any deposit to the Reserve Fund pursuant
to Section 5.01(a)(7)(xxv);
(xxvii) the balance of the Reserve Fund after all deposits and
withdrawals on such Distribution Date;
(xxviii) the Loss Severity Percentage with respect to each
Mortgage Loan; and
(xxix) the Aggregate Loss Severity Percentage.
The Securities Administrator will make such statement (and, at
its option, any additional files containing the same information in an
alternative format) available each month to the Certificateholders and the
Rating Agencies via the Securities Administrator's internet website. The
Securities Administrator's internet website shall initially be located at
http:\\www.ctslink.com and assistance in using the website can be obtained by
calling the Securities Administrator's customer service desk at 1-301-815-6600.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Securities Administrator shall have the
right to change the way such statements are distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Securities Administrator shall provide timely and adequate notification to all
above parties regarding any such changes.
In the case of information furnished pursuant to subclauses
(i) and (ii) above, the amounts shall be expressed as a dollar amount per Single
Certificate of the relevant Class.
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Within a reasonable period of time after the end of each
calendar year, the Securities Administrator shall furnish upon request to each
Person who at any time during the calendar year was a Holder of a Regular
Certificate a statement containing the information set forth in subclauses (i)
through (iii) above, aggregated for such calendar year or applicable portion
thereof during which such person was a Certificateholder. Such obligation of the
Securities Administrator shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Securities
Administrator pursuant to any requirements of the Code as from time to time are
in force.
Within a reasonable period of time after the end of each
calendar year, the Securities Administrator shall furnish upon request to each
Person who at any time during the calendar year was a Holder of a Residual
Certificate a statement setting forth the amount, if any, actually distributed
with respect to the Residual Certificates, as appropriate, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder.
The Securities Administrator shall, upon request, furnish to
each Certificateholder during the term of this Agreement, such periodic,
special, or other reports or information, whether or not provided for herein, as
shall be reasonable with respect to the Certificateholder, as applicable, or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided at the expense of the Certificateholder, in
accordance with such reasonable and explicit instructions and directions as the
Certificateholder may provide.
On each Distribution Date the Securities Administrator shall
provide Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for
each class of Certificates as of such Distribution Date, using a format and
media mutually acceptable to the Securities Administrator and Bloomberg.
SECTION 5.03 Servicer Reports; P&I Advances.
(a) On or before 12:00 noon New York time on the 18th calendar
day of each month, Ocwen shall deliver to the Master Servicer and the Securities
Administrator by telecopy or electronic mail (or by such other means as Ocwen,
the Master Servicer and the Securities Administrator may agree from time to
time) a remittance report containing such information with respect to the Ocwen
Mortgage Loans and the related Distribution Date as is reasonably available to
Ocwen as the Master Servicer or the Securities Administrator may reasonably
require so as to enable the Master Servicer to master service the Mortgage Loans
and oversee the servicing by Ocwen and the Securities Administrator to fulfill
its obligations hereunder with respect to securities and tax reporting.
(b) The amount of P&I Advances to be made by Ocwen on any
Distribution Date shall equal, subject to Section 5.03(d), (i) the aggregate
amount of Monthly Payments (net of the related Servicing Fees), due during the
related Due Period in respect of the Ocwen Mortgage Loans, which Monthly
Payments were delinquent as of the close of business on the related
Determination Date and (ii) with respect to each REO Property serviced by Ocwen,
which REO Property was acquired during or prior to the related Prepayment Period
and as to which such REO Property an REO Disposition did not occur during the
related Prepayment Period, an amount equal to the excess,
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if any, of the REO Imputed Interest on such REO Property for the most recently
ended calendar month, over the net income from such REO Property deposited in
the related Collection Account pursuant to Section 3.21 for distribution on such
Distribution Date; provided, however, Ocwen shall not be required to make P&I
Advances with respect to Relief Act Interest Shortfalls, or with respect to
Prepayment Interest Shortfalls in excess of its obligations under Section 3.22.
For purposes of the preceding sentence, the Monthly Payment on each Balloon
Mortgage Loan with a delinquent Balloon Payment is equal to the assumed monthly
payment that would have been due on the related Due Date based on the original
principal amortization schedule for such Balloon Mortgage Loan.
By 12:00 noon New York time on the Servicer Remittance Date,
Ocwen shall remit in immediately available funds to the Securities Administrator
for deposit in the Distribution Account an amount equal to the aggregate amount
of P&I Advances, if any, to be made in respect of the Ocwen Mortgage Loans for
the related Distribution Date either (i) from its own funds or (ii) from the
related Collection Account, to the extent of any Amounts Held For Future
Distribution on deposit therein (in which case it will cause to be made an
appropriate entry in the records of the related Collection Account that Amounts
Held For Future Distribution have been, as permitted by this Section 5.03, used
by Ocwen in discharge of any such P&I Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of P&I Advances to be
made by Ocwen with respect to the Ocwen Mortgage Loans. In addition, Ocwen shall
have the right to reimburse itself for any outstanding P&I Advance made from its
own funds from Amounts Held for Future Distribution. Any Amounts Held For Future
Distribution used by Ocwen to make P&I Advances or to reimburse itself for
outstanding P&I Advances shall be appropriately reflected in Ocwen's records and
replaced by Ocwen by deposit in the related Collection Account no later than the
close of business on the Servicer Remittance Date immediately following the Due
Period or Prepayment Period for which such amounts relate. The Securities
Administrator will notify Ocwen and the Master Servicer by the close of business
on the Business Day prior to the Distribution Date in the event that the amount
remitted by Ocwen to the Securities Administrator on such date is less than the
P&I Advances required to be made by Ocwen for the related Distribution Date.
(c) The obligation of Ocwen to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Ocwen Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by Ocwen if
such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively.
The determination by Ocwen that it has made a Nonrecoverable P&I Advance or a
Nonrecoverable Servicing Advance or that any proposed P&I Advance or Servicing
Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced by a
certification of a Servicing Officer delivered to the Master Servicer.
(e) Subject to and in accordance with the provisions of
Article VIII, in the event either Servicer fails to make any required P&I
Advance, then the Master Servicer (in its capacity as
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successor servicer) or any other successor Servicer shall be required to make
such P&I Advance on the Distribution Date on which such Servicer was required to
make such Advance, subject to its determination of recoverability.
SECTION 5.04 Allocation of Realized Losses.
(a) Prior to the Determination Date, Ocwen shall determine as
to each Ocwen Mortgage Loan and REO Property and include in the monthly
remittance report provided to the Master Servicer and the Securities
Administrator such information as is reasonably available to Ocwen as the Master
Servicer or the Securities Administrator may reasonably require so as to enable
the Master Servicer to master service the Ocwen Mortgage Loans and oversee the
servicing by Ocwen and the Securities Administrator to fulfill its obligations
hereunder with respect to securities and tax reporting, which shall include, but
not be limited to: (i) the total amount of Realized Losses, if any, incurred in
connection with any Final Recovery Determinations made during the related
Prepayment Period; and (ii) the respective portions of such Realized Losses
allocable to interest and allocable to principal. Prior to each Determination
Date, Ocwen shall also determine as to each Ocwen Mortgage Loan: (i) the total
amount of Realized Losses, if any, incurred in connection with any Deficient
Valuations made during the related Prepayment Period; and (ii) the total amount
of Realized Losses, if any, incurred in connection with Debt Service Reductions
in respect of Monthly Payments due during the related Due Period.
(b) All Realized Losses on the Mortgage Loans allocated to any
REMIC I Regular Interest pursuant to Section 5.04(c) on the Mortgage Loans shall
be allocated by the Securities Administrator on each Distribution Date as
follows: first, to Net Monthly Excess Cashflow; second, to the Class CE
Certificates; third, to the Class B Certificates, until the Certificate
Principal Balance has been reduced to zero, fourth, to the Class M-6
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; fifth, to the Class M-5 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; sixth, to the Class M-4 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero;
seventh, to the Class M-3 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero; eighth, to the Class M-2 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero; and ninth,
to the Class M-1 Certificates, until the Certificate Principal Balance thereof
has been reduced to zero. All Realized Losses to be allocated to the Certificate
Principal Balances of all Classes on any Distribution Date shall be so allocated
after the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.
Any allocation of Realized Losses to a Mezzanine Certificate
or Class B Certificate on any Distribution Date shall be made by reducing the
Certificate Principal Balance thereof by the amount so allocated; any allocation
of Realized Losses to a Class CE Certificates shall be made by reducing the
amount otherwise payable in respect thereof pursuant to Section
5.01(a)(7)(xxiii). No allocations of any Realized Losses shall be made to the
Certificate Principal Balances of the Class A Certificates or Class P
Certificates.
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As used herein, an allocation of a Realized Loss on a "pro
rata basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the, Certificates of such
Class in proportion to the Percentage Interests evidenced thereby.
(c)(i) The REMIC I Marker Percentage of all Realized Losses on
the Mortgage Loans shall be allocated by the Trustee, based solely on the
instructions of the Securities Administrator, on each Distribution Date to the
following REMIC I Regular Interests in the specified percentages, as follows:
first, to Uncertificated Interest payable to the REMIC I Regular Interest I-LTAA
and REMIC I Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC
I Interest Loss Allocation Amount, 98.00% and 2.00%, respectively; second, to
the Uncertificated Balances of the REMIC I Regular Interest I-LTAA and REMIC I
Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC I Principal
Loss Allocation Amount, 98.00% and 2.00%, respectively; third, to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTB and REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest I-LTB
has been reduced to zero; fourth, to the Uncertificated Balances of REMIC I
Regular Interest I-LTAA, REMIC I Regular Interest I-LTM6 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM6 has been reduced to zero; fifth, to
the Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM5 and REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM5 has been reduced to zero; sixth, to the Uncertificated Balances of REMIC
I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM4 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00%, and 1.00%, respectively, until the
Uncertificated Balance of REMIC I Regular Interest I-LTM4 has been reduced to
zero; seventh, to the Uncertificated Balances of REMIC I Regular Interest
I-LTAA, REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest I-LTZZ,
98.00%, 1.00% and 1.00%, respectively, until the Uncertificated Balance of REMIC
I Regular Interest I-LTM3 has been reduced to zero; eighth, to the
Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM2 and REMIC I Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%,
respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LTM2 has been reduced to zero; and ninth, to the Uncertificated Balances of
REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM1 and REMIC I
Regular Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the
Uncertificated Balance of REMIC I Regular Interest I-LTM1 has been reduced to
zero.
(ii) The REMIC I Sub WAC Allocation Percentage of all Realized
Losses shall be applied after all distributions have been made on each
Distribution Date first, so as to keep the Uncertificated Balance of each REMIC
I Regular Interest ending with the designation "B" equal to 0.01% of the
aggregate Stated Principal Balance of the Mortgage Loans in the related Loan
Group; second, to each REMIC I Regular Interest ending with the designation "A,"
so that the Uncertificated Balance of each such REMIC I Regular Interest is
equal to 0.01% of the excess of (x) the aggregate Stated Principal Balance of
the Mortgage Loans in the related Loan Group over (y) the current Certificate
Principal Balance of the Class A Certificate in the related Loan Group (except
that if any
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such excess is a larger number than in the preceding distribution period, the
least amount of Realized Losses shall be applied to such REMIC I Regular
Interests such that the REMIC I Subordinated Balance Ratio is maintained); and
third, any remaining Realized Losses shall be allocated to REMIC I Regular
Interest I-LTXX.
(iii) In addition, in the event that the related Servicer
receives any Subsequent Recoveries, if, after taking into account such
Subsequent Recoveries, the amount of a Realized Loss is reduced, the amount of
such Subsequent Recoveries will be applied to increase the Certificate Principal
Balance of the Class of Subordinate Certificates with the highest payment
priority to which Realized Losses have been allocated, but not by more than the
amount of Realized Losses previously allocated to that Class of Subordinate
Certificates pursuant to this Section 5.04. The amount of any remaining
Subsequent Recoveries will be applied to sequentially increase the Certificate
Principal Balance of the Subordinate Certificates, beginning with the Class of
Subordinate Certificates with the next highest payment priority, up to the
amount of such Realized Losses previously allocated to such Class of Subordinate
Certificates pursuant to this Section 5.04. Holders of such Certificates will
not be entitled to any payment in respect of current interest on the amount of
such increases for any Interest Accrual Period preceding the Distribution Date
on which such increase occurs.
SECTION 5.05 Compliance with Withholding
Requirements.
Notwithstanding any other provision of this Agreement, the
Trustee and the Securities Administrator shall comply with all federal
withholding requirements respecting payments to Certificateholders of interest
or original issue discount that the Trustee reasonably believes are applicable
under the Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Securities Administrator does withhold any amount
from interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Securities
Administrator shall indicate the amount withheld to such Certificateholders.
SECTION 5.06 Reports Filed with Securities and
Exchange Commission.
The Depositor shall prepare or cause to be prepared the
initial current report on Form 8-K. Within 15 days after each Distribution Date,
the Securities Administrator shall, in accordance with industry standards, file
with the Commission via the Electronic Data Gathering and Retrieval System
("EDGAR"), a Form 8-K with a copy of the statement to be furnished to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2005, the Securities Administrator shall, in accordance with
industry standards, file a Form 15 Suspension Notice with respect to the Trust
Fund, if applicable. Prior to (i) March 20, 2005 and (ii) unless and until a
Form 15 Suspension Notice shall have been filed, prior to March 20th of each
year thereafter, the Master Servicer shall provide the Securities Administrator
with a Master Servicer Certification, together with a copy of the annual
independent accountant's servicing report and annual statement of compliance of
the related Servicer to be delivered pursuant to this Agreement or pursuant to
the WFHM Servicing Agreement, as applicable, and, if applicable, the annual
independent accountant's servicing report and annual statement of compliance to
be delivered by the Master Servicer pursuant to Sections 4.16 and 4.17. Prior to
(i) March 31, 2005 and (ii) unless and until a Form 15 Suspension Notice shall
have been filed, March 31 of each year thereafter, the Securities
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Administrator shall file a Form 10-K, in substance conforming to industry
standards, with respect to the Trust. Such Form 10-K shall include the Master
Servicer Certification and other documentation provided by the Master Servicer
pursuant to the second preceding sentence. The Depositor hereby grants to the
Securities Administrator a limited power of attorney to execute and file each
such document on behalf of the Depositor. Such power of attorney shall continue
until either the earlier of (i) receipt by the Securities Administrator from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Securities Administrator, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement, the Mortgage Loans as the Securities Administrator reasonably deems
appropriate to prepare and file all necessary reports with the Commission. The
Securities Administrator shall have no responsibility to file any items other
than those specified in this Section 5.06; provided, however, the Securities
Administrator will cooperate with the Depositor in connection with any
additional filings with respect to the Trust Fund as the Depositor deems
necessary under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Fees and expenses incurred by the Securities Administrator in connection
with this Section 5.06 shall not be reimbursable from the Trust Fund.
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01 The Certificates.
(a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.
The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-6. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed and
authenticated by the Securities Administrator and delivered by the Trustee to
and upon the written order of the Depositor. The Certificates shall be executed
by manual or facsimile signature on behalf of the Trust by the Securities
Administrator by an authorized signatory. Certificates bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Securities Administrator shall bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates. 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 provided
herein executed by the Securities Administrator by manual signature, and such
certificate of authentication 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.
(b) The Class A Certificates and the Mezzanine Certificates
shall initially be issued as one or more Certificates held by the Book-Entry
Custodian or, if appointed to hold such Certificates as provided below, the
Depository and registered in the name of the Depository or its nominee and,
except as provided below, registration of such Certificates may not be
transferred by the Securities Administrator except to another Depository that
agrees to hold such Certificates for the respective Certificate Owners with
Ownership Interests therein. The Certificate Owners shall hold their respective
Ownership Interests in and to such Certificates through the book-entry
facilities of the Depository and, except as provided below, shall not be
entitled to definitive, fully registered Certificates ("Definitive
Certificates") in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing such Certificate Owner.
Each Depository Participant shall only transfer the Ownership Interests in the
Book-Entry Certificates of Certificate Owners it represents or of brokerage
firms for which it acts as agent in accordance with the Depository's normal
procedures. The Securities Administrator is hereby initially appointed as the
Book-Entry Custodian and hereby agrees to act as such in accordance herewith and
in accordance with the agreement that it has with the Depository authorizing it
to act as such. The Book-Entry Custodian may, and, if it is no longer qualified
to act
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as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, Ocwen and, if the Trustee is not the Book-Entry
Custodian, the Trustee, any other transfer agent (including the Depository or
any successor Depository) to act as Book-Entry Custodian under such conditions
as the predecessor Book-Entry Custodian and the Depository or any successor
Depository may prescribe, provided that the predecessor Book-Entry Custodian
shall not be relieved of any of its duties or responsibilities by reason of any
such appointment of other than the Depository. If the Securities Administrator
resigns or is removed in accordance with the terms hereof, the successor
Securities Administrator or, if it so elects, the Depository shall immediately
succeed to its predecessor's duties as Book-Entry Custodian. The Depositor shall
have the right to inspect, and to obtain copies of, any Certificates held as
Book-Entry Certificates by the Book-Entry Custodian.
(c) The Class B Certificates initially offered and sold in
offshore transactions in reliance on Regulation S shall be issued in the form of
a temporary global certificate in definitive, fully registered form (each, a
"Regulation S Temporary Global Certificate"), which shall be deposited with the
Securities Administrator or an agent of the Securities Administrator as
custodian for the Depository and registered in the name of Cede & Co. as nominee
of the Depository for the account of designated agents holding on behalf of
Euroclear or Clearstream. Beneficial interests in each Regulation S Temporary
Global Certificate may be held only through Euroclear or Clearstream; provided,
however, that such interests may be exchanged for interests in a Definitive
Certificate in accordance with the requirements described in Section 6.02. After
the expiration of the Release Date, a beneficial interest in a Regulation S
Temporary Global Certificate may be exchanged for a beneficial interest in the
related permanent global certificate of the same Class (each, a "Regulation S
Permanent Global Certificate"), in accordance with the procedures set forth in
Section 6.02. Each Regulation S Permanent Global Certificate shall be deposited
with the Securities Administrator or an agent of the Securities Administrator as
custodian for the Depository and registered in the name of Cede & Co. as nominee
of the Depository.
