ACE SECURITIES CORP.
Depositor
LITTON LOAN SERVICING LP
Servicer
WELLS FARGO BANK, N.A.
Master Servicer and Securities Administrator
HSBC BANK USA, NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2004
ACE Securities Corp. Home Equity Loan Trust, Series 2004-FM2
Asset Backed Pass-Through Certificates
ARTICLE I DEFINITIONS 15
Section 1.01. Defined Terms.............................................................................15
Accepted Master Servicing Practices........................................................................15
Accepted Servicing Practices...............................................................................15
Account....................................................................................................15
Accrued Certificate Interest...............................................................................15
Adjustable Rate Mortgage Loan..............................................................................15
Adjustment Date............................................................................................16
Administration Fees........................................................................................16
Administration Fee Rate....................................................................................16
Advance Facility...........................................................................................19
Advance Facility Notice....................................................................................19
Advance Financing Person...................................................................................19
Advance Reimbursement Amounts..............................................................................19
Affiliate..................................................................................................16
Aggregate Loss Severity Percentage.........................................................................16
Agreement..................................................................................................16
Amounts Held for Future Distribution.......................................................................16
Assignment.................................................................................................16
Available Distribution Amount..............................................................................17
Balloon Mortgage Loan......................................................................................17
Balloon Payment............................................................................................17
Bankruptcy Code............................................................................................17
Book-Entry Certificate.....................................................................................17
Book-Entry Custodian.......................................................................................17
Business Day...............................................................................................17
Cap Contracts..............................................................................................17
Cash-Out Refinancing.......................................................................................18
Certificate................................................................................................18
Certificate Factor.........................................................................................18
Certificate Margin.........................................................................................18
Certificateholder..........................................................................................19
Certificate Owner..........................................................................................20
Certificate Principal Balance..............................................................................20
Certificate Register.......................................................................................20
Class......................................................................................................20
Class A Certificate........................................................................................20
Class A Principal Distribution Amount......................................................................20
Class A-1 Certificate......................................................................................20
Class A-1 Allocation Percentage............................................................................20
Class A-1A Certificate.....................................................................................20
Class A-1 Principal Distribution Amount....................................................................20
Class A-1B Allocation Percentage...........................................................................21
Class A-1B Certificate.....................................................................................21
Class A-1B Principal Distribution Amount...................................................................21
Class A-2 Allocation Percentage............................................................................21
Class A-2 Certificate......................................................................................21
Class A-2 Principal Distribution Amount....................................................................21
Class A-2A Certificate.....................................................................................22
Class A-2B Certificate.....................................................................................22
Class A-2C Certificate.....................................................................................22
Class B-1 Certificate......................................................................................22
Class B-1 Principal Distribution Amount....................................................................22
Class CE Certificate.......................................................................................23
Class M Certificates.......................................................................................23
Class M-1 Certificate......................................................................................23
Class M-1 Principal Distribution Amount....................................................................23
Class M-2 Certificate......................................................................................23
Class M-2 Principal Distribution Amount....................................................................23
Class M-3 Certificate......................................................................................24
Class M-3 Principal Distribution Amount....................................................................24
Class M-4 Certificate......................................................................................24
Class M-4 Principal Distribution Amount....................................................................24
Class M-5 Certificate......................................................................................25
Class M-5 Principal Distribution Amount....................................................................25
Class M-6 Certificate......................................................................................25
Class M-6 Principal Distribution Amount....................................................................25
Class P Certificate........................................................................................26
Class R Certificates.......................................................................................26
Class R-I Interest.........................................................................................26
Class R-II Interest........................................................................................26
Closing Date...............................................................................................26
Code.......................................................................................................26
Collection Account.........................................................................................26
Commission.................................................................................................26
Corporate Trust Office.....................................................................................27
Corresponding Certificate..................................................................................27
Credit Enhancement Percentage..............................................................................27
Custodial Agreement........................................................................................27
Custodian..................................................................................................27
Cut-off Date...............................................................................................27
Debt Service Reduction.....................................................................................28
Deficient Valuation........................................................................................28
Definitive Certificates....................................................................................28
Deleted Mortgage Loan......................................................................................28
Delinquency Percentage.....................................................................................28
Depositor..................................................................................................28
Depository.................................................................................................28
Depository Institution.....................................................................................28
Depository Participant.....................................................................................28
Determination Date.........................................................................................29
- 2 -
Directly Operate...........................................................................................29
Disqualified Organization..................................................................................29