The Class B Certificates offered and sold to Qualified
Institutional Buyers ("QIBs") in reliance on Rule 144A under the Securities Act
("Rule 144A") or institutional investors that are accredited investors within
the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act ("Institutional Accredited Investors") will be issued in the form
of Definitive Certificates.
(d) The Trustee, Ocwen, the Securities Administrator, the
Master Servicer and the Depositor may for all purposes (including the making of
payments due on the Book-Entry Certificates and Global Certificates) deal with
the Depository as the authorized representative of the Certificate Owners with
respect to the Book-Entry Certificates and Global Certificates for the purposes
of exercising the rights of Certificateholders hereunder. The rights of
Certificate Owners with respect to the Book-Entry Certificates and Global
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates and Global
Certificates with respect to any particular matter shall not be deemed
inconsistent if they are made with respect to different Certificate Owners. The
Securities Administrator may establish a reasonable record date in connection
with solicitations of consents from or voting by Certificateholders and shall
give notice to the Depository of such record date.
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If (i)(A) the Depositor advises the Securities Administrator
in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository, and (B) the Depositor is unable to
locate a qualified successor, (ii) the Depositor at its option advises the
Securities Administrator in writing that it elects to terminate the book-entry
system through the Depository or (iii) after the occurrence of a Servicer Event
of Default, Certificate Owners representing in the aggregate not less than 51%
of the Ownership Interests of the Book-Entry Certificates advise the Securities
Administrator through the Depository, in writing, that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Certificate Owners, the Securities Administrator shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners
requesting the same. With respect to a Global Certificate, the related
Certificate Owner (other than a Holder of a Regulation S Temporary Global
Certificate) may request that its interest in a Global Certificate be exchanged
for a Definitive Certificate. Upon surrender to the Securities Administrator of
the Book-Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, or the Global Certificates by the Depository accompanied by
registration instructions from the Depository for registration of transfer, the
Securities Administrator shall cause the Definitive Certificates to be issued.
Such Definitive Certificates will be issued in minimum denominations of $10,000
except that any beneficial ownership that was represented by a Book-Entry
Certificate, or a Global Certificate, as applicable in an amount less than
$10,000 immediately prior to the issuance of a Definitive Certificate shall be
issued in a minimum denomination equal to the amount represented by such
Book-Entry Certificate or a Global Certificate, as applicable. None of the
Depositor, Ocwen, the Master Servicer, the Securities Administrator or the
Trustee shall be liable for any delay in the delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of 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 Securities Administrator, to the extent
applicable with respect to such Definitive Certificates, and the Securities
Administrator shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
SECTION 6.02 Registration of Transfer and
Exchange of Certificates.
(a) The Securities Administrator shall cause to be kept at one
of the offices or agencies to be appointed by the Securities Administrator in
accordance with the provisions of Section 9.11, a Certificate Register for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Securities Administrator shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
(b) No transfer of any Class B Certificate, Class CE
Certificate, Class P Certificate or Residual Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and effective registration
or qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Class B Certificate, Class CE Certificate, Class
P Certificate or Residual Certificate is to be made without registration or
qualification (other than in connection with the initial transfer of any such
Certificate by the Depositor), the Securities Administrator shall require
receipt of: (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from
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the Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the form attached
hereto as Exhibit B-1; (ii) if such transfer is purportedly being made in
reliance upon Rule 501(a) under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the form attached
hereto as Exhibit B-2; (iii) if such transfer is purportedly being made in
reliance on Regulation S, a written certification from the prospective
transferee, substantially in the form attached hereto as Exhibit B-1 and (iv) in
all other cases, an Opinion of Counsel satisfactory to the Securities
Administrator that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee, the Master Servicer, the Securities
Administrator or Ocwen), together with copies of the written certification(s) of
the Certificateholder desiring to effect the transfer and/or such
Certificateholder's prospective transferee upon which such Opinion of Counsel is
based, if any. Neither of the Depositor nor the Securities Administrator is
obligated to register or qualify any such Certificates under the 1933 Act or any
other securities laws or to take any action not otherwise required under this
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Certificateholder desiring to effect the transfer of any such
Certificate shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer, the Securities Administrator and each 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.
A holder of a beneficial interest in a Regulation S Temporary
Global Certificate must provide Euroclear or Clearstream, as the case may be,
with a certificate in the form of Annex A to Exhibit B-1 hereto certifying that
the beneficial owner of the interest in such Global Certificate is not a U.S.
Person (as defined in Regulation S), and Euroclear or Clearstream, as the case
may be, must provide to the Trustee and Securities Administrator a certificate
in the form of Exhibit B-1 hereto prior to (i) the payment of interest or
principal with respect to such holder's beneficial interest in the Regulation S
Temporary Global Certificate and (ii) any exchange of such beneficial interest
for a beneficial interest in a Regulation S Permanent Global Certificate.
(c) No transfer of a Class B Certificate, Class CE
Certificate, Class P Certificate or a Residual Certificate or any interest
therein shall be made to any Plan subject to ERISA or Section 4975 of the Code,
any Person acting, directly or indirectly, on behalf of any such Plan or any
Person acquiring such Certificates with "Plan Assets" of a Plan within the
meaning of the Department of Labor regulation promulgated at 29 C.F.R. ss.
2510.3-101 ("Plan Assets") unless (i) in the case of the Class CE, Class P or
Residual Certificates, the Securities Administrator is provided with an Opinion
of Counsel on which the Depositor, the Master Servicer, the Securities
Administrator, the Trustee and each Servicer may rely, which establishes to the
satisfaction of the Securities Administrator that the purchase of such
Certificates is permissible under applicable law, will not constitute or result
in any prohibited transaction under ERISA or Section 4975 of the Code and will
not subject the Depositor, Ocwen, the Trustee, the Master Servicer, the
Securities Administrator or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Depositor, Ocwen, the Trustee, the Master
Servicer, the Securities Administrator, the Trust Fund or (ii) in the case of
the Class B Certificates, the Transferee represents and warrants, or is deemed
to represent and warrant, that (1) it is an insurance company, (2) the source of
funds used to acquire or hold the certificate or interest therein
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is an "insurance company general account," as such term is defined in Prohibited
Transaction Class Exemption ("PTCE") 95-60, and (3) the conditions in Sections I
and III of PTCE 95-60 have been satisfied. An Opinion of Counsel will not be
required in connection with the initial transfer of any such Certificate by the
Depositor to an affiliate of the Depositor (in which case, the Depositor or any
affiliate thereof shall have deemed to have represented that such affiliate is
not a Plan or a Person investing Plan Assets) and the Securities Administrator
shall be entitled to conclusively rely upon a representation (which, upon the
request of the Securities Administrator, shall be a written representation) from
the Depositor of the status of such transferee as an affiliate of the Depositor.
Each Transferee of a Mezzanine Certificate will be deemed to
have represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 94-84 or FAN
97-03E, as amended by PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997), PTE
2000-58, 65 Fed. Reg. 67765 (November 13, 2000) and PTE 2002-41, 67 Fed. Reg.
54487 (August 22, 2002) (the "Exemption"), and that it understands that there
are certain conditions to the availability of the Exemption including that such
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by a Rating Agency or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in PTCE 95-60, and (iii) the conditions set
forth in Sections I and III of PTCE 95-60 have been satisfied.
If any Certificate or any interest therein is acquired or held
in violation of the conditions described in this Section 6.02(c), the next
preceding permitted beneficial owner will be treated as the beneficial owner of
that Certificate, retroactive to the date of transfer to the purported
beneficial owner. Any purported beneficial owner whose acquisition or holding of
any certificate or interest therein was effected in violation of the conditions
described in this Section 6.02(c) shall indemnify and hold harmless the
Depositor, the Trustee, Ocwen, the Master Servicer, the Securities Administrator
and the Trust Fund from and against any and all liabilities, claims, costs or
expenses incurred by those parties as a result of that acquisition or holding.
(d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Securities
Administrator or its designee under clause (iii)(A) below to deliver payments to
a Person other than such Person and to negotiate the terms of any mandatory sale
under clause (iii)(B) below and to execute all instruments of Transfer and to do
all other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(A) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall be
a Permitted Transferee and shall promptly notify the
Securities Administrator of any change or impending
change in its status as a Permitted Transferee.
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(B) In connection with any proposed Transfer
of any Ownership Interest in a Residual Certificate,
the Trustee shall require delivery to it, and shall
not register the Transfer of any Residual Certificate
until its receipt of, an affidavit and agreement (a
"Transfer Affidavit and Agreement," in the form
attached hereto as Exhibit B-3) from the proposed
Transferee, in form and substance satisfactory to the
Securities Administrator, representing and
warranting, among other things, that such Transferee
is a Permitted Transferee, that it is not acquiring
its Ownership Interest in the Residual Certificate
that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person that is not
a Permitted Transferee, that for so long as it
retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions
of this Section 6.02(d) and agrees to be bound by
them.
(C) Notwithstanding the delivery of a
Transfer Affidavit and Agreement by a proposed
Transferee under clause (B) above, if an authorized
officer of the Securities Administrator who is
assigned to this transaction has actual knowledge
that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a
Residual Certificate to such proposed Transferee
shall be effected.
(D) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall
agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person
attempts to transfer its Ownership Interest in a
Residual Certificate and (Y) not to transfer its
Ownership Interest unless it provides a Transferor
Affidavit (in the form attached hereto as Exhibit
B-2) to the Securities Administrator stating that,
among other things, it has no actual knowledge that
such other Person is not a Permitted Transferee.
(E) Each Person holding or acquiring an
Ownership Interest in a Residual Certificate, by
purchasing an Ownership Interest in such Certificate,
agrees to give the Securities Administrator written
notice that it is a "pass-through interest holder"
within the meaning of temporary Treasury regulation
Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Residual
Certificate, if it is, or is holding an Ownership
Interest in a Residual Certificate on behalf of, a
"pass-through interest holder."
(ii) The Securities Administrator will register the
Transfer of any Residual Certificate only if it shall have
received the Transfer Affidavit and Agreement and all of such
other documents as shall have been reasonably required by the
Securities Administrator as a condition to such registration.
In addition, no Transfer of a Residual Certificate shall be
made unless the Securities Administrator shall have received a
representation letter from the Transferee of such Certificate
to the effect that such Transferee is a Permitted Transferee.
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(iii) (A) If any purported Transferee shall become a
Holder of a Residual Certificate in violation of the
provisions of this Section 6.02(d), then the last preceding
Permitted Transferee shall be restored, to the extent
permitted by law, to all rights as holder thereof retroactive
to the date of registration of such Transfer of such
Residual Certificate. The Securities Administrator shall be
under no liability to any Person for any registration of
Transfer of a Residual Certificate that is in fact not
permitted by this Section 6.02(d) or for making any payments
due on such Certificate to the holder thereof or for taking
any other action with respect to such holder under the
provisions of this Agreement.
(B) If any purported Transferee shall become
a holder of a Residual Certificate in violation of
the restrictions in this Section 6.02(d) and to the
extent that the retroactive restoration of the rights
of the holder of such Residual Certificate as
described in clause (iii)(A) above shall be invalid,
illegal or unenforceable, then the Securities
Administrator shall have the right, without notice to
the holder or any prior holder of such Residual
Certificate, to sell such Residual Certificate to a
purchaser selected by the Securities Administrator on
such terms as the Securities Administrator may
choose. Such purported Transferee shall promptly
endorse and deliver each Residual Certificate in
accordance with the instructions of the Securities
Administrator. Such purchaser may be the Securities
Administrator itself or any Affiliate of the
Securities Administrator. The proceeds of such sale,
net of the commissions (which may include commissions
payable to the Securities Administrator or its
Affiliates), expenses and taxes due, if any, will be
remitted by the Securities Administrator to such
purported Transferee. The terms and conditions of any
sale under this clause (iii)(B) shall be determined
in the sole discretion of the Securities
Administrator, and the Securities Administrator shall
not be liable to any Person having an Ownership
Interest in a Residual Certificate as a result of its
exercise of such discretion.
(iv) The Securities Administrator shall make
available to the Internal Revenue Service and those Persons
specified by the REMIC Provisions all information necessary to
compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who
is a Disqualified Organization, including the information
described in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5) with respect to the "excess inclusions" of such
Residual Certificate and (B) as a result of any regulated
investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a
Residual Certificate having as among its record holders at any
time any Person which is a Disqualified Organization.
Reasonable compensation for providing such information may be
charged or collected by the Securities Administrator.
(v) The provisions of this Section 6.02(d) set forth
prior to this subsection (v) may be modified, added to or
eliminated, provided that there shall have been
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delivered to the Securities Administrator at the expense of
the party seeking to modify, add to or eliminate any such
provision the following:
(A) written notification from each Rating
Agency to the effect that the modification, addition
to or elimination of such provisions will not cause
such Rating Agency to downgrade its then-current
ratings of any Class of Certificates; and
(B) an Opinion of Counsel, in form and
substance satisfactory to the Securities
Administrator, to the effect that such modification
of, addition to or elimination of such provisions
will not cause any Trust REMIC to cease to qualify as
a REMIC and will not cause any Trust REMIC, as the
case may be, to be subject to an entity-level tax
caused by the Transfer of any Residual Certificate to
a Person that is not a Permitted Transferee or a
Person other than the prospective transferee to be
subject to a REMIC-tax caused by the Transfer of a
Residual Certificate to a Person that is not a
Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Securities Administrator maintained for such purpose pursuant to Section 9.11,
the Securities Administrator shall execute, authenticate and deliver, in the
name of the designated Transferee or Transferees, one or more new Certificates
of the same Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Securities
Administrator maintained for such purpose pursuant to Section 9.11. Whenever any
Certificates are so surrendered for exchange, the Securities Administrator shall
execute, authenticate and deliver, the Certificates which the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the Securities
Administrator) be duly endorsed by, or be accompanied by a written instrument of
transfer in the form satisfactory to the Securities Administrator duly executed
by, the Holder thereof or his attorney duly authorized in writing.
(g) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Securities Administrator
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Securities Administrator in accordance
with its customary procedures.
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SECTION 6.03 Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the
Securities Administrator, or the Securities Administrator receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and of the
ownership thereof, and (ii) there is delivered to Securities Administrator such
security or indemnity as may be required by it to save it harmless, then, in the
absence of actual knowledge by the Securities Administrator that such
Certificate has been acquired by a protected purchaser, the Securities
Administrator, shall execute, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like denomination and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Securities
Administrator 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 Securities Administrator)
connected therewith. Any replacement Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership in the
applicable REMIC created hereunder, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
SECTION 6.04 Persons Deemed Owners.
The Depositor, Ocwen, the Trustee, the Master Servicer, the
Securities Administrator and any agent of any of them may treat the Person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.01 and for all
other purposes whatsoever, and none of the Depositor, Ocwen, the Trustee, the
Master Servicer, the Securities Administrator or any agent of any of them shall
be affected by notice to the contrary.
SECTION 6.05 Certain Available Information.
On or prior to the date of the first sale of any Class CE
Certificate, Class P Certificate or Residual Certificate to an Independent third
party, the Depositor shall provide to the Securities Administrator ten copies of
any private placement memorandum or other disclosure document used by the
Depositor in connection with the offer and sale of such Certificate. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Securities Administrator, the Depositor promptly shall inform the Securities
Administrator of such event and shall deliver to the Securities Administrator
ten copies of the private placement memorandum or disclosure document, as
revised, amended or supplemented. The Securities Administrator shall maintain at
its office as set forth in Section 12.05 hereof and shall make available free of
charge during normal business hours for review by any Holder of a Certificate or
any Person identified to the Securities Administrator as a prospective
transferee of a Certificate, originals or copies of the following items: (i) in
the case of a Holder or prospective transferee of a Class CE Certificate, Class
P Certificate or Residual Certificate, the related private placement memorandum
or other disclosure document relating to such Class of Certificates, in the form
most recently provided to the Securities Administrator; and (ii) in all cases,
(A) this Agreement and any amendments hereof entered into pursuant to Section
11.01, (B) all monthly statements required to be delivered to Certificateholders
of the relevant Class pursuant to Section 4.02 since the Closing Date, and all
other notices, reports, statements and written communications delivered to the
Certificateholders of the relevant Class pursuant to this Agreement
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since the Closing Date and (C) any copies of all officers' certificates of the
Servicers since the Closing Date delivered to the Master Servicer to evidence
such Person's determination that any P&I Advance or Servicing Advance was, or if
made, would be a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance.
Copies and mailing of any and all of the foregoing items will be available from
the Securities Administrator upon request at the expense of the Person
requesting the same.
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ARTICLE VII
THE DEPOSITOR, OCWEN AND THE MASTER SERVICER
SECTION 7.01 Liability of the Depositor, Ocwen
and the Master Servicer.
The Depositor, Ocwen and the Master Servicer each shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed by this Agreement upon them in their respective capacities as Depositor,
a Servicer and Master Servicer and undertaken hereunder by the Depositor, Ocwen
and the Master Servicer herein.
SECTION 7.02 Merger or Consolidation of the
Depositor, Ocwen or the Master
Servicer.
Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
Ocwen will keep in full effect its existence, rights and franchises as a
federally chartered savings bank. Subject to the following paragraph, the Master
Servicer will keep in full effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its formation. The Depositor,
Ocwen and the Master Servicer each will 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, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
The Depositor, Ocwen or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor, Ocwen or the Master Servicer shall be a
party, or any Person succeeding to the business of the Depositor, Ocwen or the
Master Servicer, shall be the successor of the Depositor, Ocwen or the Master
Servicer, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that any successor of
Ocwen or the Master Servicer shall meet the eligibility requirements set forth
in clauses (i) and (iii) of the last paragraph of Section 8.02(a) or Section
7.06, as applicable.
SECTION 7.03 Limitation on Liability of the
Depositor, Ocwen, the Master
Servicer and Others.
None of the Depositor, Ocwen, the Securities Administrator,
the Master Servicer or any of the directors, officers, employees or agents of
the Depositor, Ocwen or the Master Servicer shall be under any liability to the
Trust Fund or the Certificateholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Depositor, Ocwen, the Securities Administrator, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein or against any specific liability imposed on any such Person pursuant
hereto or against any liability which would otherwise be imposed by reason of
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willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. The
Depositor, Ocwen, the Securities Administrator, the Master Servicer and any
director, officer, employee or agent of the Depositor, Ocwen, the Securities
Administrator and the Master Servicer may rely in good faith on any document of
any kind which, PRIMA FACIE, is properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, Ocwen, the Securities
Administrator, the Master Servicer and any director, officer, employee or agent
of the Depositor, Ocwen, the Securities Administrator or the Master Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement, the Certificates or any Credit Risk Management Agreement or any
loss, liability or expense incurred other than 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, Ocwen, the Securities Administrator or the Master Servicer shall be
under any obligation to appear in, prosecute or defend any legal action unless
such action is related to its respective duties under this Agreement and, in its
opinion, does not involve it in any expense or liability; provided, however,
that each of the Depositor, Ocwen, the Securities Administrator and the Master
Servicer may in its discretion undertake any such action which it may deem
necessary or desirable with respect to this Agreement and the rights and duties
of the parties hereto and the interests of the Certificateholders hereunder. In
such event, the legal expenses and costs of such action and any liability
resulting therefrom (except 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) shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor, Ocwen, the Securities Administrator and the Master Servicer shall be
entitled to be reimbursed therefor from the related Collection Account or the
Distribution Account as and to the extent provided in Article III and Article
IV, any such right of reimbursement being prior to the rights of the
Certificateholders to receive any amount in the related Collection Account and
the Distribution Account.
Notwithstanding anything to the contrary contained herein,
Ocwen shall not be liable for any actions or inactions prior to the Cut-off Date
of any prior servicer of the Ocwen Mortgage Loans and the Master Servicer shall
not be liable for any action or inaction of any Servicer, except to the extent
expressly provided herein, or the Credit Risk Manager.
SECTION 7.04 Limitation on Resignation of Ocwen.
(a) Ocwen shall neither assign all or substantially all of its
rights under this Agreement or the servicing hereunder nor delegate all or
substantially all of its duties hereunder nor sell or otherwise dispose of all
or substantially all of its property or assets without, in each case, the prior
written consent of the Master Servicer, which consent shall not be unreasonably
withheld; provided, that in each case, there must be delivered to the Trustee
and the Master Servicer a letter from each Rating Agency to the effect that such
transfer of servicing or sale or disposition of assets will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of the
Certificates. Notwithstanding the foregoing, Ocwen, without the consent of the
Trustee or the Master Servicer, may retain third-party contractors to perform
certain servicing and loan administration functions, including without
limitation hazard insurance administration, tax payment and administration,
flood certification and administration, collection services and similar
functions,
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PROVIDED, HOWEVER, that the retention of such contractors by Ocwen shall not
limit the obligation of Ocwen to service the Mortgage Loans pursuant to the
terms and conditions of this Agreement. Ocwen shall not resign from the
obligations and duties hereby imposed on it except by consent of the Master
Servicer or upon determination that its duties hereunder are no longer
permissible under applicable law or as provided in Section 7.04(c). Any such
determination pursuant to the preceding sentence permitting the resignation
(other than pursuant to Section 7.04(c)) of Ocwen shall be evidenced by an
Opinion of Counsel to such effect obtained at the expense of Ocwen and delivered
to the Trustee and the Rating Agencies. No resignation of Ocwen shall become
effective until the Master Servicer or a successor Servicer shall have assumed
Ocwen's responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.
(b) Except as expressly provided herein, Ocwen shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by Ocwen hereunder. The foregoing prohibition on assignment shall not
prohibit Ocwen from designating a Sub-Servicer as payee of any indemnification
amount payable to Ocwen hereunder; provided, however, that as provided in
Section 3.02, no Sub-Servicer shall be a third-party beneficiary hereunder and
the parties hereto shall not be required to recognize any Sub-Servicer as an
indemnitee under this Agreement.
(c) Notwithstanding anything to the contrary herein, Ocwen may
pledge or assign as collateral all its rights, title and interest under this
Agreement to a lender (the "Lender"), provided, that:
(1) upon an Event of Default and receipt of a notice of
termination by Ocwen, the Lender may direct Ocwen or its designee to
appoint a successor Servicer pursuant to the provisions, and subject to
the conditions, set forth in Section 8.02 regarding Ocwen's appointment
of a successor Servicer;
(2) the Lender's rights are subject to this Agreement; and
(3) Ocwen shall remain subject to termination as servicer
under this Agreement pursuant to the terms hereof.
SECTION 7.05 Limitation on Resignation of the
Master Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that its duties hereunder
are no longer permissible under applicable law. Any such determination pursuant
to the preceding sentence permitting the resignation of the Master Servicer
shall be evidenced by an Opinion of Counsel to such effect obtained at the
expense of the Master Servicer and delivered to the Trustee and the Rating
Agencies. No resignation of the Master Servicer shall become effective until the
Trustee or a successor Master Servicer 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.
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SECTION 7.06 Assignment of Master Servicing.
The Master Servicer may sell and assign its rights and
delegate its duties and obligations in its entirety as Master Servicer under
this Agreement; provided, however, that: (i) the purchaser or transferee accept
in writing such assignment and delegation and assume the obligations
of the Master Servicer hereunder (a) shall have a net worth of not less than
$15,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (b) shall be reasonably satisfactory to the Trustee (as evidenced
in a writing signed by the Trustee); and (c) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
from and after the effective date of such agreement; (ii) each Rating Agency
shall be given prior written notice of the identity of the proposed successor to
the Master Servicer and each Rating Agency's rating of the Certificates in
effect immediately prior to such assignment, sale and delegation will not be
downgraded, qualified or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect delivered to the Master
Servicer and the Trustee; and (iii) the Master Servicer assigning and selling
the master servicing shall deliver to the Trustee an officer's certificate and
an Opinion of Independent counsel, each stating that all conditions precedent to
such action under this Agreement have been completed and such action is
permitted by and complies with the terms of this Agreement. No such assignment
or delegation shall affect any liability of the Master Servicer arising out of
acts or omissions prior to the effective date thereof.
SECTION 7.07 Rights of the Depositor in Respect
of Ocwen and the Master Servicer.
Each of the Master Servicer and Ocwen shall afford (and any
Sub-Servicing Agreement shall provide that each Sub-Servicer shall afford) the
Depositor and the Trustee, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer or Ocwen (and any such
Sub-Servicer) in respect of Ocwen's rights and obligations hereunder and access
to officers of the Master Servicer or Ocwen (and those of any such Sub-
Servicer) responsible for such obligations, and the Master Servicer shall have
access to all records maintained by Ocwen and any Sub-Servicers. Upon request,
each of the Master Servicer and Ocwen shall furnish to the Depositor and the
Trustee its (and any such Sub-Servicer's) most recent financial statements and
such other information relating to the Master Servicer's or Ocwen's capacity to
perform its obligations under this Agreement as it possesses (and that any such
Sub-Servicer possesses). To the extent such information is not otherwise
available to the public, the Depositor and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Master
Servicer's or Ocwen's written consent, except as required pursuant to this
Agreement or to the extent that it is appropriate to do so (i) to its legal
counsel, auditors, taxing authorities or other governmental agencies and the
Certificateholders, (ii) pursuant to any law, rule, regulation, order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over the Depositor and the Trustee or the Trust Fund, and in any
case, the Depositor or the Trustee, (iii) disclosure of any and all information
that is or becomes publicly known, or information obtained by the Trustee from
sources other than the Depositor, Ocwen or the Master Servicer, (iv) disclosure
as required pursuant to this Agreement or (v) disclosure of any and all
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information (A) in any preliminary or final offering circular, registration
statement or contract or other document pertaining to the transactions
contemplated by the Agreement approved in advance by the Depositor, Ocwen or the
Master Servicer or (B) to any affiliate, independent or internal auditor, agent,
employee or attorney of the Trustee having a need to know the same, provided
that the Trustee advises such recipient of the confidential nature of the
information being disclosed, shall use its best efforts to assure the
confidentiality of any such disseminated non-public information. Nothing in this
Section 7.07 shall limit the obligation of Ocwen to comply with any applicable
law prohibiting disclosure of information regarding the Mortgagors and the
failure of Ocwen to provide access as provided in this Section 7.07 as a result
of such obligation shall not constitute a breach of this Section. Nothing in
this Section 7.07 shall require Ocwen to collect, create, collate or otherwise
generate any information that it does not generate in its usual course of
business. Ocwen shall not be required to make copies of or ship documents to any
party unless provisions have been made for the reimbursement of the costs
thereof. The Depositor may, but is not obligated to, enforce the obligations of
the Master Servicer and Ocwen under this Agreement and may, but is not obligated
to, perform, or cause a designee to perform, any defaulted obligation of the
Master Servicer or Ocwen under this Agreement or exercise the rights of the
Master Servicer or Ocwen under this Agreement; provided that neither the Master
Servicer nor Ocwen shall be relieved of any of its obligations under this
Agreement by virtue of such performance by the Depositor or its designee. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Master Servicer or Ocwen and is not obligated to supervise
the performance of the Master Servicer or Ocwen under this Agreement or
otherwise.
SECTION 7.08. Duties of the Credit Risk Manager.
For and on behalf of the Depositor, the Credit Risk Manager
will provide reports and recommendations concerning certain delinquent and
defaulted Mortgage Loans, and as to the collection of any Prepayment Charges
with respect to the Mortgage Loans. Such reports and recommendations will be
based upon information provided to the Credit Risk Manager pursuant to the
Credit Risk Management Agreements, and the Credit Risk Manager shall look solely
to the related Servicer and/or Master Servicer for all information and data
(including loss and delinquency information and data) relating to the servicing
of the related Mortgage Loans. Upon any termination of the Credit Risk Manager
or the appointment of a successor Credit Risk Manager, the Depositor shall give
written notice thereof to the related Servicer, the Master Servicer, the
Trustee, and each Rating Agency. Notwithstanding the foregoing, the termination
of the Credit Risk Manager pursuant to this Section shall not become effective
until the appointment of a successor Credit Risk Manager.
SECTION 7.09. Limitation Upon Liability of the
Credit Risk Manager.
Neither the Credit Risk Manager, nor any of its directors,
officers, employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by the related Servicer under the related
Credit Risk Management Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Credit Risk Manager or any such person
against liability that would otherwise be imposed by reason of willful
malfeasance or bad faith in its performance of its duties. The Credit Risk
Manager and any director, officer, employee, or agent of the Credit Risk Manager
may rely in
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good faith on any document of any kind PRIMA FACIE properly executed and
submitted by any Person respecting any matters arising hereunder, and may rely
in good faith upon the accuracy of information furnished by the related Servicer
pursuant to the related Credit Risk Management Agreement in the performance of
its duties thereunder and hereunder.
SECTION 7.10. Removal of the Credit Risk Manager.
The Credit Risk Manager may be removed as Credit Risk Manager
by Certificateholders holding not less than 66 2/3% of the Voting Rights in the
Trust Fund, in the exercise of its or their sole discretion. The
Certificateholders shall provide written notice of the Credit Risk Manager's
removal to the Trustee. Upon receipt of such notice, the Trustee shall provide
written notice to the Credit Risk Manager of its removal, which shall be
effective upon receipt of such notice by the Credit Risk Manager.
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ARTICLE VIII
DEFAULT
SECTION 8.01 Servicer Events of Default.
(a) "Servicer Event of Default," wherever used herein, means
any one of the following events:
(i) any failure by Ocwen to remit to the Securities
Administrator for distribution to the Certificateholders any payment
(other than a P&I Advance required to be made from its own funds on any
Servicer Remittance Date pursuant to Section 5.03) required to be made
under the terms of the Certificates and this Agreement which continues
unremedied for a period of one Business Day after the date upon which
written notice of such failure, requiring the same to be remedied,
shall have been given to Ocwen by the Depositor or the Trustee (in
which case notice shall be provided by telecopy), or to Ocwen, the
Depositor, the Trustee and by the Holders of Certificates entitled to
at least 25% of the Voting Rights; or
(ii) any failure on the part of Ocwen duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of Ocwen contained in this Agreement, or the
material breach by Ocwen of any representation and warranty contained
in Section 2.05, which continues unremedied for a period of 30 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to Ocwen by the Depositor or
the Trustee or to Ocwen, the Depositor and the Trustee by the Holders
of Certificates entitled to at least 25% of the Voting Rights;
provided, however, that in the case of a failure that cannot be cured
within thirty (30) days, the cure period may be extended for an
additional thirty (30) days if Ocwen can demonstrate to the reasonable
satisfaction of the Trustee that Ocwen is diligently pursuing remedial
action; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceeding,
or for the winding-up or liquidation of its affairs, shall have been
entered against Ocwen and such decree or order shall have remained in
force undischarged or unstayed for a period of 90 days; or
(iv) Ocwen shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to it or of or relating to all or substantially all of
its property; or
(v) Ocwen shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or
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reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations;
(vi) failure by Ocwen to duly perform, within the
required time period, its obligations under Section 3.17, 3.18 or 3.19
which failure continues unremedied for a period of thirty (30) days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to Ocwen by any party to
this Agreement; or
(vii) any failure of Ocwen to make any P&I Advance on
any Servicer Remittance Date required to be made from its own funds
pursuant to Section 5.03 which continues unremedied until 3:00 p.m. New
York time on the Business Day immediately following the Servicer
Remittance Date.
If a Servicer Event of Default described in clauses (i) through (vi) of this
Section shall occur, then, and in each and every such case, so long as such
Servicer Event of Default shall not have been remedied, the Depositor or the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to Ocwen (and to the Depositor if given by the Trustee or to the Trustee
if given by the Depositor) with a copy to the Master Servicer and each Rating
Agency, terminate all of the rights and obligations of Ocwen in its capacity as
a Servicer under this Agreement, to the extent permitted by law, and in and to
the Mortgage Loans and the proceeds thereof. If a Servicer Event of Default
described in clause (vii) hereof shall occur, the Trustee shall, by notice in
writing to Ocwen, the Depositor and the Master Servicer, terminate all of the
rights and obligations of Ocwen in its capacity as a Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof. Subject to
Section 8.02, on or after the receipt by Ocwen of such written notice, all
authority and power of Ocwen under this Agreement, whether with respect to the
Certificates (other than as a Holder of any Certificate) or the Ocwen Mortgage
Loans or otherwise, shall pass to and be vested in the Master Servicer pursuant
to and under this Section, and, without limitation, the Master Servicer is
hereby authorized and empowered, as attorney-in-fact or otherwise, to execute
and deliver, on behalf of and at the expense of Ocwen, 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 Ocwen Mortgage Loans
and related documents, or otherwise. Ocwen agrees promptly (and in any event no
later than ten Business Days subsequent to such notice) to provide the Master
Servicer with all documents and records requested by it to enable it to assume
Ocwen's functions under this Agreement, and to cooperate with the Master
Servicer in effecting the termination of Ocwen's responsibilities and rights
under this Agreement, including, without limitation, the transfer within one
Business Day to the Master Servicer for administration by it of all cash amounts
which at the time shall be or should have been credited by Ocwen to the related
Collection Account held by or on behalf of Ocwen or thereafter be received with
respect to the Ocwen Mortgage Loans or any REO Property (provided, however, that
Ocwen shall continue to be entitled to receive all amounts accrued or owing to
it under this Agreement on or prior to the date of such termination, whether in
respect of P&I Advances, Servicing Advances, accrued and unpaid Servicing Fees
or otherwise, and shall continue to be entitled to the benefits of Section 7.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 8.01(a), the Trustee shall not
be deemed to have knowledge of a Servicer Event of Default unless a Responsible
Officer of the
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Trustee assigned to and working in the Trustee's Corporate Trust Office has
actual knowledge thereof or unless written notice of any event which is in fact
such a Servicer Event of Default is received by the Trustee at its Corporate
Trust Office and such notice references the Certificates, the Trust or this
Agreement. The Trustee shall promptly notify the Master Servicer and the Rating
Agencies of the occurrence of a Servicer Event of Default of which it has
knowledge as provided above.
The Master Servicer shall be entitled to be reimbursed by
Ocwen (or from amounts on deposit in the Distribution Account if Ocwen is unable
to fulfill its obligations hereunder) for all reasonable out-of-pocket or third
party costs associated with the transfer of servicing from the predecessor
Servicer (or if the predecessor Servicer is the Master Servicer, from the
Servicer immediately preceding the Master Servicer), including without
limitation, any reasonable out-of- pocket or third party costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.
(b) "Master Servicer Event of Default," wherever used herein,
means any one of the following events:
(i) any failure on the part of the Master Servicer
duly 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 the breach by the Master Servicer of any
representation and warranty contained in Section 2.04, which continues
unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Depositor or the Trustee or to
the Master Servicer, the Depositor and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights; or
(ii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceeding,
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 90 days; or
(iii) the Master Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to it or of or relating to all or
substantially all of its property; or
(iv) 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 any applicable insolvency
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or reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations.
If a Master Servicer Event of Default shall occur, then, and in each and every
such case, so long as such Master Servicer Event of Default shall not have been
remedied, the Depositor or the Trustee may, and at the written direction of the
Holders of Certificates entitled to at least 51% of Voting Rights, the Trustee
shall, by notice in writing to the Master Servicer (and to the Depositor if
given by the Trustee or to the Trustee if given by the Depositor) with a copy to
each Rating Agency, terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement, to the extent
permitted by law, and in and to the Mortgage Loans and the proceeds thereof. On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement, whether with
respect to the Certificates (other than as a Holder of any Certificate) or the
Mortgage Loans or otherwise including, without limitation, the compensation
payable to the Master Servicer under this Agreement, shall pass to and be vested
in the Trustee pursuant to and under this Section, and, without limitation, the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise, to
execute and deliver, on behalf of and at the expense of the Master Servicer, 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. The Master Servicer
agrees promptly (and in any event no later than ten Business Days subsequent to
such notice) to provide the Trustee with all documents and records requested by
it to enable it to assume the Master Servicer's functions under this Agreement,
and to cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights under this Agreement (provided, however,
that the Master Servicer shall continue to be entitled to receive all amounts
accrued or owing to it under this Agreement on or prior to the date of such
termination and shall continue to be entitled to the benefits of Section 7.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 8.01(b), the Trustee shall not
be deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a Master Servicer Event of Default is received
by the Trustee and such notice references the Certificates, the Trust or this
Agreement. The Trustee shall promptly notify the Rating Agencies of the
occurrence of a Master Servicer Event of Default of which it has knowledge as
provided above.