Distribution Account.......................................................................................29
Distribution Date..........................................................................................29
Due Date...................................................................................................29
Due Period.................................................................................................30
Eligible Account...........................................................................................30
ERISA......................................................................................................30
Estate in Real Property....................................................................................30
Excess Liquidation Proceeds................................................................................30
Expense Adjusted Mortgage Rate.............................................................................30
Extraordinary Trust Fund Expense...........................................................................30
Extra Principal Distribution Amount........................................................................30
Fannie Mae.................................................................................................30
FDIC.......................................................................................................30
Final Maturity Date........................................................................................30
Final Recovery Determination...............................................................................30
Fitch......................................................................................................31
Freddie Mac................................................................................................31
Gross Margin...............................................................................................31
Group IA Interest Remittance Amount........................................................................31
Group IA Mortgage Loans....................................................................................31
Group IA Principal Distribution Amount.....................................................................31
Group IA Principal Remittance Amount.......................................................................32
Group IB Interest Remittance Amount........................................................................32
Group IB Mortgage Loans....................................................................................32
Group IB Principal Distribution Amount.....................................................................32
Group IB Principal Remittance Amount.......................................................................32
Group II Interest Remittance Amount.......................................................................32
Group II Mortgage Loans....................................................................................32
Group II Principal Distribution Amount.....................................................................33
Group II Principal Remittance Amount.......................................................................33
Independent................................................................................................33
Independent Contractor.....................................................................................33
Index......................................................................................................34
Institutional Accredited Investor..........................................................................34
Insurance Proceeds.........................................................................................34
Interest Accrual Period....................................................................................34
Interest Carry Forward Amount..............................................................................34
Interest Determination Date................................................................................34
Interest Distribution Amount...............................................................................34
Interest Remittance Amount.................................................................................35
Last Scheduled Distribution Date...........................................................................35
Late Collections...........................................................................................35
Liquidation Event..........................................................................................35
Liquidation Proceeds.......................................................................................35
- 3 -
Loan-to-Value Ratio........................................................................................35
London Business Day........................................................................................35
Loss Severity Percentage...................................................................................35
Marker Rate................................................................................................35
Master Servicer............................................................................................36
Master Servicer Certification..............................................................................36
Master Servicer Event of Default...........................................................................36
Master Servicer Fee Rate...................................................................................36
Master Servicing Fee.......................................................................................36
Maximum I-LTZZ Uncertificated Interest Deferral Amount.....................................................36
Maximum Mortgage Rate......................................................................................37
MERS.......................................................................................................37
MERS(R) System.............................................................................................37
Mezzanine Certificate......................................................................................37
MIN........................................................................................................37
Minimum Mortgage Rate......................................................................................37
MOM Loan...................................................................................................37
Monthly Payment............................................................................................37
Moody's....................................................................................................37
Mortgage...................................................................................................38
Mortgage File..............................................................................................38
Mortgage Loan..............................................................................................38
Mortgage Loan Documents....................................................................................38
Mortgage Loan Purchase Agreement...........................................................................38
Mortgage Loan Schedule.....................................................................................38
Mortgage Note..............................................................................................40
Mortgage Rate..............................................................................................40
Mortgaged Property.........................................................................................41
Mortgagor..................................................................................................41
Net Monthly Excess Cashflow................................................................................41
Net Mortgage Rate..........................................................................................41
Net WAC Pass-Through Rate..................................................................................41
Net WAC Rate Carryover Amount..............................................................................42
New Lease..................................................................................................43
Nonrecoverable P&I Advance.................................................................................43
Nonrecoverable Servicing Advance...........................................................................43
Non-United States Person...................................................................................43
Notional Amount............................................................................................43
Offered Certificates.......................................................................................43
Officer's Certificate......................................................................................43
One-Month LIBOR............................................................................................43
One-Month LIBOR Pass-Through Rate..........................................................................44
Opinion of Counsel.........................................................................................45
Optional Termination Date..................................................................................45
Originator.................................................................................................45
Overcollateralization Amount...............................................................................45
- 4 -
Overcollateralization Increase Amount......................................................................45
Overcollateralization Reduction Amount.....................................................................45
Ownership Interest.........................................................................................45
P&I Advance................................................................................................45
Pass-Through Rate..........................................................................................46