To the extent that the costs and expenses of the Trustee
related to the termination of the Master Servicer, appointment of a successor
Master Servicer or the transfer and assumption of the master servicing by the
Trustee (including, without limitation, (i) all legal costs and expenses and all
due diligence costs and expenses associated with an evaluation of the potential
termination of the Master Servicer as a result of a Master Servicer Event of
Default and (ii) all costs and expenses associated with the complete transfer of
the master servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor Master Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
Master Servicer to master service the Mortgage Loans in accordance with this
Agreement) are not fully and timely reimbursed by the terminated Master
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Servicer, the Trustee shall be entitled to reimbursement of such costs and
expenses from the Distribution Account.
SECTION 8.02 Master Servicer to Act; Appointment
of Successor.
(a) On and after the time Ocwen receives a notice of
termination, the Master Servicer shall be the successor in all respects to the
Ocwen in its capacity as Servicer under this Agreement and the transactions set
forth or provided for herein, and all the responsibilities, duties and
liabilities relating thereto and arising thereafter shall be assumed by the
Master Servicer (except for any representations or warranties of Ocwen under
this Agreement, the responsibilities, duties and liabilities contained in
Section 2.03 and the obligation to deposit amounts in respect of losses pursuant
to Section 3.10(b)) by the terms and provisions hereof including, without
limitation, Ocwen's obligations to make P&I Advances pursuant to Section 5.03;
provided, however, that if the Master Servicer is prohibited by law or
regulation from obligating itself to make advances regarding delinquent mortgage
loans, then the Master Servicer shall not be obligated to make P&I Advances
pursuant to Section 5.03; and provided further, that any failure to perform such
duties or responsibilities caused by Ocwen's failure to provide information
required by Section 8.01 shall not be considered a default by the Master
Servicer as successor to Ocwen hereunder; provided, however, that (1) it is
understood and acknowledged by the parties hereto that there will be a period of
transition (not to exceed 120 days) before the actual servicing functions can be
fully transferred to the Master Servicer or any successor Servicer appointed in
accordance with the following provisions and (2) any failure to perform such
duties or responsibilities caused by Ocwen's failure to provide information
required by Section 8.01 shall not be considered a default by the Master
Servicer as successor to Ocwen hereunder. As compensation therefor, the Master
Servicer shall be entitled to the Servicing Fee and all funds relating to the
Ocwen Mortgage Loans to which Ocwen would have been entitled if it had continued
to act hereunder. Notwithstanding the above and subject to the immediately
following paragraph, the Master Servicer may, if it shall be unwilling to so
act, or shall, if it is unable to so act promptly appoint or petition a court of
competent jurisdiction to appoint, a Person that satisfies the eligibility
criteria set forth below as the successor to Ocwen under this Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
Ocwen under this Agreement.
Notwithstanding any provision in this Agreement to the
contrary, for a period of 30 days following the date on which Ocwen shall have
received a notice of termination pursuant to Section 8.01, Ocwen or its designee
may appoint a successor Servicer that satisfies the eligibility criteria of a
successor Servicer set forth below, which appointment shall be subject to the
consent of the Depositor, the Seller, the Master Servicer, and the Trustee,
which consent shall not be unreasonably withheld or delayed; provided that such
successor Servicer agrees to fully effect the servicing transfer within 120 days
following the termination of Ocwen and to make all P&I Advances that would
otherwise be made by the Master Servicer under Section 8.01 as of the date of
such appointment, and to reimburse Ocwen and/or the Master Servicer for any
unreimbursed P&I Advances they have made and any reimbursable expenses that they
may have incurred in connection with this Section 8.02. Any proceeds received in
connection with the appointment of such successor Servicer shall be the property
of Ocwen or its designee. This 30-day period shall terminate immediately (i) at
the close of business on the second Business Day of such 30-day period if (A)
Ocwen was terminated because of an Event of Default described in Section 8.01
(a)(vii) for failing
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to make a required P&I Advance, and (B) Ocwen shall have failed to make (or
cause to be made) such P&I Advance, or shall fail to reimburse (or cause to be
reimbursed) the Master Servicer for a P&I Advance made by the Master Servicer,
by the close of business on such second Business Day, or (ii) at the close of
business on the second Business Day following the date (if any) during such
30-day period on which a P&I Advance is due to be made, if Ocwen shall have
failed to make (or caused to be made) such P&I Advance, or Ocwen shall have
failed to reimburse (or cause to be reimbursed) the Master Servicer for such P&I
Advance, by the close of business on such second Business Day.
Notwithstanding anything herein to the contrary, in no event
shall the Trustee or the Master Servicer be liable for any Servicing Fee or for
any differential in the amount of the Servicing Fee paid hereunder and the
amount necessary to induce any successor Servicer to act as successor Servicer
under this Agreement and the transactions set forth or provided for herein.
Any successor Servicer appointed under this Agreement must (i)
be an established mortgage loan servicing institution that is a Fannie Mae and
Freddie Mac approved seller/servicer, (ii) be approved by each Rating Agency by
a written confirmation from each Rating Agency that the appointment of such
successor Servicer would not result in the reduction or withdrawal of the then
current ratings of any outstanding Class of Certificates, (iii) have a net worth
of not less than $15,000,000 and (iv) assume all the responsibilities, duties or
liabilities of Ocwen (other than liabilities of Ocwen hereunder incurred prior
to termination of Ocwen under Section 8.01 herein) under this Agreement as if
originally named as a party to this Agreement.
(b)(1) All servicing transfer costs (including, without
limitation, servicing transfer costs of the type described in Section 8.02(a)
and incurred by the Trustee, the Master Servicer and any successor Servicer
under paragraph (b)(2) below) shall be paid by the terminated Servicer upon
presentation of reasonable documentation of such costs, and if such predecessor
or initial Servicer, as applicable, defaults in its obligation to pay such
costs, the successor Servicer, the Master Servicer and the Trustee shall be
entitled to reimbursement therefor from the assets of the Trust Fund.
(2) No appointment of a successor to the Servicer under this
Agreement shall be effective until the assumption by the successor of all of
Ocwen's responsibilities, duties and liabilities hereunder. In connection with
such appointment and assumption described herein, the Trustee may make such
arrangements for the compensation of such successor out of payments on Ocwen
Mortgage Loans as it and such successor shall agree; PROVIDED, HOWEVER, that no
such compensation shall be in excess of that permitted Ocwen as such hereunder.
The Depositor, the Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Pending appointment of a successor to Ocwen under this Agreement, the Master
Servicer shall act in such capacity as hereinabove provided.
SECTION 8.03 Notification to Certificateholders.
(a) Upon any termination of Ocwen or the Master Servicer
pursuant to Section 8.01(a) or (b) or any appointment of a successor to Ocwen or
the Master Servicer pursuant to Section 8.02, the Trustee shall give prompt
written notice thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register.
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(b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Servicer Event of Default or a Master Servicer Event of
Default or five days after a Responsible Officer of the Trustee becomes aware of
the occurrence of such an event, the Trustee shall transmit by mail to all
Holders of Certificates notice of each such occurrence, unless such default or
Servicer Event of Default or Master Servicer Event of Default shall have been
cured or waived.
SECTION 8.04 Waiver of Servicer Events of
Default.
The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default, Servicer Event
of Default or Master Servicer Event of Default hereunder may waive such default,
Servicer Event of Default or Master Servicer Event of Default; PROVIDED,
HOWEVER, that a Servicer Event of Default under clause (i) or (vii) of Section
8.01(a) may be waived only by all of the Holders of the Regular Certificates.
Upon any such waiver of a default, Servicer Event of Default or Master Servicer
Event of Default, such default, Servicer Event of Default or Master Servicer
Event of Default shall cease to exist and shall be deemed to have been remedied
for every purpose hereunder. No such waiver shall extend to any subsequent or
other default, Servicer Event of Default or Master Servicer Event of Default or
impair any right consequent thereon except to the extent expressly so waived.
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ARTICLE IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
SECTION 9.01 Duties of Trustee and Securities
Administrator.
The Trustee, prior to the occurrence of a Master Servicer
Event of Default and after the curing or waiver of all Master Servicer Events of
Default which may have occurred, and the Securities Administrator each undertake
to perform such duties and only such duties as are specifically set forth in
this Agreement as duties of the Trustee and the Securities Administrator,
respectively. During the continuance of a Master Servicer Event of Default, 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 its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
Each of the Trustee and the Securities Administrator, upon
receipt of all resolutions, certificates, statements, opinions, reports,
documents, orders or other instruments furnished to it, which are specifically
required to be furnished pursuant to any provision of this Agreement, shall
examine them to determine whether they conform to the requirements of this
Agreement. If any such instrument is found not to conform to the requirements of
this Agreement in a material manner, the Trustee or the Securities
Administrator, as the case may be, shall take such action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to its satisfaction, the Securities Administrator will provide notice
to the Trustee thereof and the Trustee will provide notice to the
Certificateholders.
The Trustee shall promptly remit to the related Servicer any
complaint, claim, demand, notice or other document (collectively, the "Notices")
delivered to the Trustee as a consequence of the assignment of any Mortgage Loan
hereunder and relating to the servicing of the Mortgage Loans; provided than any
such notice (i) is delivered to the Trustee at its Corporate Trust Office, (ii)
contains information sufficient to permit the Trustee to make a determination
that the real property to which such document relates is a Mortgaged Property.
The Trustee shall have no duty hereunder with respect to any Notice it may
receive or which may be alleged to have been delivered to or served upon it
unless such Notice is delivered to it or served upon it at its Corporate Trust
Office and such Notice contains the information required pursuant to clause (ii)
of the preceding sentence.
No provision of this Agreement shall be construed to relieve
the Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own misconduct; PROVIDED,
HOWEVER, that:
(i) Prior to the occurrence of a Master Servicer
Event of Default, and after the curing or waiver of all such
Master Servicer Events of Default which may have occurred with
respect to the Trustee and at all times with respect to the
Securities Administrator, the duties and obligations of the
Trustee shall be
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determined solely by the express provisions of this Agreement,
neither the Trustee nor the Securities Administrator shall be
liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement,
no implied covenants or obligations shall be read into this
Agreement against the Trustee or the Securities Administrator
and, in the absence of bad faith on the part of the Trustee or
the Securities Administrator, respectively, the Trustee or the
Securities Administrator, respectively, 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 or the Securities Administrator,
respectively, that conform to the requirements of this
Agreement;
(ii) Neither the Trustee nor the Securities
Administrator shall be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of
the Trustee or an officer or officers of the Securities
Administrator, respectively, unless it shall be proved that
the Trustee or the Securities Administrator, respectively, was
negligent in ascertaining the pertinent facts; and
(iii) Neither the Trustee nor the Securities
Administrator shall be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates
entitled to at least 25% of the Voting Rights relating to the
time, method and place of conducting any proceeding for any
remedy available to the Trustee or the Securities
Administrator or exercising any trust or power conferred upon
the Trustee or the Securities Administrator under this
Agreement.
SECTION 9.02 Certain Matters Affecting Trustee
and Securities Administrator.
(a) Except as otherwise provided in Section 9.01:
(i) The Trustee and the Securities Administrator may
request and rely upon and shall be protected in acting or
refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document
reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) The Trustee and the Securities Administrator may
consult with counsel of its selection and any advice of such
counsel or 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 advice or Opinion of Counsel;
(iii) Neither the Trustee nor the Securities
Administrator shall be under any obligation to exercise any of
the trusts or powers vested in it by this Agreement or to
institute, conduct or defend any litigation hereunder or in
relation hereto at the
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request, order or direction of any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee or the
Securities Administrator, as the case may be, reasonable
security or indemnity satisfactory to it against the costs,
expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of a Master
Servicer Event of Default (which has not been cured or
waived), to exercise such of the rights and powers vested in
it by this Agreement, and to 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;
(iv) Neither the Trustee nor the Securities
Administrator shall be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) Prior to the occurrence of a Master Servicer
Event of Default hereunder and after the curing or waiver of
all Master Servicer Events of Default which may have occurred
with respect to the Trustee and at all times with respect to
the Securities Administrator, neither the Trustee nor the
Securities Administrator shall 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 to do so
by the Holders of Certificates entitled to at least 25% of the
Voting Rights; PROVIDED, HOWEVER, that if the payment within a
reasonable time to the Trustee or the Securities Administrator
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 or the Securities Administrator, as applicable,
not reasonably assured to the Trustee or the Securities
Administrator by such Certificateholders, the Trustee or the
Securities Administrator, as applicable, may require
reasonable indemnity satisfactory to it against such expense,
or liability from such Certificateholders as a condition to
taking any such action;
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by
it hereunder;
(vii) The Trustee shall not be liable for any loss
resulting from the investment of funds held in the Collection
Account, for any loss resulting from the investment of funds
held in the Reserve Fund or for any loss resulting from the
redemption or sale of any such investment as therein
authorized;
(viii) the Trustee shall not be deemed to have notice
of any default, Master Servicer Event of Default or Servicer
Event of Default unless a Responsible Officer of the Trustee
has actual knowledge thereof or unless written notice of any
event
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which is in fact such a default is received by a Responsible
Officer of the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Certificates and this
Agreement; and
(ix) the rights, privileges, protections, immunities
and benefits given to the Trustee, including, without
limitation, its right to be indemnified, are extended to, and
shall be enforceable by, each agent, custodian and other
Person employed to act hereunder.
(b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee, may be enforced by it 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 such Certificates, subject to the provisions of this Agreement.
(c) The Trustee is hereby directed by the Depositor to execute
the Cap Contracts on behalf of the Trust Fund in the form presented to it by the
Depositor and shall have no responsibility for the contents of the Cap
Contracts, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Cap Contracts, the Trustee shall not be required to
make any payments to the counterparty under the Cap Contracts.
(d) None of the Securities Administrator, the Master Servicer,
any Servicer, the Seller, the Depositor, the Custodian or the Trustee shall be
responsible for the acts or omissions of the others, it being understood that
this Agreement shall not be construed to render those partners joint venturers
or agents of one another.
SECTION 9.03 Trustee and Securities Administrator
not Liable for Certificates or
Mortgage Loans.
The recitals contained herein and in the Certificates (other
than the signature of the Securities Administrator, the authentication of the
Securities Administrator on the Certificates, the acknowledgments of the Trustee
contained in Article II and the representations and warranties of the Trustee in
Section 9.12) shall be taken as the statements of the Depositor and neither the
Trustee nor the Securities Administrator assumes any responsibility for their
correctness. Neither the Trustee nor the Securities Administrator makes any
representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 9.12) or of the
Certificates (other than the signature of the Securities Administrator and
authentication of the Securities Administrator on the Certificates) or of any
Mortgage Loan or related document. The Trustee and the Securities Administrator
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from any Collection Account
by the related Servicer, other than with respect to the Securities Administrator
any funds held by it or on behalf of the Trustee in accordance with Section 3.23
and 3.24.
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SECTION 9.04 Trustee and Securities Administrator
May Own Certificates.
Each of the Trustee and the Securities Administrator in its
individual capacity or any other capacity may become the owner or pledgee of
Certificates and may transact business with other interested parties and their
Affiliates with the same rights it would have if it were not Trustee or the
Securities Administrator.
SECTION 9.05 Fees and Expenses of Trustee and
Securities Administrator.
The fees of the Trustee and the Securities Administrator
hereunder and of Wells Fargo under the Custodial Agreement shall be paid in
accordance with a side letter agreement with the Master Servicer and at the sole
expense of the Master Servicer. In addition, the Trustee, the Securities
Administrator, the Custodian and any director, officer, employee or agent of the
Trustee, the Securities Administrator and the Custodian shall be indemnified by
the Trust and held harmless against any loss, liability or expense (including
reasonable attorney's fees and expenses) incurred by the Trustee, the Custodian
or the Securities Administrator in connection with any claim or legal action or
any pending or threatened claim or legal action arising out of or in connection
with the acceptance or administration of its respective obligations and duties
under this Agreement, including the Cap Contracts and any and all other
agreements related hereto, other than any loss, liability or expense (i) for
which the Trustee is indemnified by the Master Servicer or any Servicer, (ii)
that constitutes a specific liability of the Trustee or the Securities
Administrator pursuant to Section 11.01(g) or (iii) any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder by the Trustee or the Securities
Administrator or by reason of reckless disregard of obligations and duties
hereunder. In no event shall the Trustee or the Securities Administrator be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if it has been
advised of the likelihood of such loss or damage and regardless of the form of
action. The Master Servicer agrees to indemnify the Trustee, from, and hold the
Trustee harmless against, any loss, liability or expense (including reasonable
attorney's fees and expenses) incurred by the Trustee by reason of the Master
Servicer's willful misfeasance, bad faith or gross negligence in the performance
of its duties under this Agreement or by reason of the Master Servicer's
reckless disregard of its obligations and duties under this Agreement. In
addition, the Seller agrees to indemnify the Trustee for, and to hold the
Trustee harmless against, any loss, liability or expense arising out of, or in
connection with, the provisions set forth in the last paragraph of Section 2.01,
including, without limitation, all costs, liabilities and expenses (including
reasonable legal fees and expenses) of investigating and defending itself
against any claim, action or proceeding, pending or threatened, relating to the
provisions of such paragraph. The indemnities in this Section 9.05 shall survive
the termination or discharge of this Agreement and the resignation or removal of
the Master Servicer, the Trustee, the Securities Administrator or the Custodian.