Percentage Interest........................................................................................47
Periodic Rate Cap..........................................................................................48
Permitted Investments......................................................................................48
Permitted Transferee.......................................................................................49
Person.....................................................................................................49
Plan.......................................................................................................49
Prepayment Assumption......................................................................................49
Prepayment Charge..........................................................................................50
Prepayment Charge Schedule.................................................................................50
Prepayment Interest Excess.................................................................................50
Prepayment Interest Shortfall..............................................................................50
Prepayment Period..........................................................................................51
Principal Prepayment.......................................................................................51
Principal Distribution Amount..............................................................................51
Principal Remittance Amount................................................................................51
Purchase Price.............................................................................................51
QIB........................................................................................................52
Qualified Substitute Mortgage Loan.........................................................................52
Rate/Term Refinancing......................................................................................52
Rating Agency or Rating Agencies...........................................................................52
Realized Loss..............................................................................................53
Record Date................................................................................................54
Reference Banks............................................................................................54
Refinanced Mortgage Loan...................................................................................54
Regular Certificate........................................................................................54
Regular Interest...........................................................................................54
Regulation S Temporary Global Certificate..................................................................54
Regulation S Permanent Global Certificate..................................................................54
Release Date...............................................................................................54
Relief Act.................................................................................................54
Relief Act Interest Shortfall..............................................................................55
REMIC......................................................................................................55
REMIC I....................................................................................................55
REMIC I Interest Loss Allocation Amount....................................................................55
REMIC I Marker Allocation Percentage.......................................................................55
REMIC I Overcollateralization Amount.......................................................................55
REMIC I Principal Loss Allocation Amount...................................................................56
REMIC I Regular Interest...................................................................................56
REMIC I Regular Interest I-LTAA............................................................................56
REMIC I Regular Interest I-LTA1A...........................................................................56
REMIC I Regular Interest I-LTA1B...........................................................................56
- 5 -
REMIC I Regular Interest I-LTA2............................................................................56
REMIC I Regular Interest I-LTA2............................................................................57
REMIC I Regular Interest I-LTA2............................................................................57
REMIC I Regular Interest I-LTB.............................................................................57
REMIC I Regular Interest I-LTM1............................................................................57
REMIC I Regular Interest I-LTM2............................................................................57
REMIC I Regular Interest I-LTM3............................................................................57
REMIC I Regular Interest I-LTM4............................................................................57
REMIC I Regular Interest I-LTM5............................................................................58
REMIC I Regular Interest I-LTM6............................................................................58
REMIC I Regular Interest I-LTP.............................................................................58
REMIC I Regular Interest I-LTXX............................................................................58
REMIC I Regular Interest I-LTZZ............................................................................58
REMIC I Regular Interest I-LT1A............................................................................58
REMIC I Regular Interest I-LT1B............................................................................58
REMIC I Regular Interest I-LT2A............................................................................59
REMIC I Regular Interest I-LT2B............................................................................59
REMIC I Regular Interest I-LT2A............................................................................59
REMIC I Regular Interest I-LT2B............................................................................59
REMIC I Remittance Rate....................................................................................59
REMIC I Sub WAC Allocation Percentage......................................................................59
REMIC I Subordinated Balance Ratio.........................................................................60
REMIC I Required Overcollateralization Amount..............................................................60
REMIC II...................................................................................................60
REMIC II Certificate.......................................................................................60
REMIC II Certificateholder.................................................................................60
REMIC Provisions...........................................................................................60
Remittance Report..........................................................................................60
Rents from Real Property...................................................................................60
REO Account................................................................................................60
REO Disposition............................................................................................60
REO Imputed Interest.......................................................................................61
REO Principal Amortization.................................................................................61
REO Property...............................................................................................61
Required Overcollateralization Amount......................................................................61
Reserve Fund...............................................................................................61
Reserve Interest Rate......................................................................................61
Residential Dwelling.......................................................................................61
Residual Certificate.......................................................................................62
Residual Interest..........................................................................................62
Responsible Officer........................................................................................62
Rule 144A..................................................................................................62
S&P........................................................................................................62
Scheduled Principal Balance................................................................................62
Securities Act.............................................................................................62
Securities Administrator`..................................................................................62
- 6 -
Seller.....................................................................................................62
Senior Interest Distribution Amount........................................................................63
Servicer...................................................................................................63
Servicer Event of Default..................................................................................63
Servicer Remittance Date...................................................................................63
Servicer Report............................................................................................63
Servicing Advances.........................................................................................63
Servicing Fee..............................................................................................63
Servicing Fee Rate.........................................................................................63
Servicing Officer..........................................................................................64
Single Certificate.........................................................................................64
Startup Day................................................................................................64
Stated Principal Balance...................................................................................64
Stepdown Date..............................................................................................65
Subordinate Certificates...................................................................................65
Subsequent Recoveries......................................................................................65
Sub-Servicer...............................................................................................65
Sub-Servicing Agreement....................................................................................65
Substitution Shortfall Amount..............................................................................65
Tax Returns................................................................................................65
Telerate Page 3750.........................................................................................65
Termination Price..........................................................................................65
Transfer...................................................................................................66
Transferee.................................................................................................66
Transferor.................................................................................................66
Trigger Event..............................................................................................66
Trust......................................................................................................66
Trust Fund.................................................................................................66
Trust REMIC................................................................................................66
Trustee....................................................................................................66
Uncertificated Balance.....................................................................................66
Uncertificated Interest....................................................................................67
Uninsured Cause............................................................................................67
United States Person.......................................................................................67
Value......................................................................................................67
Voting Rights..............................................................................................68
Wells Fargo................................................................................................68
Section 1.02. Allocation of Certain Interest Shortfalls.................................................68
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES 70
Section 2.01. Conveyance of the Mortgage Loans..........................................................70
Section 2.02. Acceptance of REMIC I by Trustee..........................................................71
Section 2.03. Repurchase or Substitution of Mortgage Loans..............................................71
Section 2.04. Representations and Warranties of the Master Servicer.....................................74
Section 2.05. Representations, Warranties and Covenants of the Servicer.................................75
- 7 -
Section 2.06. Issuance of the REMIC I Regular Interests and the Class R-I Interest......................77
Section 2.07. Conveyance of the REMIC I Regular Interests; Acceptance of REMIC I by the Trustee.........77
Section 2.08. Issuance of Class R Certificates..........................................................78
Section 2.09. Establishment of the Trust................................................................78
ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS; ACCOUNTS 79
Section 3.01. The Servicer to Act as a Servicer.........................................................79
Section 3.02. Sub-Servicing Agreements Between the Servicer and Sub-Servicers...........................81
Section 3.03. Successor Sub-Servicers...................................................................82
Section 3.04. No Contractual Relationship Between Sub-Servicer, Trustee or the Certificateholders.......82
Section 3.05. Assumption or Termination of Sub-Servicing Agreement by Successor Servicer................82
Section 3.06. Collection of Certain Mortgage Loan Payments..............................................83
Section 3.07. Collection of Taxes, Assessments and Similar Items; Servicing Accounts....................83
Section 3.08. Collection Account and Distribution Account...............................................84
Section 3.09. Withdrawals from the Collection Account and Distribution Account..........................86
Section 3.10. Investment of Funds in the Investment Accounts............................................88
Section 3.11. Maintenance of Hazard Insurance, Errors and Omissions and Fidelity
Coverage and Primary Mortgage Insurance...................................................89
Section 3.12. Enforcement of Due-on-Sale Clauses; Assumption Agreements.................................91
Section 3.13. Realization Upon Defaulted Mortgage Loans.................................................93
Section 3.14. Trustee to Cooperate; Release of Mortgage Files...........................................95
Section 3.15. Servicing Compensation....................................................................96
Section 3.16. Collection Account Statements.............................................................96
Section 3.17. Statement as to Compliance................................................................97
Section 3.18. Independent Public Accountants' Servicing Report..........................................97
Section 3.19. Annual Certification......................................................................97
Section 3.20. Access to Certain Documentation...........................................................98
Section 3.21. Title, Management and Disposition of REO Property.........................................99
Section 3.22. Obligations of the Servicer in Respect of Prepayment Interest Shortfalls;
Relief Act Interest Shortfalls...........................................................102
Section 3.23. Obligations of the Servicer in Respect of Mortgage Rates and Monthly Payments...........102
Section 3.24. Reserve Fund.............................................................................102
Section 3.25. Advance Facility.........................................................................104
Section 3.26. The Servicer Indemnification.............................................................106
ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF THE MORTGAGE LOANS BY THE MASTER SERVICER 107
Section 4.01. Master Servicer..........................................................................107
Section 4.02. REMIC-Related Covenants..................................................................108
Section 4.03. Monitoring of Servicer...................................................................108
- 8 -
Section 4.04. Fidelity Bond............................................................................109
Section 4.05. Power to Act; Procedures.................................................................109
Section 4.06. Due-on-Sale Clauses; Assumption Agreements...............................................110
Section 4.07. Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee.....110
Section 4.08. Standard Hazard Insurance and Flood Insurance Policies...................................111
Section 4.09. Presentment of Claims and Collection of Proceeds.........................................111
Section 4.10. Maintenance of Primary Mortgage Insurance Policies.......................................111
Section 4.11. Trustee to Retain Possession of Certain Insurance Policies and Documents.................112
Section 4.12. Realization Upon Defaulted Mortgage Loans................................................112
Section 4.13. Compensation for the Master Servicer.....................................................112
Section 4.14. REO Property.............................................................................113
Section 4.15. Annual Officer's Certificate as to Compliance............................................113
Section 4.16. Annual Independent Accountant's Servicing Report.........................................114
Section 4.17. UCC......................................................................................114
Section 4.18. Obligation of the Master Servicer in Respect of Prepayment Interest Shortfalls...........114
ARTICLE V PAYMENTS TO CERTIFICATEHOLDERS 116
Section 5.01. Distributions............................................................................116
Section 5.02. Statements to Certificateholders.........................................................129
Section 5.03. Servicer Reports; P&I Advances...........................................................132
Section 5.04. Allocation of Realized Losses............................................................134
Section 5.05. Compliance with Withholding Requirements.................................................136
Section 5.06. Reports Filed with Securities and Exchange Commission....................................136
ARTICLE VI THE CERTIFICATES 138
Section 6.01. The Certificates.........................................................................138
Section 6.02. Registration of Transfer and Exchange of Certificates....................................140
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates........................................145
Section 6.04. Persons Deemed Owners....................................................................146