Any payment hereunder made by the Master Servicer to the Trustee shall be from
the Master Servicer's own funds, without reimbursement from REMIC I therefor.
SECTION 9.06 Eligibility Requirements for Trustee
and Securities Administrator.
The Trustee and the Securities Administrator shall at all
times be a corporation or an association (other than the Depositor, the Seller,
the Master Servicer or any Affiliate of the
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foregoing) organized and doing business under the laws of any 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 (or a
member of a bank holding company whose capital and surplus is at least
$50,000,000) and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 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
conditions so published. In case at any time the Trustee or the Securities
Administrator, as applicable, shall cease to be eligible in accordance with the
provisions of this Section, the Trustee or the Securities Administrator, as
applicable, shall resign immediately in the manner and with the effect specified
in Section 9.07.
SECTION 9.07 Resignation and Removal of Trustee
and Securities Administrator.
The Trustee and the Securities Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Depositor, to the Master Servicer, to the Securities
Administrator (or the Trustee, if the Securities Administrator resigns) and to
the Certificateholders. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor trustee or successor securities administrator
by written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee or Securities Administrator, as applicable, and to the
successor trustee or successor securities administrator, as applicable. A copy
of such instrument shall be delivered to the Certificateholders, the Trustee,
the Securities Administrator and the Master Servicer by the Depositor. If no
successor trustee or successor securities administrator shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee or Securities Administrator, as the
case may be, may, at the expense of the Trust Fund, petition any court of
competent jurisdiction for the appointment of a successor trustee, successor
securities administrator, Trustee or Securities Administrator, as applicable.
If at any time the Trustee or the Securities Administrator
shall cease to be eligible in accordance with the provisions of Section 9.06 and
shall fail to resign after written request therefor by the Depositor, or if at
any time the Trustee or the Securities Administrator shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or the Securities Administrator or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor may remove the Trustee or the
Securities Administrator, as applicable and appoint a successor trustee or
successor securities administrator, as applicable, by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or the Securities
Administrator so removed and to the successor trustee or successor securities
administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee, the Securities Administrator and the Master
Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee or the Securities Administrator
and appoint a successor trustee or successor securities administrator by written
instrument or instruments, in triplicate, signed by such Holders
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or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, one complete set to the Trustee
or the Securities Administrator so removed and one complete set to the successor
so appointed. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee (in the case of the removal of the Securities
Administrator), the Securities Administrator (in the case of the removal of the
Trustee) and the Master Servicer by the Depositor.
Any resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor trustee or successor securities
administrator pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee or successor
securities administrator, as applicable, as provided in Section 8.08.
Notwithstanding anything to the contrary contained herein, the
Master Servicer and the Securities Administrator shall at all times be the same
Person.
SECTION 9.08 Successor Trustee or Securities
Administrator.
Any successor trustee or successor securities administrator
appointed as provided in Section 9.07 shall execute, acknowledge and deliver to
the Depositor and its predecessor trustee or predecessor securities
administrator an instrument accepting such appointment hereunder, and thereupon
the resignation or removal of the predecessor trustee or predecessor securities
administrator shall become effective and such successor trustee or successor
securities administrator 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 or
securities administrator herein. The predecessor trustee or predecessor
securities administrator shall deliver to the successor trustee or successor
securities administrator all Mortgage Loan Documents and related documents and
statements to the extent held by it hereunder, as well as all moneys, held by it
hereunder, and the Depositor and the predecessor trustee or predecessor
securities administrator shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee or successor securities administrator
all such rights, powers, duties and obligations.
No successor trustee or successor securities administrator
shall accept appointment as provided in this Section unless at the time of such
acceptance such successor trustee or successor securities administrator shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor trustee or successor securities administrator shall not result in a
downgrading of any Class of Certificates by any Rating Agency, as evidenced by a
letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee or
successor securities administrator as provided in this Section, the Depositor
shall mail notice of the succession of such trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee or successor securities administrator, the
successor trustee or successor securities administrator shall cause such notice
to be mailed at the expense of the Depositor.
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SECTION 9.09 Merger or Consolidation of Trustee
or Securities Administrator.
Any corporation or association into which the Trustee or the
Securities Administrator may be merged or converted or with which it may be
consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee or the Securities Administrator
shall be a party, or any corporation or association succeeding to the business
of the Trustee or the Securities Administrator shall be the successor of the
Trustee or the Securities Administrator hereunder, provided such corporation or
association shall be eligible under the provisions of Section 8.06, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
SECTION 9.10 Appointment of Co-Trustee or
Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the REMIC I or property securing the same may at the time be located,
the Trustee shall have the power and shall execute and deliver all instruments
to appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, and for the benefit of the Holders of the Certificates, such title to
REMIC I, or any part thereof, and, subject to the other provisions of this
Section 9.10, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 9.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to a defaulting 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 REMIC I or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. Each separate trustee and co-trustee, upon
its acceptance of the trust 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.
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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 or co-trustee.
SECTION 9.11 Appointment of Office or Agency.
The Certificates may be surrendered for registration of
transfer or exchange at the Securities Administrator's office located at Sixth
and Marquette, Minneapolis, Minnesota 55479, and presented for final
distribution at the Corporate Trust Office of the Securities Administrator where
notices and demands to or upon the Securities Administrator in respect of the
Certificates and this Agreement may be served.
SECTION 9.12 Representations and Warranties.
The Trustee hereby represents and warrants to the Master
Servicer, the Securities Administrator and the Depositor as applicable, as of
the Closing Date, that:
(i) It is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
(ii) The execution and delivery of this Agreement by it, and
the performance and compliance with the terms of this Agreement by it,
will not violate its articles of association or bylaws or constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or which
is applicable to it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of it, enforceable against it in accordance with the
terms hereof, subject to (A) applicable bankruptcy, insolvency,
receivership, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, and (B) general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(v) It is not in violation of, and its execution and delivery
of this Agreement and its performance and compliance with the terms of
this Agreement will not constitute a violation of, any law, any order
or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority,
which violation, in its good faith and reasonable judgment, is likely
to affect materially and adversely either the ability of it to perform
its obligations under this Agreement or its financial condition.
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(vi) No litigation is pending or, to the best of its
knowledge, threatened against it, which would prohibit it from entering
into this Agreement or, in its good faith reasonable judgment, is
likely to materially and adversely affect either the ability of it to
perform its obligations under this Agreement or its financial
condition.
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ARTICLE X
TERMINATION
SECTION 10.01 Termination Upon Repurchase or
Liquidation of All Mortgage Loans.
(a) Subject to Section 10.02, the respective obligations and
responsibilities under this Agreement of the Depositor, Ocwen and the Trustee
(other than the obligations of the Master Servicer to the Trustee pursuant to
Section 9.05 and of Ocwen to make remittances to the Securities Administrator
and the Securities Administrator to make payments in respect of the REMIC I
Regular Interests, REMIC I Regular Interests or the Classes of Certificates as
hereinafter set forth) shall terminate upon payment to the Certificateholders
and the deposit of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Terminator (as defined
below) of all Mortgage Loans and each REO Property remaining in REMIC I and (ii)
the final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan or REO Property remaining in REMIC I; PROVIDED, HOWEVER,
that in no event shall the trust created hereby continue beyond the expiration
of 21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. The purchase by the Terminator of all Mortgage Loans
and each REO Property remaining in REMIC I shall be at a price (the "Termination
Price") equal to the sum of (i) the greater of (A) the aggregate Purchase Price
of all the Mortgage Loans included in REMIC I, plus the appraised value of each
REO Property, if any, included in REMIC I, such appraisal to be conducted by an
appraiser mutually agreed upon by the Terminator and the Trustee in their
reasonable discretion and (B) the aggregate fair market value of all of the
assets of REMIC I (as determined by the Terminator and the Trustee, as of the
close of business on the third Business Day next preceding the date upon which
notice of any such termination is furnished to Certificateholders pursuant to
the third paragraph of this Section 10.01) plus (ii) any amounts due the related
Servicer and the Master Servicer in respect of unpaid Servicing Fees, Master
Servicing Fees and outstanding P&I Advances and Servicing Advances.
(b) The Master Servicer or, if the Master Servicer fails to
exercise such optional termination right, Ocwen (either the Master Servicer or
Ocwen, the "Terminator") shall have the right to purchase all of the Mortgage
Loans and each REO Property remaining in REMIC I pursuant to clause (i) of the
preceding paragraph no later than the Determination Date in the month
immediately preceding the Distribution Date on which the Certificates will be
retired; provided, however, that the Terminator may elect to purchase all of the
Mortgage Loans and each REO Property remaining in REMIC I pursuant to clause (i)
above only if the aggregate Stated Principal Balance of the Mortgage Loans and
each REO Property remaining in the Trust Fund at the time of such election is
reduced to less than 10% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date. By acceptance of the Residual
Certificates, the Holder of the Residual Certificates agrees, in connection with
any termination hereunder, to assign and transfer any portion of the Termination
Price in excess of par, and to the extent received in respect of such
termination, to pay any such amounts to the Holders of the Class CE
Certificates. Notwithstanding the foregoing,
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the optional termination right may only be exercised by Ocwen if (i) it receives
written notification from the Master Servicer that it will not exercise such
optional termination right, (ii) it provides written notice to the Authorized
Officers of the Seller that it intends to exercise such optional termination
right and (iii) it receives written authorization from the Authorized Officers
of the Seller to exercise such optional termination right.
(c) Notice of the liquidation of the Certificates shall be
given promptly by the Securities Administrator by letter to the
Certificateholders mailed (a) in the event such notice is given in connection
with the purchase of the Mortgage Loans and each REO Property by the Terminator,
not earlier than the 15th day and not later than the 25th day of the month next
preceding the month of the final distribution on the Certificates or (b)
otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which the Trust Fund will terminate and the final payment in respect
of the REMIC I Regular Interests, REMIC I Regular Interests or the Certificates
will be made upon presentation and surrender of the related Certificates at the
office of the Securities Administrator therein designated, (ii) the amount of
any such final payment, (iii) that no interest shall accrue in respect of the
REMIC I Regular Interests, REMIC I Regular Interests or Certificates from and
after the Interest Accrual Period relating to the final Distribution Date
therefor and (iv) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Securities Administrator. In the event
such notice is given in connection with the purchase of all of the Mortgage
Loans and each REO Property remaining in REMIC I by the Terminator, the
Terminator shall deliver to the Securities Administrator for deposit in the
Distribution Account not later than the Business Day prior to the Distribution
Date on which the final distribution on the Certificates an amount in
immediately available funds equal to the above-described Termination Price. The
Securities Administrator shall remit to the Servicer, the Master Servicer, the
Trustee and the Custodian from such funds deposited in the Distribution Account
(i) any amounts which the related Servicer would be permitted to withdraw and
retain from the Collection Account pursuant to Section 3.09 as if such funds had
been deposited therein (including all unpaid Servicing Fees and all outstanding
P&I Advances and Servicing Advances) and (ii) any other amounts otherwise
payable by the Securities Administrator to the Master Servicer, the Trustee, the
Custodian and the related Servicer from amounts on deposit in the Distribution
Account pursuant to the terms of this Agreement prior to making any final
distributions pursuant to Section 10.01(d) below. Upon certification to the
Trustee by the Securities Administrator of the making of such final deposit, the
Trustee shall promptly release or cause to be released to the Terminator the
Mortgage Files for the remaining Mortgage Loans, and Trustee shall execute all
assignments, endorsements and other instruments delivered to it and necessary to
effectuate such transfer.
(d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Securities Administrator
shall distribute to each Certificateholder so presenting and surrendering its
Certificates the amount otherwise distributable on such Distribution Date in
accordance with Section 5.01 in respect of the Certificates so presented and
surrendered. Any funds not distributed to any Holder or Holders of Certificates
being retired on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 10.01 shall
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not have been surrendered for cancellation within six months after the time
specified in such notice, the Securities Administrator shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Securities
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates. The costs and expenses of maintaining the funds in trust and of
contacting such Certificateholders shall be paid out of the assets remaining in
the trust funds. If within one year after the final notice any such Certificates
shall not have been surrendered for cancellation, the Securities Administrator
shall pay to the Depositor all such amounts, and all rights of non-tendering
Certificateholders in or to such amounts shall thereupon cease. No interest
shall accrue or be payable to any Certificateholder on any amount held in trust
by the Securities Administrator as a result of such Certificateholder's failure
to surrender its Certificate(s) on the final Distribution Date for final payment
thereof in accordance with this Section 10.01. Any such amounts held in trust by
the Securities Administrator shall be held uninvested in an Eligible Account.
SECTION 10.02 Additional Termination Requirements.
(a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:
(i) The Trustee shall specify the first day in the
90-day liquidation period in a statement attached to each
Trust REMIC's final Tax Return pursuant to Treasury regulation
Section 1.860F-1 and shall satisfy all requirements of a
qualified liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion of Counsel
obtained by and at the expense of the Terminator;
(ii) During such 90-day liquidation period and, at or
prior to the time of making of the final payment on the
Certificates, the Trustee shall sell all of the assets of
REMIC I to the Terminator for cash; and
(iii) At the time of the making of the final payment
on the Certificates, the Securities Administrator shall
distribute or credit, or cause to be distributed or credited,
to the Holders of the Residual Certificates all cash on hand
in the Trust Fund (other than cash retained to meet claims),
and the Trust Fund shall terminate at that time.
(b) At the expense of the requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the event
described in clause (ii) of the first paragraph of Section 10.01, at the expense
of the Trust Fund), the Terminator shall prepare or cause to be prepared the
documentation required in connection with the adoption of a plan of liquidation
of each Trust REMIC pursuant to this Section 10.02.
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(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.
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ARTICLE XI
REMIC PROVISIONS
SECTION 11.01 REMIC Administration.
(a) The Trustee shall elect to treat each Trust REMIC as a
REMIC under the Code and, if necessary, under applicable state law. Each such
election will be made by the Securities Administrator on Form 1066 or other
appropriate federal tax or information return or any appropriate state return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Interest shall be designated as the
Residual Interests in REMIC I. The Class A Certificates, the Mezzanine
Certificates, the Class B Certificates, the Class P Certificates and the Class
CE Certificates shall be designated as the Regular Interests in REMIC II and the
Class R-II Interest shall be designated as the Residual Interests in REMIC II.
The Trustee shall not permit the creation of any "interests" in each Trust REMIC
(within the meaning of Section 860G of the Code) other than the REMIC I Regular
Interests and the interests represented by the Certificates.
(b) The Closing Date is hereby designated as the "Startup Day"
of each Trust REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) The Securities Administrator shall be reimbursed for any
and all expenses relating to any tax audit of the Trust Fund (including, but not
limited to, any professional fees or any administrative or judicial proceedings
with respect to each Trust REMIC that involve the Internal Revenue Service or
state tax authorities), including the expense of obtaining any tax related
Opinion of Counsel except as specified herein. The Securities Administrator, as
agent for each Trust REMIC's tax matters person shall (i) act on behalf of the
Trust Fund in relation to any tax matter or controversy involving any Trust
REMIC and (ii) represent the Trust Fund in any administrative or judicial
proceeding relating to an examination or audit by any governmental taxing
authority with respect thereto. The holder of the largest Percentage Interest of
each class of Residual Certificates shall be designated, in the manner provided
under Treasury regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the related REMIC created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Securities Administrator or an Affiliate as its agent to perform all of the
duties of the tax matters person for the Trust Fund.
(d) The Securities Administrator shall prepare and file and
the Trustee shall sign all of the Tax Returns in respect of each REMIC created
hereunder. The expenses of preparing and filing such returns shall be borne by
the Securities Administrator without any right of reimbursement therefor.
(e) The Securities Administrator shall perform on behalf of
each Trust REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service
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or any state or local taxing authority. Among its other duties, as required by
the Code, the REMIC Provisions or other such compliance guidance, the Securities
Administrator shall provide (i) to any Transferor of a Residual Certificate such
information as is necessary for the application of any tax relating to the
transfer of a Residual Certificate to any Person who is not a Permitted
Transferee upon receipt of additional reasonable compensation, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of each
Trust REMIC. The Depositor shall provide or cause to be provided to the
Securities Administrator, within ten (10) days after the Closing Date, all
information or data that the Securities Administrator reasonably determines to
be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) To the extent in the control of the Trustee or the
Securities Administrator, each such Person (i) shall take such action and shall
cause each REMIC created hereunder to take such action as shall be necessary to
create or maintain the status thereof as a REMIC under the REMIC Provisions,
(ii) shall not take any action, cause the Trust Fund to take any action or fail
to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (A) endanger the
status of each Trust REMIC as a REMIC or (B) result in the imposition of a tax
upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless such action or inaction is permitted
under this Agreement or the Trustee and the Securities Administrator have
received an Opinion of Counsel, addressed to the them (at the expense of the
party seeking to take such action but in no event at the expense of the Trustee
or the Securities Administrator) to the effect that the contemplated action will
not, with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor (iii) shall the Securities Administrator take or
fail to take any action (whether or not authorized hereunder) as to which the
Trustee has advised it in writing that it has received an Opinion of Counsel to
the effect that an Adverse REMIC Event could occur with respect to such action;
provided that the Securities Administrator may conclusively rely on such Opinion
of Counsel and shall incur no liability for its action or failure to act in
accordance with such Opinion of Counsel. In addition, prior to taking any action
with respect to any Trust REMIC or the respective assets of each, or causing any
Trust REMIC to take any action, which is not contemplated under the terms of
this Agreement, the Securities Administrator will consult with the Trustee or
its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to any Trust REMIC, and the Securities
Administrator shall not take any such action or cause any Trust REMIC to take
any such action as to which the Trustee has advised it in writing that an
Adverse REMIC Event could occur. The Trustee may consult with counsel to make
such written advice, and the cost of same shall be home by the party seeking to
take the action not permitted by this Agreement, but in no event shall such cost
be an expense of the Trustee.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any
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contributions to any such REMIC after the Startup Day therefor pursuant to
Section 860G(d) of the Code, or any other tax is imposed by the Code or any
applicable provisions of state or local tax laws, such tax shall be charged (i)
to the Trustee pursuant to Section 11.03, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Article XI,
(ii) to the Securities Administrator pursuant to Section 11.03, if such tax
arises out of or results from a breach by the Securities Administrator of any of
its obligations under this Article XI, (iii) to the Master Servicer pursuant to
Section 11.03, if such tax arises out of or results from a breach by the Master
Servicer of any of its obligations under Article IV or under this Article XI,
(iv) to Ocwen pursuant to Section 11.03, if such tax arises out of or results
from a breach by Ocwen of any of its obligations under Article III or under this
Article XI, or (v) in all other cases, against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.
(h) The Securities Administrator shall, for federal income tax
purposes, maintain books and records with respect to each Trust REMIC on a
calendar year and on an accrual basis.
(i) Following the Startup Day, neither the Securities
Administrator nor the Trustee shall accept any contributions of assets to any
Trust REMIC other than in connection with any Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
Fund will not cause the related REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
(j) Neither the Trustee nor the Securities Administrator shall
knowingly enter into any arrangement by which any Trust REMIC will receive a fee
or other compensation for services nor permit either REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.
(k) The Securities Administrator shall apply for an employer
identification number with the Internal Revenue Service via a Form SS-4 or other
comparable method for each REMIC. In connection with the foregoing, the
Securities Administrator shall provide the name and address of the person who
can be contacted to obtain information required to be reported to the holders of
Regular Interests in each REMIC as required by IRS Form 8811.
SECTION 11.02 Prohibited Transactions and
Activities.
None of the Depositor, Ocwen, the Securities Administrator,
the Master Servicer or the Trustee shall sell, dispose of or substitute for any
of the Mortgage Loans (except in connection with (i) the foreclosure of a
Mortgage Loan, including but not limited to, the acquisition or sale of a
Mortgaged Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy
of REMIC I, (iii) the termination of REMIC I pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
purchase of Mortgage Loans pursuant to Article II of this Agreement), nor
acquire any assets for any Trust REMIC (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the related Collection Account or the Distribution Account for gain, nor accept
any contributions to any Trust
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REMIC after the Closing Date (other than a Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03), unless it has received an Opinion of
Counsel, addressed to the Trustee and the Securities Administrator (at the
expense of the party seeking to cause such sale, disposition, substitution,
acquisition or contribution but in no event at the expense of the Trustee) that
such sale, disposition, substitution, acquisition or contribution will not (a)
affect adversely the status of any Trust REMIC as a REMIC or (b) cause any Trust
REMIC to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions.
SECTION 11.03 Indemnification.
(a) The Trustee agrees to be liable for any taxes and costs
incurred by the Trust Fund, the Depositor, the Master Servicer, the Securities
Administrator or Ocwen including, without limitation, any reasonable attorneys
fees imposed on or incurred by the Trust Fund, the Depositor, the Master
Servicer, the Securities Administrator or the related Servicer as a result of
the Trustee's failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Trustee set forth in this Agreement.
(b) Ocwen agrees to indemnify the Trust Fund, the Depositor,
the Master Servicer, the Securities Administrator and the Trustee for any taxes
and costs including any reasonable attorneys' fees imposed on or incurred by the
Trust Fund, the Depositor, the Master Servicer, the Securities Administrator or
the Trustee, as a result of Ocwen's failure to perform its covenants set forth
in Article III in accordance with the standard of care of Ocwen set forth in
this Agreement.
(c) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor, the related Servicer and the Trustee for any taxes and costs
including any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor, Ocwen or the Trustee, as a result of the Master Servicer's
failure to perform its covenants set forth in Article IV in accordance with the
standard of care of the Master Servicer set forth in this Agreement.
(d) The Securities Administrator agrees to be liable for any
taxes and costs incurred by the Trust Fund, the Depositor or the Trustee
including any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Depositor, Ocwen or the Trustee as a result of the Securities
Administrator's failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Securities Administrator set forth
in this Agreement.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01 Amendment.
This Agreement may be amended from time to time by the
Depositor, Ocwen, the Master Servicer, the Securities Administrator and the
Trustee, but without the consent of any of the Certificateholders, (i) to cure
any ambiguity or defect, (ii) to correct, modify or supplement any provisions
herein (including to give effect to the expectations of Certificateholders), or
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement, provided that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Trustee, 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. No amendment shall be
deemed to adversely affect in any material respect the interests of any
Certificateholder who shall have consented thereto, and no Opinion of Counsel
shall be required to address the effect of any such amendment on any such
consenting Certificateholder.
This Agreement may also be amended from time to time by the
Depositor, Ocwen, the Master Servicer, the Securities Administrator and the
Trustee with the consent of the Holders of Certificates entitled to at least 66%
of the Voting Rights for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; PROVIDED,
HOWEVER, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are 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
at least 66% of the Voting Rights allocated to such Class, or (iii) modify the
consents required by the immediately preceding clauses (i) and (ii) without the
consent of the Holders of all Certificates then outstanding. Notwithstanding any
other provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 12.01, Certificates registered in the name of
the Depositor or a Servicer or any Affiliate thereof shall be entitled to Voting
Rights with respect to matters affecting such Certificates. Without limiting the
generality of the foregoing, any amendment to this Agreement required in
connection with the compliance with or the clarification of any reporting
obligations described in Section 5.06 hereof shall not require the consent of
any Certificateholder and without the need for any Opinion of Counsel or Rating
Agency confirmation.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment is
permitted hereunder and will not result in the imposition of any tax on any
Trust REMIC pursuant to the REMIC Provisions or cause any Trust
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REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding and that such amendment is authorized or permitted by this
Agreement.
Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.
It shall not be necessary for the consent of
Certificateholders under this Section 12.01 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.
The cost of any Opinion of Counsel to be delivered pursuant to
this Section 12.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee .
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
SECTION 12.02 Recordation of Agreement;
Counterparts.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all 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 Depositor at the expense of the Certificateholders, but only
upon direction of the Trustee accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 12.03 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 representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor 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
expressly provided for 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 any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as
-173-
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon 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 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder. and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 12.04 Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to
conflicts of laws principles thereof.
SECTION 12.05 Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if sent by
facsimile, receipt confirmed, if personally delivered at or mailed by first
class mail, postage prepaid, or by express delivery service or delivered in any
other manner specified herein, to (a) in the case of the Depositor, ACE
Securities Corp., AMACAR GROUP, 6525 Morrison Boulevard, Suite 318, Charlotte,
North Carolina 28211, Attention: Juliana Johnson (telecopy number:(704)
365-1362), or such other address or telecopy number as may hereafter be
furnished to the Servicer, the Master Servicer, the Securities Administrator and
the Trustee in writing by the Depositor, (b) in the case of Ocwen, Ocwen Federal
Bank FSB, 1675 Palm Beach Lakes Boulevard, Suite 10A, West Palm Beach, Florida
33401, Attention: Secretary (telecopy number: (561) 682-8177), or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
Master Servicer, the Securities Administrator and the Depositor in writing by
Ocwen, (c) in the case of the Master Servicer and the Securities Administrator,
P.O. Box 98, Columbia, Maryland 21046 and for overnight delivery to 9062 Old
Annapolis Road, Columbia, Maryland 21045, Attention: Ace Securities Corp.,
2004-HE1 (telecopy number: (410) 715-2380), or such other address or telecopy
number as may hereafter be furnished to the Trustee, the Depositor
-174-
and the Servicers in writing by the Master Servicer or the Securities
Administrator and (d) in the case of the Trustee, at the Corporate Trust Office
or such other address or telecopy number as the Trustee may hereafter be furnish
to the Servicers, the Master Servicers, the Securities Administrator and the
Depositor in writing by the Trustee. Any notice required or permitted to be
given to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the manner
set forth above.
SECTION 12.06 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 12.07 Notice to Rating Agencies.
The Trustee shall use its best efforts promptly to provide
notice to the Rating Agencies with respect to each of the following of which a
Responsible Officer has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Servicer Event of Default or
Master Servicer Event of Default that has not been
cured or waived;
3. The resignation or termination of a Servicer, the
Master Servicer or the Trustee;
4. The repurchase or substitution of Mortgage Loans
pursuant to or as contemplated by Section 2.03;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of the Distribution
Account; and
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7. Any event that would result in the inability of the
Trustee as successor Servicer to make advances
regarding delinquent Mortgage Loans.
In addition, the Securities Administrator shall promptly make
available to each Rating Agency copies of each report to Certificateholders
described in Section 5.02.
Ocwen shall make available to each Rating Agency copies of the
following:
1. Each annual statement as to compliance described in
Section 3.17;
2. Each annual independent public accountants' servicing
report described in Section 3.18; and
3. Any change in the location of the Collection Account.
Any such notice pursuant to this Section 12.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Standard & Poor's, a division of the McGraw-Hill Companies, Inc., 55 Water
Street, New York, New York 10041, to Fitch Ratings, 1 State Street Plaza, New
York, New York 10004 and to Moody's Investors Service, Inc., 99 Church Street,
New York, New York 10007 or such other addresses as the Rating Agencies may
designate in writing to the parties hereto.
SECTION 12.08 Article and Section References.
All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.
SECTION 12.09 Grant of Security Interest.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee, on behalf of
the Trust and for the benefit of the Certificateholders, be, and be construed
as, a sale of the Mortgage Loans by the Depositor and not a pledge of the
Mortgage Loans to secure a debt or other obligation of the Depositor. However,
in the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Depositor, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Depositor to the Trustee, on behalf of the Trust and for
the benefit of the Certificateholders, to secure a debt or other obligation of
the Depositor and (b)(1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code
as in effect from time to time in the State of New York; (2) the
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conveyance provided for in Section 2.01 shall be deemed to be a grant by the
Depositor to the Trustee, on behalf of the Trust and for the benefit of the
Certificateholders, of a security interest in all of the Depositor's right,
title and interest in and to the Mortgage Loans and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee, on behalf of the Trust
and for the benefit of the Certificateholders, a security interest in the
Mortgage Loans and all other property described in clause (2) of the preceding
sentence, for the purpose of securing to the Trustee the performance by the
Depositor of the obligations described in clause (3) of the preceding sentence.
Notwithstanding the foregoing, the parties hereto intend the conveyance pursuant
to Section 2.01 to be a true, absolute and unconditional sale of the Mortgage
Loans and assets constituting the Trust Fund by the Depositor to the Trustee, on
behalf of the Trust and for the benefit of the Certificateholders.
SECTION 12.10 Survival of Indemnification.
Any and all indemnities to be provided by any party to this
Agreement shall survive the termination and resignation of any party hereto and
the termination of this Agreement.
SECTION 12.11 WFHM Servicing Agreement.
With respect to the WFHM Mortgage Loans, in the event of any
conflict between the provisions of this Agreement and the provisions of the WFHM
Servicing Agreement, the provisions of the WFHM Servicing Agreement shall
control.
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IN WITNESS WHEREOF, the Depositor, Ocwen, the Master Servicer,
the Securities Administrator and the Trustee have caused their names to be
signed hereto by their respective officers thereunto duly authorized, in each
case as of the day and year first above written.
ACE SECURITIES CORP.,
as Depositor
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
OCWEN FEDERAL BANK FSB,
as Servicer
By:
-----------------------------------------
Name:
Title:
HSBC BANK USA,
not in its individual capacity but solely as Trustee
By:
-----------------------------------------
Name:
Title:
WELLS FARGO BANK, N.A.
as Master Servicer and Securities Administrator
By:
-----------------------------------------
Name:
Title:
For purposes of Sections 7.08, 7.09 and 7.10:
THE MURRAYHILL COMPANY
By:
-----------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTION
9.05:
DEUTSCHE BANK AG NEW YORK BRANCH
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
ACE 2004-HS1
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March
2004, before me, a notary public in and for said State, personally appeared
_____________________ known to me to be a _____________________ of ACE
Securities Corp., one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have
hereunto set my hand and affixed my official seal the day and year in this
certificate first above written.
______________________
Notary
Public
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the __ day of March
2004, before me, a notary public in and for said State, personally appeared
___________________________ known to me to be a ____________________ of ACE
Securities Corp., one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have
hereunto set my hand and affixed my official seal the day and year in this
certificate first above written.
______________________
Notary
Public
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March
2004, before me, a notary public in and for said State, personally appeared
_______________ known to me to be a _______________ of ________________, Ocwen
Federal Bank FSB, one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have
hereunto set my hand and affixed my official seal the day and year in this
certificate first above written.
______________________
Notary
Public
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March
2004, before me, a notary public in and for said State, personally appeared
____________________, known to me to be a __________________ of Wells Fargo
Bank, N.A., one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of said corporation,
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have
hereunto set my hand and affixed my official seal the day and year in this
certificate first above written.
______________________
Notary
Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March
2004, before me, a notary public in and for said State, personally appeared
____________________, known to me to be a __________________ of HBSC Bank USA,
one of the corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have
hereunto set my hand and affixed my official seal the day and year in this
certificate first above written.
______________________
Notary
Public
[Notarial Seal]
EXHIBIT A-1
-----------
FORM OF CLASS A-[1][2A][2B][3] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Series 2004-HE1, Class A-[1][2A][2B][3] Aggregate Certificate Principal Balance of the
Class A-[1][2A][2B][3] Certificates as of the
Pass-Through Rate: Variable Issue Date:
$
Date of Pooling and Servicing Agreement and Denomination: $
Cut-off Date: March 1, 2004
Master Servicer: Wells Fargo Bank, N.A.
First Distribution Date: April 25, 2004
Trustee: HSBC Bank USA
No.__ Issue Date: March 30, 2004
CUSIP:________________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.]
A-1-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR,
THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ________________ is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class
A-[1][2A][2B][3] Certificates as of the Issue Date) in that certain beneficial
ownership interest evidenced by all the Class A-[1][A2][2B][3] Certificates in
REMIC II created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among ACE Securities Corp., as depositor
(hereinafter called the "Depositor", which term includes any successor entity
under the Agreement), Wells Fargo Bank, N.A. as master servicer (the "Master
Servicer") and securities administrator (the "Securities Administrator"), Ocwen
Federal Bank FSB, as servicer (the "Servicer") and HSBC Bank USA, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the Business Day immediately
preceding such Distribution Date (the "Record Date"), in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to the Holders of Class A- [1][2A][2B][3]
Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-[1][2A][2B][3]Certificates the aggregate initial Certificate Principal Balance
of which is in excess of the lesser of (i) $5,000,000
A-1-3
or (ii) two-thirds of the aggregate initial Certificate Principal Balance of the
Class A-[1][2A][2B][3] Certificates, or otherwise by check mailed by first class
mail to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Securities
Administrator of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Securities Administrator for that purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
be a rate per annum equal to the lesser of (i) One-Month LIBOR plus [_____]%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus [_____]%, in the case of any Distribution Date
thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans and payments received
pursuant to certain cap agreements, all as more specifically set forth herein
and in the Agreement. As provided in the Agreement, withdrawals from the
Collection Account and the Distribution Account may be made from time to time
for purposes other than distributions to Certificateholders, such purposes
including reimbursement of advances made, or certain expenses incurred, with
respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Securities Administrator duly
A-1-4
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Securities Administrator may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assumes
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-1-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-[1][2A][2B][3] Certificates
referred to in the within-mentioned Agreement.
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------
(Cust) (Minor)
under Uniform Gifts to
Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right if _______________
survivorship and not as tenants in (State)
common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto___________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or the Securities
Administrator to issue a new Certificate of a like Percentage Interest and Class
to the above named assignee and deliver such Certificate to the following
address:_______________________________________________________________________
_______________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to__________________________________________________
________________________________________________________________________________
for the account of ___________________________, account number______________ or,
if mailed by check, to _________________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-2
-----------
FORM OF CLASS M-[1][2][3][4][5][6] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES [,/AND]
CLASS M-1 CERTIFICATES [,/AND] CLASS M-2 CERTIFICATES[,/AND] CLASS M-3
CERTIFICATES [,/AND] CLASS M-4 CERTIFICATES [,/AND] CLASS M-5
CERTIFICATES] TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO
HEREIN.
ANY TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED TO
MAKE THE REPRESENTATIONS SET FORTH IN SECTION 6.02(C) OF
THE AGREEMENT REFERRED TO HEREIN.
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO
AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY,
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE
SECURITIES ADMINISTRATOR NAMED HEREIN.
Series 2004-HE1, Class M-[1][2][3][4][5][6] Aggregate Certificate Principal Balance of the
Class M-[1][2][3][4][5][6] Certificates as of the
Pass-Through Rate: Variable Issue Date: $______________
Date of Pooling and Servicing Agreement and Denomination: $______________
Cut-off Date: March 1, 2004
Master Servicer: Wells Fargo Bank, N.A.
First Distribution Date: April 25, 2004
Trustee: HSBC Bank USA
No.___ Issue Date: March 30, 2004
CUSIP:_________________
A-2-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed and sold
by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR,
THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class
M-[1][2][3][4][5][6] Certificates as of the Issue Date) in that certain
beneficial ownership interest evidenced by all the Class M-[1][2][3][4][5][6]
Certificates in REMIC II created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among ACE Securities Corp., as
depositor (hereinafter called the "Depositor", which term includes any successor
entity under the Agreement), Wells Fargo Bank, N.A. as master servicer (the
"Master Servicer") and securities administrator (the "Securities
Administrator"), Ocwen Federal Bank FSB, as servicer (the "Servicer") and HSBC
Bank USA, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the Business Day immediately
preceding such Distribution Date (the "Record Date"), in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to the Holders of Class M-[1][2][3][4][5][6]
Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
M-[1][2][3][4][5][6] Certificates the aggregate initial Certificate Principal
Balance of which is in excess of the lesser of (i) $5,000,000
A-2-3
or (ii) two-thirds of the aggregate initial Certificate Principal Balance of the
Class M-[1][2][3][4][5][6] Certificates, or otherwise by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Securities Administrator of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Securities Administrator for that purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus [____]% ,
in the case of each Distribution Date through and including the Distribution
Date on which the aggregate principal balance of the Mortgage Loans (and
properties acquired in respect thereof) remaining in the Trust Fund is reduced
to less than 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date, or One-Month LIBOR plus [____]%, in the case of any
Distribution Date thereafter and (ii) the applicable Net WAC Pass-Through Rate
for such Distribution Date.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans and payments received
pursuant to certain cap agreements, all as more specifically set forth herein
and in the Agreement. As provided in the Agreement, withdrawals from the
Collection Account and the Distribution Account may be made from time to time
for purposes other than distributions to Certificateholders, such purposes
including reimbursement of advances made, or certain expenses incurred, with
respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Securities Administrator duly
A-2-4
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
Any transferee of this Certificate shall be deemed to make the
representations set forth in Section 6.02(c) of the Agreement.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Securities Administrator may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assume
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-2-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-[1][2][3][4][5][6] Certificates
referred to in the within-mentioned Agreement.