Section 6.05. Certain Available Information............................................................146
ARTICLE VII THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER 147
Section 7.01. Liability of the Depositor, the Servicer and the Master Servicer.........................147
Section 7.02. Merger or Consolidation of the Depositor, the Servicer or the Master Servicer............147
Section 7.03. Limitation on Liability of the Depositor, the Servicer, the Master Servicer and Others...147
Section 7.04. Limitation on Resignation of the Servicer................................................148
Section 7.05. Limitation on Resignation of the Master Servicer.........................................149
Section 7.06. Assignment of Master Servicing...........................................................149
- 9 -
Section 7.07. Rights of the Depositor in Respect of the Servicer and the Master Servicer...............150
ARTICLE VIII DEFAULT 152
Section 8.01. Servicer Events of Default...............................................................152
Section 8.02. Master Servicer to Act; Appointment of Successor.........................................155
Section 8.03. Notification to Certificateholders.......................................................158
Section 8.04. Waiver of Servicer Events of Default.....................................................158
ARTICLE IX CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR 159
Section 9.01. Duties of Trustee and Securities Administrator...........................................159
Section 9.02. Certain Matters Affecting Trustee and Securities Administrator...........................160
Section 9.03. Trustee and Securities Administrator not Liable for Certificates or Mortgage Loans.......162
Section 9.04. Trustee and Securities Administrator May Own Certificates................................162
Section 9.05. Fees and Expenses of Trustee and Securities Administrator................................162
Section 9.06. Eligibility Requirements for Trustee and Securities Administrator........................163
Section 9.07. Resignation and Removal of Trustee and Securities Administrator..........................164
Section 9.08. Successor Trustee or Securities Administrator............................................165
Section 9.09. Merger or Consolidation of Trustee or Securities Administrator...........................165
Section 9.10. Appointment of Co-Trustee or Separate Trustee............................................166
Section 9.11. Appointment of Office or Agency..........................................................166
Section 9.12. Representations and Warranties...........................................................167
ARTICLE X TERMINATION 168
Section 10.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans.........................168
Section 10.02. Additional Termination Requirements......................................................170
ARTICLE XI REMIC PROVISIONS 171
Section 11.01. REMIC Administration.....................................................................171
Section 11.02. Prohibited Transactions and Activities...................................................173
Section 11.03. Indemnification..........................................................................174
ARTICLE XII MISCELLANEOUS PROVISIONS 175
Section 12.01. Amendment................................................................................175
Section 12.02. Recordation of Agreement; Counterparts...................................................176
Section 12.03. Limitation on Rights of Certificateholders...............................................176
Section 12.04. Governing Law............................................................................177
Section 12.05. Notices..................................................................................177
Section 12.06. Severability of Provisions...............................................................178
Section 12.07. Notice to Rating Agencies................................................................178
Section 12.08. Article and Section References...........................................................179
- 10 -
Section 12.09. Grant of Security Interest...............................................................179
Section 12.10. Survival of Indemnification. ............................................................179
Section 12.11. Fremont Servicing Agreement. ............................................................179
EXHIBITS
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class M Certificate
Exhibit A-3 Form of Class B Certificate
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
Exhibit D Form of Power of Attorney
Schedule 1 Mortgage Loan Schedule
Schedule 2 Prepayment Charge Schedule
Schedule 3 [Reserved]
Schedule 4 Standard File Layout - Delinquency Reporting
Schedule 5 Standard File Layout - Scheduled/Scheduled
Schedule 6 Mortgage Loan Schedule for the September 1, 2004 Servicing
Transfer Date
Schedule 7 Mortgage Loan Schedule for the October 1, 2004 Servicing
Transfer Date
- 11 -
This Pooling and Servicing Agreement, is dated and effective
as of August 1, 2004, among ACE SECURITIES CORP., as Depositor, LITTON LOAN
SERVICING LP, as Servicer, WELLS FARGO BANK, N.A., as Master Servicer and
Securities Administrator and HSBC BANK USA, NATIONAL ASSOCIATION, 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) $ 501,840,565.13 August 25, 2034
I-LTA1A Variable(2) $ 1,608,305.00 August 25, 2034
I-LTA1B Variable(2) $ 1,608,305.00 August 25, 2034
I-LTA2A Variable(2) $ 578,135.00 August 25, 2034
I-LTA2B Variable(2) $ 185,530.00 August 25, 2034
I-LTA2C Variable(2) $ 167,595.00 August 25, 2034
I-LTM1 Variable(2) $ 317,490.00 August 25, 2034
I-LTM2 Variable(2) $ 256,040.00 August 25, 2034
I-LTM3 Variable(2) $ 76,810.00 August 25, 2034
I-LTM4 Variable(2) $ 64,010.00 August 25, 2034
I-LTM5 Variable(2) $ 51,210.00 August 25, 2034
I-LTM6 Variable(2) $ 51,210.00 August 25, 2034
I-LTB Variable(2) $ 76,810.00 August 25, 2034
I-LTZZ Variable(2) $ 5,200,194.19 August 25, 2034
I-LTP Variable(2) $ 100.00 August 25, 2034
I-LT1A Variable(2) $ 7,545.08 August 25, 2034
I-LT1B Variable(2) $ 39,711.19 August 25, 2034
I-LT1C Variable(2) $ 7,545.13 August 25, 2034
I-LT2A Variable(2) $ 39,711.23 August 25, 2034
I-LT2B Variable(2) $ 4,368.83 August 25, 2034
I-LT2C Variable(2) $ 22,994.03 August 25, 2034
I-LTXX Variable(2) $ 511,960,333.83 August 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
Certificate Principal Latest Possible
Designation Pass Through Rate Balance Maturity Date (1)
----------- ----------------- ------- -----------------
Class A-1A Variable(2) $321,661,000 August 25, 2034
Class A-1B Variable(2) $321,661,000 August 25, 2034
Class A-2A Variable(2) $115,627,000 August 25, 2034
Class A-2B Variable(2) $ 37,106,000 August 25, 2034
Class A-2C Variable(2) $ 33,519,000 August 25, 2034
Class M-1 Variable(2) $ 63,498,000 August 25, 2034
Class M-2 Variable(2) $ 51,208,000 August 25, 2034
Class M-3 Variable(2) $ 15,362,000 August 25, 2034
Class M-4 Variable(2) $ 12,802,000 August 25, 2034
Class M-5 Variable(2) $ 10,242,000 August 25, 2034
Class M-6 Variable(2) $ 10,242,000 August 25, 2034
Class B Variable(2) $ 15,362,000 August 25, 2034
Class P N/A(3) $ 100 August 25, 2034
Class CE N/A(4) $ 15,874,419 August 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 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.
As of the Cut-off Date, the Group IA Mortgage Loans had an aggregate
Scheduled Principal Balance equal to approximately $397,111,887.00, the Group IB
Mortgage Loans had an aggregate Scheduled Principal Balance equal to
approximately $397,112,322.00 and the Group II Mortgage Loans had an aggregate
Scheduled Principal Balance equal to approximately $229,940,309.00.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Master Servicer, the Securities Administrator and
the Trustee agree as follows:
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 4.18 of this Agreement or
pursuant to the Fremont 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.
"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 and
(ii) the Master Servicing Fee.
"Administration Fee Rate": The sum of (i) the Servicing Fee
Rate and (ii) the Master Servicer Fee Rate.
"Advance Facility ": As defined in Section 3.25(a).
"Advance Facility Notice ": As defined in Section 3.25(b).
"Advance Financing Person ": As defined in Section 3.25(a).
"Advance Reimbursement Amounts ": As defined in Section
3.25(b).
"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.
"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 the Servicer or the Master
Servicer in respect of Prepayment Interest Shortfalls for such Distribution Date
pursuant to Section 3.22 or Section 4.18 of this Agreement or pursuant to the
Fremont Servicing Agreement, as applicable, (c) the aggregate of any P&I
Advances for such Distribution Date made by the Servicer pursuant to Section
5.03 of this Agreement or pursuant to the Fremont 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, the Servicer, the Trustee, the
Master Servicer, the Securities Administrator or the Custodian pursuant to
Section 3.09 or 9.05 of this Agreement, pursuant to the Fremont Servicing
Agreement or otherwise payable in respect of Extraordinary Trust Fund Expenses,
(v) amounts deposited in the Collection Account or the Distribution Account in
error, (vi) the amount of any Prepayment Charges collected by the Servicer in
connection with the Principal Prepayment of any of the Mortgage Loans and (vii)
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,
Maryland, Texas, 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-1A Certificates, the Mezzanine Certificates and the Class B
Certificates, (ii) the Cap Contract between the Trustee
and the counterparty thereunder, for the benefit of the Class A-1B Certificates,
the Mezzanine Certificates and the Class B Certificates and (iii) 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-FM2, Class A-1A, Class A-1B, Class A-2A,
Class A-2B, Class A-2C, 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-1A
Certificates and, for purposes of the definition of "Marker Rate", REMIC I
Regular Interest I-LTA1A 0.30% in the case of each Distribution Date through and
including the Optional Termination Date and 0.60% in the case of each
Distribution Date thereafter.
With respect to the Class A-1B Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA1B, 0.30% in
the case of each Distribution Date through and including the Optional
Termination Date and 0.60% 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 0.16% in
the case of each Distribution Date through and including the Optional
Termination Date and 0.32% 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 0.31% in
the case of each Distribution Date through and including the Optional
Termination Date and 0.62% in the case of each Distribution Date thereafter.
With respect to the Class A-2C Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA2C 0.48% in
the case of each Distribution Date through and including the Optional
Termination Date and 0.96% 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, 0.65% in
the case of each Distribution Date through and including the Optional
Termination Date and 0.975% 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, 1.20% in
the case of each Distribution Date through and including the Optional
Termination Date and 1.80% 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, 1.35% 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, 2.130% in
the case of each Distribution Date through and including the Optional
Termination Date and 3.195% 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, 3.50% 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.
With respect to the Class B Certificates and, for purposes of
the definition of "Marker Rate", REMIC I Regular Interest I-LTB, 3.50% 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, the 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 conclusively rely upon a certificate of the
Depositor, the Seller, the Master Servicer, the Securities Administrator or the
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 any Subsequent Recoveries added to the Certificate Principal
Balance of such Certificate pursuant to Section 5.04, 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-1A, Class A-1B or Class A-2
Certificate.
"Class A Principal Distribution Amount": The Class A Principal
Distribution Amount is an amount equal to the sum of: (i) the Class A-1A
Principal Distribution Amount, (ii) the Class A-1B Principal Distribution Amount
and (iii) the Class A-2 Principal Distribution Amount.
"Class A-1 Certificate": Any Class A-1A Certificate or Class
A-1B Certificate.
"Class A-1A Allocation Percentage": With respect to any
Distribution Date is the percentage equivalent of a fraction, the numerator of
which is (x) the Group IA Principal Remittance Amount for such Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.
"Class A-1A Certificate": Any one of the Class A-1A
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-1A 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 Certificate Principal Balance of the Class A-1A Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
62.00% and (ii) the aggregate Stated Principal Balance of the Group IA 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 IA 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 IA Mortgage
Loans as of the Cut-off Date.
"Class A-1B Allocation Percentage": With respect to any
Distribution Date is the percentage equivalent of a fraction, the numerator of
which is (x) the Group IB Principal Remittance Amount for such Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.
"Class A-1B Certificate": Any one of the Class A-1B
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-1B 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 Certificate Principal Balance of the
Class A-1B Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 62.00% and (ii) the aggregate Stated Principal
Balance of the Group IB 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 IB 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 IB 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, Class A-2B or Class
A-2C Certificate.
"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 aggregate Certificate Principal Balance of
the Class A-2 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 62.00% 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 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-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-2C Certificate": Any one of the Class A-2C
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) 96.90% 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.
"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) 74.40% 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) 84.40% 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-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) 87.40% 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) 89.90% 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-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) 91.90% 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 III 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 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)
93.90% 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": August 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 the Servicer pursuant to
Section 3.08(a), which shall be entitled "Litton Loan Servicing LP, as Servicer
for HSBC Bank USA, National Association as Trustee, in trust for the registered
holders of ACE Securities Corp., Home Equity Loan Trust, Series 2004-FM2, Asset
Backed Pass-Through Certificates" or by Fremont in accordance with the Fremont
Servicing Agreement. The Collection Account 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-FM2, 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-FM2), and for all other
purposes is located at Wells Fargo Bank, N.A., P.O. Box 98, Columbia, Maryland
21045, Attention: Corporate Trust (ACE 2004-FM2) (or for overnight deliveries,
at 9062 Old Annapolis Road, Columbia, Maryland 21046, Attention: Corporate Trust
(ACE 2004-FM2)).
"Corresponding Certificate": With respect to each REMIC I
Regular Interest, as follows:
REMIC I Regular Interest Class
------------------------ -----
REMIC I Regular Interest I-LTA1A A-1A
REMIC I Regular Interest I-LTA1B A-1B
REMIC I Regular Interest I-LTA2A A-2A
REMIC I Regular Interest I-LTA2B A-2B
REMIC I Regular Interest I-LTA2C A-2C
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.
"Custodial Agreement": The Custodial Agreement dated as of
August 1, 2004, among the Trustee, the Custodian and the Servicer 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.
"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, August 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 rated at least A-1+ by S&P, F-1+
by Fitch 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) the Servicer, the 10th day of the calendar month in which such
Distribution Date occurs, or if such 10th day is not a Business Day, the
Business Day immediately preceding such 10th day (ii) Fremont, as set forth in
the Fremont 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 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, N.A., in trust for
registered holders of ACE Securities Corp. Home Equity Loan Trust, Series
2004-FM2". 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.
"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 September 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 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 pursuant to the
Fremont 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.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Maturity Date": The Distribution Date occurring in
August 2034.
"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 Servicer pursuant to or as
contemplated by Section 2.03, 3.13(c) or Section 10.01), a determination made by
the 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.
"Fremont": Fremont Investment & Loan, in its capacity as
interim servicer of the Mortgage Loans from Closing Date up to the related
Servicing Transfer Date.
"Fremont Assignment Agreement": The Assignment, Assumption and
Recognition Agreement, dated as of August 30, 2004, by and among the Depositor,
the Seller and Fremont, evidencing the assignment of the Fremont Servicing
Agreement to the Depositor.
"Fremont Servicing Agreement": The Master Mortgage Loan and
Interim Servicing Agreement dated as of May 1, 2004, by and between the Seller
and the Fremont, as modified by the Fremont Assignment Agreement.
"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 IA 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 IA
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, the Servicer or
Fremont pursuant to this Agreement, the Fremont Servicing Agreement or the
Custodial Agreement).
"Group IA Mortgage Loans": Those Mortgage Loans identified on
the Mortgage Loan Schedule as Group IA Mortgage Loans.