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------
(Cust) (Minor)
under Uniform Gifts to
Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right if _______________
survivorship and not as tenants in (State)
common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto___________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or the Securities
Administrator to issue a new Certificate of a like Percentage Interest and Class
to the above named assignee and deliver such Certificate to the following
address:_______________________________________________________________________
_______________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to__________________________________________________
________________________________________________________________________________
for the account of ___________________________, account number______________ or,
if mailed by check, to _________________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-3
-----------
FORM OF CLASS B CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE CLASS A CERTIFICATES AND THE MEZZANINE
CERTIFICATES, AS DESCRIBED IN THE AGREEMENT
REFERRED TO HEREIN.
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES
ALLOCABLE HERETO AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES,
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE
DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS
CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY
INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT
AND OTHER APPLICABLE LAWS AND (1) OUTSIDE OF THE UNITED STATES
WITHIN THE MEANING OF AND IN COMPLIANCE WITH REGULATION S UNDER THE
ACT ("REGULATION S"), OR (2) WITHIN THE UNITED STATES TO (A)
"QUALIFIED INSTITUTIONAL BUYERS" WITHIN THE MEANING OF AND IN
COMPLIANCE WITH RULE 144A UNDER THE ACT ("RULE 144A") OR (B) TO
INSTITUTIONAL INVESTORS THAT ARE "ACCREDITED INVESTORS" WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF "REGULATION D" UNDER
THE ACT.
A-2-9
[THIS CERTIFICATE IS A REGULATION S TEMPORARY GLOBAL CERTIFICATE
FOR PURPOSES OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). PRIOR TO THE DATE THAT
IS 40 DAYS AFTER THE LATER OF (I) THE COMMENCEMENT OF THE OFFERING
OF THE OFFERED CERTIFICATES AND (II) THE CLOSING DATE, THIS
CERTIFICATE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.]
[NO BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL
CERTIFICATE SHALL BE ENTITLED TO RECEIVE PAYMENTS OF PRINCIPAL OR
INTEREST HEREIN UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN
DELIVERED PURSUANT TO THE TERMS OF THE AGREEMENT (AS DEFINED
HEREIN).]
[THE HOLDER OF THIS REGULATION S PERMANENT GLOBAL CERTIFICATE BY
ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH CERTIFICATE WITHIN THE UNITED STATES OR TO U.S.
PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) PRIOR
TO THE DATE WHICH IS THE LATER OF (I) 40 DAYS AFTER THE LATER OF
THE CLOSING DATE AND (II) THE DATE ON WHICH THE REQUISITE
CERTIFICATIONS ARE DUE TO AND PROVIDED TO THE TRUSTEE AND
SECURITIES ADMINISTRATOR PURSUANT TO THE AGREEMENT (AS DEFINED
BELOW), EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.]
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY
PERSON, UNLESS THE TRANSFEREE PROVIDES EITHER A
CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
AGREEMENT.
A-2-10
Series ACE 2004-HE1, Class B Aggregate Certificate Principal Balance of the
Pass-Through Rate: Variable Class B Certificates as of the Issue Date: $
Date of Pooling and Servicing Agreement Denomination: $
and Cut-off Date: March 1, 2004
Master Servicer: Wells Fargo Bank, N.A.
First Distribution Date: April 25, 2004
Trustee: HSBC Bank USA
No. ______ Issue Date: March 30, 2004
CUSIP:
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the
"Trust Fund") consisting primarily of a pool of conventional one- to
four-family, fixed and adjustable-rate first and second lien mortgage loans (the
"Mortgage Loans") formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES.
This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class B Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class B Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), Wells Fargo Bank, N.A., as master
servicer (the "Master Servicer"), and securities administrator (the "Securities
Administrator"), Ocwen Federal Bank FSB, as servicer (the "Servicer") and HSBC
Bank USA, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following such 25th
A-2-11
day (a "Distribution Date"), commencing on the First Distribution Date specified
above, to the Person in whose name this Certificate is registered at the close
of business on the Business Day immediately preceding such Distribution Date
(the "Record Date"), in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class B Certificates on such Distribution Date pursuant to the
Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
B Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class B Certificates, or otherwise
by check mailed by first class mail to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Securities Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Securities Administrator for that purpose as
provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of (i) One Month LIBOR plus _____%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus _____%, in the case of any Distribution Date
thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee, the Securities Administrator, the
Servicer and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer, the Trustee, the Securities
A-2-12
Administrator and the Servicer with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Securities Administrator as
provided in the Agreement, duly endorsed by, or accompanied by an assignment in
the form below or other written instrument of transfer in form satisfactory to
the Securities Administrator duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Securities Administrator may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
No transfer of this Certificate shall be made unless the transfer
is made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A or Regulation S under the 1933 Act, written certifications from the Holder
of the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement as
Exhibit B-1, and (ii) in all other cases, an Opinion of Counsel satisfactory to
it that such transfer may be made without such registration or qualification
(which Opinion of Counsel shall not be an expense of the Trust Fund or of the
Depositor, the Trustee, the Master Servicer or the Securities Administrator in
their respective capacities as such), together with copies of the written
certification(s) of the Holder of the Certificate desiring to effect the
transfer and/or such Holder's prospective transferee upon which such Opinion of
Counsel is based. None of the Depositor, the Trustee or the Securities
Administrator is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities
A-2-13
Administrator 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 this Class B Certificate will be made unless the
Depositor, the Trustee and the Securities Administrator have received a
representation letter, in the form as described by the Agreement, stating that
either (i) the transferee is not an employee benefit or other plan subject to
the prohibited transaction provisions of ERISA or Section 4975 of the Code (a
"Plan"), or any other person (including an investment manager, a named fiduciary
or a trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan or (ii) (A) it is an
insurance company, (B) the source of funds used to acquire or hold the
certificate or interest therein is an "insurance company general account," as
such term is defined in Prohibited Transaction Class Exemption ("PTCE") 95-60,
and (C) the conditions in Sections I and III of PTCE 95-60 have been satisfied.
The Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and any agent of the Depositor, the Master Servicer,
the Trustee, the Securities Administrator or the Servicer may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of the
Depositor and neither the Trustee nor the Securities Administrator assume any
responsibility for their correctness.
Unless the certificate of authentication hereon has been executed
by the Securities Administrator, by manual signature, this Certificate shall not
be entitled to any benefit under the Agreement or be valid for any purpose.
A-2-14
IN WITNESS WHEREOF, the Securities Administrator has caused this
Certificate to be duly executed.
Dated:
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B Certificates referred to in
the within-mentioned Agreement.
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Signatory
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________ (Please print or typewrite
name and address including postal zip code of assignee) a Percentage Interest
evidenced by the within Mortgage Pass-Through Certificate and hereby authorizes
the transfer of registration of such interest to assignee on the Certificate
Register of the Trust Fund.
I (We) further direct the Securities Administrator to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Dated:
___________________________________________
Signature by or on behalf of assignor
___________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to__________________________________________________
________________________________________________________________________________
for the account of ___________________________, account number______________ or,
if mailed by check, to _________________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
This information is provided by
______________________________________________, the assignee named above, or
____________________________________, as its agent.
EXHIBIT A-4
-----------
FORM OF CLASS CE CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A
CERTIFICATES AND THE MEZZANINE CERTIFICATES TO THE
EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
Series 2004-HE1, Class CE Aggregate Certificate Principal Balance of the
Class CE Certificates as of the Issue Date:
Pass-Through Rate: Variable $_____________
Cut-off Date and date of Pooling and Denomination: $_________________
Servicing Agreement: March 1, 2004
Master Servicer: Wells Fargo Bank, N.A.
First Distribution Date: April 25, 2004
Trustee: HSBC Bank USA
No. __
Issue Date: March 30, 2004
Aggregate Notional Amount of the Class
CE Certificates as of the Issue Date:
$-------------
Notional Amount: $_______________
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate, first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES.
This certifies that ________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class CE
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp., as depositor (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), Wells Fargo Bank,
N.A., as master servicer (the "Master Servicer") and securities administrator
(the "Securities Administrator"), Ocwen Federal Bank FSB, as servicer (the
"Servicer") and HSBC Bank USA, as trustee (the "Trustee"), a summary of certain
of the pertinent
A-3-2
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions
will be made on the 25th day of each month or, if such 25th day is not a
Business Day, the Business Day immediately following such 25th day (a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered on the last Business
Day of the calendar month immediately preceding the month in which the related
Distribution Date occurs (the "Record Date"), in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under
the Agreement will be made or caused to be made by the Securities Administrator
by wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
CE Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class CE Certificates, or otherwise
by check mailed by first class mail to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Securities Administrator of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Securities Administrator for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and
A-3-3
binding on such Holder and upon all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Securities Administrator duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit B-1,
and (ii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee, the Master Servicer or the Securities Administrator in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor, the Trustee or the Securities Administrator is obligated to register
or qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor, the
Master Servicer and the Securities Administrator 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 this Certificate to a Plan subject to
ERISA or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person using "Plan Assets" to acquire this
Certificate shall be made except in accordance with Section 6.02(c) of the
Agreement.
The Certificates are issuable in fully registered form
only without coupons in Classes and denominations representing Percentage
Interests specified in the Agreement. As provided in the Agreement and subject
to certain limitations therein set forth, the Certificates are exchangeable for
new Certificates of the same Class in authorized denominations evidencing the
A-3-4
same aggregate Percentage Interest, as requested by the Holder surrendering the
same. No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Securities Administrator may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust
Fund created thereby shall terminate upon payment to the Certificateholders of
all amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as
statements of the Depositor and neither the Trustee nor the Securities
Administrator assume any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-3-5
IN WITNESS WHEREOF, the Securities Administrator has
caused this Certificate to be duly executed.
Dated:
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------
(Cust) (Minor)
under Uniform Gifts to
Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right if _______________
survivorship and not as tenants in (State)
common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto___________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or the Securities
Administrator to issue a new Certificate of a like Percentage Interest and Class
to the above named assignee and deliver such Certificate to the following
address:_______________________________________________________________________
_______________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to__________________________________________________
________________________________________________________________________________
for the account of ___________________________, account number______________ or,
if mailed by check, to _________________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-5
-----------
CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
Series 2004-HE1, Class P Aggregate Certificate Principal Balance of the
Class P Certificates as of the Issue Date:
$100.00
Cut-off Date and date of Pooling and
Servicing Agreement: March 1, 2004 Denomination: $100.00
First Distribution Date: April 25, 2004 Master Servicer: Wells Fargo Bank, N.A.
No. __ Trustee: HSBC Bank USA
Issue Date: March 30, 2004
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
A-4-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate, first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.
This certifies that____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P Certificates in REMIC II created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp., as depositor (hereinafter called the "Depositor",
which term includes any successor entity under the Agreement), Wells Fargo Bank,
N.A., as master servicer (the "Master Servicer"), and securities administrator
(the "Securities Administrator"), Ocwen Federal Bank FSB, as servicer (the
"Servicer") and HSBC Bank USA, as trustee (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the last Business Day of the
calendar month immediately preceding the month in which the related Distribution
Date occurs (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class P Certificates on such Distribution Date
pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
P Certificates the aggregate initial Certificate Principal Balance of which is
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds
A-4-3
of the aggregate initial Certificate Principal Balance of the Class P
Certificates, or otherwise by check mailed by first class mail to the address of
the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Securities Administrator of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Securities Administrator
for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Securities Administrator duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A
A-4-4
under the 1933 Act, written certifications from the Holder of the Certificate
desiring to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Master Servicer or the Securities Administrator in their respective capacities
as such), together with copies of the written certification(s) of the Holder of
the Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. None of the Depositor,
the Trustee or the Securities Administrator is obligated to register or qualify
the Class of Certificates specified on the face hereof under the 1933 Act or any
other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Master Servicer
and the Securities Administrator 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 this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 6.02(c) of the Agreement.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Securities Administrator may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase
A-4-5
is subject to the aggregate Stated Principal Balance of the Mortgage Loans at
the time of purchase being less than 10% of the aggregate principal balance of
the Mortgage Loans as of the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assume
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
A-4-7
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------
(Cust) (Minor)
under Uniform Gifts to
Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right if _______________
survivorship and not as tenants in (State)
common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto___________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or the Securities
Administrator to issue a new Certificate of a like Percentage Interest and Class
to the above named assignee and deliver such Certificate to the following
address:_______________________________________________________________________
_______________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to__________________________________________________
________________________________________________________________________________
for the account of ___________________________, account number______________ or,
if mailed by check, to _________________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-6
-----------
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-
UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS THE SOLE "RESIDUAL INTEREST" IN EACH "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC"), AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE OF 1986 (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE MAY BE MADE ONLY IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
TO THE SECURITIES ADMINISTRATOR THAT (A) SUCH TRANSFEREE IS NOT (1)
THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A
COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT
FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF
THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1),
(2) OR (3) SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED
ORGANIZATION") OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND
(B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF
THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER,
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH AND THE PROVISIONS OF SECTION 6.02(D) OF THE AGREEMENT
REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION
IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS
CERTIFICATE.
Series 2004-HE1, Class R Aggregate Percentage Interest of the Class R
Certificates as of the Issue Date: 100.00%
Date of Pooling and Servicing Agreement
and Cut-off Date: March 1, 2004 Master Servicer: Wells Fargo Bank, N.A.
First Distribution Date: April 25, 2004 Trustee: HSBC Bank USA
No __ Issue Date: March 30, 2004
A-5-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-HE1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first and second lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.
A-5-3
This certifies that _______________ is the registered owner of
a Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class R Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), Wells Fargo Bank, N.A., as master
servicer (the "Master Servicer") and securities administrator (the "Securities
Administrator"), Ocwen Federal Bank FSB, as the servicer (the "Servicer") and
HSBC Bank USA, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R Certificates, or otherwise by check mailed by first class mail to the address
of the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Securities Administrator of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Securities Administrator
for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificate of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
A-5-4
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Trustee, the
Securities Administrator and the Servicer with the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Securities Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Securities Administrator duly executed by, the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Securities Administrator shall require
receipt of (i) if such transfer is purportedly being made in reliance upon Rule
144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit B-1,
and (ii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee, the Master Servicer or the Securities Administrator in their respective
capacities as such), together with copies of the written certification(s) of the
Holder of the Certificate desiring to effect the transfer and/or such Holder's
prospective transferee upon which such Opinion of Counsel is based. None of the
Depositor, the Trustee or the Securities Administrator is obligated to register
or qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any Holder desiring to effect a transfer of this
Certificate shall be required to indemnify the Trustee, the Depositor, the
Master Servicer and the Securities
A-5-5
Administrator 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 this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 6.02 of the Agreement.
Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Securities Administrator (i) an affidavit to the effect that such transferee is
any Person other than a Disqualified Organization or the agent (including a
broker, nominee or middleman) of a Disqualified Organization, and (ii) a
certificate that acknowledges that (A) the Class R Certificates have been
designated as representing the beneficial ownership of the residual interests in
each of REMIC I and REMIC II, (B) it will include in its income a PRO RATA share
of the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.
The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 6.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause any portion
of the Trust Fund to cease to qualify as a REMIC or cause the imposition of a
tax upon any REMIC.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Securities Administrator may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
The Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicer may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Trustee, the Securities Administrator, the Servicer nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Securities Administrator and required to be paid to them
pursuant to the Agreement following the earlier of (i) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan
A-5-6
remaining in REMIC I and (ii) the purchase by the party designated in the
Agreement at a price determined as provided in the Agreement from REMIC I of all
the Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assume
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-5-7
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
WELLS FARGO BANK, N.A.
as Securities Administrator
By:________________________________
Authorized Signatory
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
----------
(Cust) (Minor)
under Uniform Gifts to
Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right if _______________
survivorship and not as tenants in (State)
common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto___________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or the Securities
Administrator to issue a new Certificate of a like Percentage Interest and Class
to the above named assignee and deliver such Certificate to the following
address:_______________________________________________________________________
_______________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to__________________________________________________
________________________________________________________________________________
for the account of ___________________________, account number______________ or,
if mailed by check, to _________________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT B-1
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE1
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-HE1
Asset Backed Pass-Through Certificates Class B, Class CE,
Class P and Class R Certificates
---------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ______________________ (the
"Transferor") to ___________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
March 1, 2004, among ACE Securities Corp. as Depositor, Ocwen Federal Bank FSB
as Servicer, Wells Fargo Bank, N.A. as Master Servicer and Securities
Administrator and HSBC Bank USA as trustee (the "Pooling and Servicing
Agreement"), pursuant to which Pooling and Servicing Agreement the Certificates
were issued.
Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
[Transferor]
By:
-------------------------------
Name:
Title:
B-1-2
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE1
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-HE1
Asset Backed Pass-Through Certificates Class B, Class CE,
Class P and Class R Certificates
--------------------------------
Ladies and Gentlemen:
In connection with the purchase from
______________________________ (the "Transferor") on the date hereof of the
captioned trust certificates (the "Certificates"), (the "Transferee") hereby
certifies as follows:
1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act
of 1933 (the "1933 Act") and has completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2.
The Transferee is aware that the sale to it is being made in
reliance on Rule 144A. The Transferee is acquiring the Certificates
for its own account or for the account of a qualified institutional
buyer, and understands that such Certificate 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 1933 Act.