"Group IA 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 IA 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 IA 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 IA Mortgage Loans, net in
each case of payments or reimbursements to the Trustee, the Custodian, the
Master Servicer, the Securities Administrator and the Servicer and (iv) the
Class A-1A Allocation Percentage of the amount of any Overcollateralization
Increase Amount for such Distribution Date MINUS (v) the Class A-1A
Allocation Percentage of the amount of any Overcollateralization Reduction
Amount for such Distribution Date.
"Group IA 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 IA Principal Distribution Amount.
"Group IB 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 IB
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, the Servicer or
Fremont pursuant to this Agreement, the Fremont Servicing Agreement or the
Custodial Agreement).
"Group IB Mortgage Loans": Those Mortgage Loans identified on
the Mortgage Loan Schedule as Group IB Mortgage Loans.
"Group IB 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 IB 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 IB 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 IB Mortgage Loans, net in
each case of payments or reimbursements to the Trustee, the Custodian, the
Master Servicer, the Securities Administrator and the Servicer and (iv) the
Class A-1B Allocation Percentage of the amount of any Overcollateralization
Increase Amount for such Distribution Date MINUS (v) the Class A-1B Allocation
Percentage of the amount of any Overcollateralization Reduction Amount for such
Distribution Date.
"Group IB 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 IB 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, the Servicer or
Fremont pursuant to this Agreement, the Fremont 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 Servicer 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 Servicer, 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 Servicer, 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 Servicer, the
Seller, the Originator or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent contractor" with respect to REMIC 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 the 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.
"Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, the Class B Certificates, REMIC I
Regular Interest I-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I Regular
Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest
I-LTA2C, 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: (i) the Group IA Interest Remittance Amount, (ii) the Group IB
Interest Remittance Amount and (iii) the Group II Interest Remittance Amount.
"Last Scheduled Distribution Date": August 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 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 Fremont Servicing Agreement or (iv)
any Subsequent Recoveries.
"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-LTA1A, REMIC I Regular Interest I-LTA1B,
REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I
Regular Interest I-LTA2C, 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 related Net WAC Pass-Through Rate for the
corresponding Certificate 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 superseded 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.
"Master Servicer Event of Default": One or more of the events
described in Section 8.01(b).
"Master Servicer Fee Rate": 0.005% 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-LTA1A, REMIC I Regular Interest I-LTA1B,
REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I
Regular Interest I-LTA2C, 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 related Net WAC
Pass-Through Rate for the corresponding Certificate 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.
"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 Servicer pursuant to Section 3.01 of this Agreement
or Fremont pursuant to the Fremont 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 or second lien on, or first or second priority security
interest in, a Mortgaged Property securing a Mortgage Note, including all riders
thereto.
"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 August 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 IA
Mortgage Loans, the Group IB 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 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;
(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;
(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 FICO score at origination.
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, including all riders
thereto.
"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 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-1A
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 IA 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-1B 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 IB
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-LT2B, 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 of
days elapsed in the related Interest Accrual Period) the
REMIC I Remittance Rate on REMIC I Regular Interest I-LT3B, 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 IA Mortgage
Loans, (b) and 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 IB Mortgage Loans (c) REMIC I Regular Interest I-LT3A, 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 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 IA Mortgage
Loans, (b) and 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 IB Mortgage Loans and (c) REMIC I Regular Interest I-LT3A, 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 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 without taking into account
the applicable Net WAC Pass-Through Rate.
"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 Servicer or Fremont or a successor to
the Servicer or Fremont (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 Fremont
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 or Fremont,
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 Fremont 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.
"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-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A,
REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, 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 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-1A Certificates and, for purposes of the definition of "Marker Rate", REMIC I
Regular Interest I-LTA1A, a per annum rate equal to One-Month LIBOR plus the
related Certificate Margin.
With respect to the Class A-1B Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA1B, 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-2C Certificates and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTA2C, 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.
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.
"Originator": Fremont Investment & Loan, a California
Corporation.
"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 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 Servicer in respect of any Determination Date pursuant to
Section 5.03 of this Agreement,
an Advance Financing Person pursuant to Section 3.25 of this Agreement or in
respect of any Distribution Date by a successor Servicer (including the Master
Servicer) pursuant to Section 8.02 of this Agreement or by Fremont pursuant to
the Fremont 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 (xv) below, and the denominator of which is the aggregate Uncertificated
Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1A,
REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I
Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, 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;
(ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA1A minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA1A;
(iii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA1B minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA1B;
(iv) 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;
(v) 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;
(vi) REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA2C minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA2C;
(vii) 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;
(viii) 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;
(ix) 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;
(x) 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;
(xi) 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;
(xii) 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;
(xiii) 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;
(xiv) 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
(xv) 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, the Servicer, the Master
Servicer, the Trustee or any of their respective Affiliates:
(xvi) 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;
(xvii) (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 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, Fitch 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;
(xviii) 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, F-1 or higher by Fitch 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;
(xix) 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;
(xx) 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;
(xxi) units of money market funds that have been rated "AAA"
by Fitch (if rated by Fitch), "AAA" 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
(xxii) 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;
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 1.72727% 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 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:
(xxiii) the Mortgage Loan identifying number;
(xxiv) a code indicating the type of Prepayment Charge;
(xxv) the date on which the first Monthly Payment was due on
the related Mortgage Loan;
(xxvi) the term of the related Prepayment Charge;
(xxvii) the original Stated Principal Balance of the related
Mortgage Loan; and
(xxviii) the Stated Principal Balance of the related Mortgage
Loan as of the Cut-off Date.
"Prepayment Interest Excess": With respect to each 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 fifteenth day 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.