2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the
nature, performance and servicing of the Mortgage Loans, (c) the
Pooling and Servicing Agreement referred to below, and (d) any
credit enhancement mechanism associated with the Certificates, that
it has requested.
3. The Transferee: (a) is not an employee benefit or other
plan subject to the prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA), or Section 4975 of the Internal Revenue Code of 1986, as
amended ("Plan"), or any other person (including an investment
manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate
with "plan assets" of any Plan within the meaning of the Department
of Labor ("DOL") regulation at 29 C.F.R. ss.2510.3-101 or (b) has
provided the Securities
B-1-3
Administrator with an opinion of counsel on which the Trustee, the
Depositor, the Master Servicer, the Securities Administrator and
the Servicer may rely, acceptable to and in form and substance
satisfactory to the Trustee to the effect that the purchase of
Certificates is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction under
ERISA or Section 4975 of the Code and will not subject the Trust
Fund, the Trustee, the Depositor, the Master Servicer, the
Securities Administrator or the Servicer to any obligation or
liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in the
Pooling and Servicing Agreement.
In addition, the Transferee hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee, the Securities
Administrator, the Master Servicer and the Servicer that the Transferee will not
transfer such Certificates to any Plan or person unless such Plan or person
meets the requirements set forth in either 3(a) or (b) above.
All capitalized terms used but not otherwise defined herein have
the respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of March 1, 2004, among ACE Securities Corp. as Depositor, Wells Fargo
Bank, N.A. as Master Servicer and Securities Administrator, Ocwen Federal Bank
FSB as Servicer and HSBC Bank USA as Trustee, pursuant to which the Certificates
were issued.
[TRANSFEREE]
By:
-------------------------------
Name:
Title:
B-1-4
ANNEX 1 TO EXHIBIT B-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Wells Fargo Bank, N.A., as Securities
Administrator, with respect to the asset backed pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $________________1 in securities
(except for the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Transferee satisfies the criteria in the category
marked below.
___ CORPORATION, ETC. The Transferee is a corporation (other than
a bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ BANK. The Transferee (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 Transferee (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.
- --------
1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that
case, Transferee must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
B-1-5
___ BROKER-DEALER. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Transferee is an insurance company
whose primary and predominant business activity is the writing
of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a
State, territory or the District of Columbia.
___ STATE OR LOCAL PLAN. The Transferee 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 Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ INVESTMENT ADVISOR The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee 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.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor 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 Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
B-1-6
6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.
7. The Transferee 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 Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
Dated:
-----------------------------------
Print Name of Transferee
By:
-------------------------------
Name:
Title:
B-1-7
ANNEX 2 TO EXHIBIT B-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Wells Fargo Bank, N.A., as Securities
Administrator, with respect to the asset backed pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee'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 Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.
___ The Transferee owned $________________________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
___ The Transferee 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 Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (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).
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
B-1-8
5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
Dated:
-----------------------------------
Print Name of Transferee or Advisor
By:
-------------------------------
Name:
Title:
IF AN ADVISER:
-----------------------------------
Print Name of Transferee
B-1-9
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of
1933, as amended.
3. As of the date specified below (which is not earlier
than the last day of the Purchaser's most recent fiscal year), the
amount of "securities", computed for purposes of Rule 144A, owned
and invested on a discretionary basis by the Purchaser was in
excess of $100,000,000.
Name of Purchaser
-------------------------------------------------------------
By: (Signature)
---------------------------------------------------------------
Name of Signatory
-------------------------------------------------------------
Title
-------------------------------------------------------------------------
Date of this certificate
------------------------------------------------------
Date of information provided in paragraph 3
-----------------------------------
B-1-10
FORM OF REGULATION S TRANSFER CERTIFICATE
[Date]
Wells Fargo Bank Minnesota, National Association
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE1
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-HE1
Asset Backed Pass-Through Certificates, Class B Certificates
------------------------------------------------------------
Ladies and Gentlemen:
Reference is hereby made to the Pooling and Servicing
Agreement (the "Agreement"), dated as of March 1, 2004, among ACE Securities
Corp. (the "Depositor"), Wells Fargo Bank, N.A., as master servicer and
securities administrator (the "Master Servicer"), Ocwen Federal Bank FSB, as
servicer (the "Servicer") and HSBC Bank USA, as trustee (the "Trustee").
Capitalized terms used herein but not defined herein shall have the meanings
assigned thereto in the Agreement.
This letter relates to U.S. $[__________] Certificate
Principal Balance of Class B Certificates (the "Certificates") which are held in
the name of [name of transferor] (the "Transferor") to effect the transfer of
the Certificates to a person who wishes to take delivery thereof in the form of
an equivalent beneficial interest [name of transferee] (the "Transferee").
In connection with such request, the Transferor hereby
certifies that such transfer has been effected in accordance with the transfer
restrictions set forth in the Agreement and the private placement memorandum
dated March __, 2004 relating to the Certificates and that the following
additional requirements (if applicable) were satisfied:
(a) the offer of the Certificates was not made to a person in the
United States;
(b) at the time the buy order was originated, the Transferee was
outside the United States or the Transferor and any person acting on its behalf
reasonably believed that the Transferee was outside the United States;
(c) no directed selling efforts were made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;
(d) the transfer or exchange is not part of a plan or scheme to
evade the registration requirements of the Securities Act;
B-1-11
(e) the Transferee is not a U.S. Person, as defined in Regulation S
under the Securities Act;
(f) the transfer was made in accordance with the applicable
provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1), as the case may be; and
(g) the Transferee understands that the Certificates have not been
and will not be registered under the Securities Act, that any offers, sales or
deliveries of the Certificates purchased by the Transferee in the United States
or to U.S. persons prior to the date that is 40 days after the later of (i) the
commencement of the offering of the Certificates and (ii) the Closing Date, may
constitute a violation of United States law, and that (x) distributions of
principal and interest and (y) the exchange of beneficial interests in a
Temporary Regulation S Global Certificate for beneficial interests in the
related Permanent Regulation S Global Certificate, in each case, will be made in
respect of such Certificates only following the delivery by the Holder of a
certification of non-U.S. beneficial ownership, at the times and in the manner
set forth in the Agreement.
B-1-12
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
[Name of Transferor]
By:
-------------------------------
Name:
Title:
B-1-13
EXHIBIT B-2
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
____________, 20__
Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE1
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-HE1
Asset Backed Pass-Through Certificates, Class B, Class CE, Class
P and Class R Certificates
---------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act'), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act, in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
Very truly yours,
(Transferor)
By:
--------------------------------
Name:
Title:
FORM OF TRANSFEREE LETTER
_______________, 20__
Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-HE1
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-HE1
Asset Backed Pass-Through Certificates, Class B, Class CE,
Class P and Class R Certificates
--------------------------------
Ladies and Gentlemen:
In connection with the transfer by ______________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferee hereby
certifies as follows:
1. The Transferee understands that (a) the Certificates have
not been and will not be registered or qualified under the
Securities Act of 1933, as amended (the "Act") or any state
securities law, (b) the Depositor is not required to so register or
qualify the Certificates, (c) the Certificates may be resold only
if registered and qualified pursuant to the provisions of the Act
or any state securities law, or if an exemption from such
registration and qualification is available, (d) the Pooling and
Servicing Agreement contains restrictions regarding the transfer of
the Certificates and (e) the Certificates will bear a legend to the
foregoing effect.
2. The Transferee is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any distribution thereof in any manner that would
violate the Act or any applicable state securities laws.
3. The Transferee is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such matters
related to securities similar to the Certificates, such that it is
capable of evaluating the merits and risks of investment in the
Certificates, (b) able to bear the economic risks of such an
investment and (c) an "accredited investor" within the meaning of
Rule 501(a) promulgated pursuant to the Act.
4. The Transferee has been furnished with, and has had an
opportunity to review (a) a copy of the Pooling and Servicing
Agreement and (b) such other information concerning the
Certificates, the Mortgage Loans and the Depositor as has been
requested by the Transferee from the Depositor or the Transferor
and is relevant to the Transferee's
B-2-2
decision to purchase the Certificates. The Transferee has had any
questions arising from such review answered by the Depositor or the
Transferor to the satisfaction of the Transferee.
5. The Transferee has not and will not nor has it authorized
or will it authorize any person to (a) offer, pledge, sell, dispose
of or otherwise transfer any Certificate, any interest in any
Certificate or any other similar security to any person in any
manner, (b) solicit any offer to buy or to accept a pledge,
disposition of other transfer of any Certificate, any interest in
any Certificate or any other similar security from any person in
any manner, (c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other similar
security with any person in any manner, (d) make any general
solicitation by means of general advertising or in any other manner
or (e) take any other action, that (as to any of (a) through (e)
above) would constitute a distribution of any Certificate under the
Act, that would render the disposition of any Certificate a
violation of Section 5 of the 1933 Act or any state securities law,
or that would require registration or qualification pursuant
thereto. The Transferee will not sell or otherwise transfer any of
the Certificates, except in compliance with the provisions of the
Pooling and Servicing Agreement.
6. The Transferee: (a) is not an employee benefit or other
plan subject to the prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended ("Plan"), or any other person (including an investment
manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate
with "plan assets" of any Plan within the meaning of the Department
of Labor ("DOL") regulation at 29 C.F.R. ss.2510.3-101 or (b) has
provided the Trustee with an opinion of counsel on which the
Depositor, the Master Servicer, the Securities Administrator, the
Trustee and the Servicer may rely, acceptable to and in form and
substance satisfactory to the Trustee to the effect that the
purchase of Certificates is permissible under applicable law, will
not constitute or result in any non-exempt prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the
Trust Fund, the Trustee, the Master Servicer, the Securities
Administrator, the Depositor or the Servicer to any obligation or
liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in the
Pooling and Servicing Agreement.
In addition, the Transferee hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee, the Securities
Administrator, the Master Servicer and the Servicer that the Transferee will not
transfer such Certificates to any Plan or person unless such Plan or person
meets the requirements set forth in either 6(a) or (b) above.
Very truly yours,
By:
--------------------------------
Name:
Title:
B-2-3
EXHIBIT B-3
-----------
TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
___________________________ being duly sworn, deposes, represents
and warrants as follows:
1. I am a _____________________ of _______________________________
(the "Owner") a corporation duly organized and existing under the
laws of _________________________, the record owner of Ace
Securities Corp. Home Equity Loan Trust, Series 2004-HE1 Asset
Backed Pass-Through Certificates, Class R Certificates (the
"Class R Certificates"), on behalf of whom I make this affidavit
and agreement. Capitalized terms used but not defined herein have
the respective meanings assigned thereto in the Pooling and
Servicing Agreement pursuant to which the Class R Certificates
were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
____________________. ____ and (ii) is acquiring the Class R
Certificates for its own account or for the account of another
Owner from which it has received an affidavit in substantially
the same form as this affidavit. A "Permitted Transferee" is any
person other than a "disqualified organization" or a possession
of the United States. For this purpose, a "disqualified
organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of
which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is
not selected by any such governmental entity) or any foreign
government, international organization or any agency or
instrumentality of such foreign government or organization, any
real electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally
exempt from federal income tax unless such organization is
subject to the tax on unrelated business taxable income.
3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified
organizations under the Internal Revenue Code of 1986 that
applies to all transfers of the Class R Certificates after March
31, 1988; (ii) that such tax would be on the transferor or, if
such transfer is through an agent (which person includes a
broker, nominee or middleman) for a non-Permitted Transferee, on
the agent; (iii) that the person otherwise liable for the tax
shall be relieved of liability
for the tax if the transferee furnishes to such person an
affidavit that the transferee is a Permitted Transferee and, at
the time of transfer, such person does not have actual knowledge
that the affidavit is false; and (iv) that each of the Class R
Certificates may be a "noneconomic residual interest" within the
meaning of proposed Treasury regulations promulgated under 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 is to impede the assessment or collection of tax.
4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the
taxable year of the pass-through entity, a non-Permitted
Transferee is the record holder of an interest in such entity.
(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.)
5. The Owner is aware that the Securities Administrator will not
register the transfer of any Class R Certificate unless the
transferee, or the transferee's agent, delivers to the Securities
Administrator, among other things, an affidavit in substantially
the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and
agreement are false.
6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Class R
Certificates will only be owned, directly or indirectly, by an
Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is ________________.
8. The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 6.02(d) of
the Pooling and Servicing Agreement under which the Class R
Certificates were issued (in particular, clauses (iii)(A) and
(iii)(B) of Section 6.02(d) which authorize the Securities
Administrator to deliver payments to a person other than the
Owner and negotiate a mandatory sale by the Securities
Administrator in the event that the Owner holds such Certificate
in violation of Section 6.02(d)); and that the Owner expressly
agrees to be bound by and to comply with such restrictions and
provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of
any tax.
10. The Owner anticipates that it will, so long as it holds the Class
R Certificates, have sufficient assets to pay any taxes owed by
the holder of such Class R Certificates, and hereby represents to
and for the benefit of the person from whom it acquired the Class
R Certificates that the Owner intends to pay taxes associated
with holding such
B-3-2
Class R Certificates as they become due, fully understanding that
it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificates.
11. The Owner has no present knowledge that it may become insolvent
or subject to a bankruptcy proceeding for so long as it holds the
Class R Certificates.
12. The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or
entity that will not have sufficient assets to pay any taxes owed
by the holder of such Class R Certificates, or that may become
insolvent or subject to a bankruptcy proceeding, for so long as
the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the
representations required by Section 6.02(d) of the Pooling and
Servicing Agreement under which the Class R Certificate were
issued and will not consummate any such transfer if it knows, or
knows facts that should lead it to believe, that any such
representations are false.
15. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Securities Administrator
an affidavit, which represents and warrants that it is not
transferring the Class R Certificates to impede the assessment or
collection of any tax and that it has no actual knowledge that
the proposed transferee: (i) has insufficient assets to pay any
taxes owed by such transferee as holder of the Class R
Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Class R Certificates
remains outstanding; and (iii) is not a "Permitted Transferee".
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in,
or under the laws of, the United States or any political
subdivision thereof, or an estate or trust whose income from
sources without the United States may be included 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.
17. The Owner of the Class R Certificate, hereby agrees that in the
event that the Trust Fund created by the Pooling and Servicing
Agreement is terminated pursuant to Section 10.01 thereof, the
undersigned shall assign and transfer to the Holders of the Class
CE and the Class P Certificates any amounts in excess of par
received in connection with such termination. Accordingly, in the
event of such termination, the Securities Administrator is hereby
authorized to withhold any such amounts in excess of par and to
pay such amounts directly to the Holders of the Class CE and the
Class P Certificates. This agreement shall bind and be
enforceable against any successor, transferee or assigned of the
undersigned in the Class R Certificate. In connection
B-3-3
with any transfer of the Class R Certificate, the Owner shall
obtain an agreement substantially similar to this clause from any
subsequent owner.
B-3-4
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
_________________, ____.
[OWNER]
By:
--------------------------------
Name:
Title: [Vice] President
ATTEST:
By:
----------------------------------
Name:
Title: [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 a [Vice] President of the Owner, and acknowledged
to me that [he/she] executed the same as [his/her] free act and deed and the
free act and deed of the Owner.
Subscribed and sworn before me this ______________ day of
__________, ____.
-------------------------------------
Notary Public
County of
---------------------------
State of
----------------------------
My Commission expires:
B-3-5
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
_________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a ____________________ of _________________________
(the "Owner"), a corporation duly organized and existing under the laws of
_____________, on behalf of whom I make this affidavit.
2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.
3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to
the Trustee or a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit B-2. The Owner does not know or
believe that any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.
B-3-6
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
________________, ____.
[OWNER]
By:
--------------------------------
Name:
Title: [Vice] President
ATTEST:
By:
----------------------------------------
Name:
Title: [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 a [Vice] President of the Owner, and acknowledged
to me that [he/she] executed the same as [his/her] free act and deed and the
free act and deed of the Owner.
Subscribed and sworn before me this ______ day of
_____________, ____.
-----------------------------------
Notary Public
County of
-------------------------
State of
--------------------------
My Commission expires:
EXHIBIT C
FORM OF SERVICER CERTIFICATION
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-HE1
Asset Backed Pass-Through Certificates,
---------------------------------------
I, [identify the certifying individual], certify to ACE Securities
Corp. (the "Depositor"), HSBC Bank USA (the "Trustee") and Wells Fargo Bank,
N.A. (the "Master Servicer"), and their respective officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:
1. Based on my knowledge, the information in the Annual Statement
of Compliance, the Annual Independent Public Accountant's Servicing Report and
all servicing reports, officer's certificates and other information relating to
the servicing of the Mortgage Loans submitted to the Master Servicer taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact constituting information required to be provided by Ocwen
Federal Bank FSB under the Pooling and Servicing Agreement necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading as of the date of this certification.
2. Based on my knowledge, the servicing information required to be
provided to the Master Servicer by Ocwen Federal Bank FSB under the Pooling and
Servicing Agreement has been provided to the Master Servicer.
3. I am responsible for reviewing the activities performed by Ocwen
Federal Bank FSB under the Pooling and Servicing Agreement and based upon my
knowledge and the review required by the Pooling and Servicing Agreement, and
except as disclosed in the Annual Statement of Compliance or the Annual
Independent Public Accountant's Servicing Report submitted to the Master
Servicer, Ocwen Federal Bank FSB has fulfilled its obligations under the Pooling
and Servicing Agreement; and
4. I have disclosed to the Master Servicer all significant
deficiencies relating to Ocwen Federal Bank FSB compliance with the minimum
servicing standards in accordance with a review conducted in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or similar standard as
set forth in the Pooling and Servicing Agreement.
C-1
Capitalized terms used and not otherwise defined herein have the
meanings assigned thereto in the Pooling and Servicing Agreement, dated as of
February 1, 2004, among ACE Securities Corp., Ocwen Federal Bank FSB, Wells
Fargo Bank, N.A. and HSBC Bank USA.
Date: _________________________
_________________________________
[Signature]
[Title]
C-2