"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 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 Servicer, the Master Servicer and
Fremont in respect of any Prepayment Interest Shortfall are set forth in Section
3.22 and Section 4.18, respectively of this Agreement or the Fremont Servicing
Agreement.
"Prepayment Period": With respect to any Distribution Date and
(i) the Servicer, the calendar month prior to the month of such Distribution
Date and (ii) Fremont, the calendar month prior to the month of such
Distribution Date, pursuant to the Fremont servicing Agreement.
"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 IA Principal Distribution Amount, the
Group IB Principal Distribution Amount and the Group II Principal Distribution
Amount.
"Principal Remittance Amount": With respect to any
Distribution Date is the sum of the Group IA Principal Remittance Amount, the
Group IB Principal Distribution 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 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 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 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 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 the same lien priority on the
related Mortgaged Property as the Deleted Loan, (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 Servicer to the Master Servicer (in substantially the
form of Schedule 4 hereto) 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 Servicer or Fremont with
respect to such Mortgage Loan pursuant to Section 3.09(a)(iii) of this Agreement
or pursuant to the Fremont Servicing Agreement, as applicable.
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 Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.09(a)(ix) and Section 3.13(b) of
this 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 Servicer or Fremont in respect of
such REO Property or the related Mortgage Loan for which the Servicer or Fremont
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 Fremont
Servicing Agreement, as applicable, 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 Fremont
Servicing Agreement, as applicable.
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 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 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 (including any
security interest created thereby), the Fremont Assignment Agreement and the
Fremont Servicing Agreement 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-LTA1A, REMIC I
Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I Regular
Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, 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-LTA1A, REMIC I Regular Interest I-LTA1B,
REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I
Regular Interest I-LTA2C, 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-LTA1A,
REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I
Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C, 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-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest
I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest I-LTA2C,
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-LTB1, REMIC I Regular Interest I-LTB2, REMIC I Regular Interest I-LTB3 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 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-LTA1A": 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-LTA1A
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-LTA1B": 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-LTA1B
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-LTA2C": 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-LTA2C
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 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.
"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 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-LT3A": 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-LT3A
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-LT3B": 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-LT3B
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 Remittance Rate": With respect to REMIC I Regular
Interest I-LTAA, REMIC I Regular Interest I-LTA1A, REMIC I Regular Interest
I-LTA1B, REMIC I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B,
REMIC I Regular Interest I-LTA2C, 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 IA Mortgage Loans. With respect to REMIC I Regular Interest
I-LT2B, the weighted average of the Expense Adjusted Mortgage Rates of the Group
IB Mortgage Loans. With respect to REMIC I Regular Interest I-LT3B, 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, REMIC I Regular Interest I-LT3A, REMIC I Regular
Interest I-LT3B 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 IA Mortgage Loans, Group IB 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 2.07, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
"REMIC II Certificate": Any Regular Certificate (other than
the Class M-6, Class B, Class CE and Class P Certificates) or Class R
Certificate.
"REMIC II Certificateholder": The Holder of any REMIC II
Certificate.
"REMIC II Regular Interest": Any Regular 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.
"REMIC Regular Interest": Any REMIC I Regular Interest.
"REMIC Remittance Rate": The REMIC I Remittance Rate.
"Remittance Report": A report by the Servicer pursuant to
Section 5.03(a).
"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 Servicer in respect of an REO Property pursuant to
Section 3.21 of this Agreement or pursuant to the Fremont Servicing Agreement,
as applicable.
"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 Servicer
pursuant to Section 3.21(d) of this Agreement or Fremont pursuant to the Fremont
Servicing Agreement, as applicable, 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 Trustee
or its nominee or Fremont 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 Fremont Servicing Agreement.
"Required Overcollateralization Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, the product of (A) 1.55% and
(B) the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, (ii) on or after the Stepdown Date provided a Trigger Event is not in
effect, the greater of (x) 3.10% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period and (y) an
amount equal to the product of (A) 0.50% and (B) the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date, and (iii) on or after the Stepdown
Date and a Trigger Event is in effect, the Required Overcollateralization Amount
for the immediately preceding Distribution 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 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 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": DB Structured Products, Inc. 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": Litton Loan Servicing LP, or any successor thereto
appointed hereunder in connection with the servicing and administration of the
Mortgage Loans.
"Servicer Event of Default": With respect to the Servicer, one
or more of the events described in Section 8.01(a). With respect to Fremont, the
events of default described in the Fremont Servicing Agreement.
"Servicer Remittance Date": With respect to any Distribution
Date and (i) the Servicer, by 3:00 p.m. New York time on the second Business Day
immediately preceding the related Distribution Date or (ii) Fremont, the 10th
day of the month in which such Distribution Date occurs or if such 10th day is
not a Business Day, the first Business Day immediately following such tenth 10th
day.
"Servicer Report": A report (substantially in the form of
Schedule 5 hereto) or otherwise in form and substance acceptable to the Master
Servicer and Securities Administrator on an electronic data file or tape
prepared by the Servicer pursuant to Section 5.03(a) of this Agreement or by
Fremont pursuant to the Fremont Servicing Agreement, as applicable, with such
additions, deletions and modifications as agreed to by the Master Servicer, the
Securities Administrator and the Servicer and Fremont.
"Servicing Advances": The customary and reasonable
"out-of-pocket" costs and expenses incurred by the Servicer or Fremont in
connection with a default, delinquency or other unanticipated event by the
Servicer or Fremont 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 pursuant to the Fremont Servicing Agreement, as applicable.
Servicing Advances also include any reasonable "out-of-pocket" cost and expenses
(including legal fees) incurred by the Servicer or Fremont 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 under the Fremont Servicing Agreement. Neither the
Servicer nor Fremont shall 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": 0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in,
or responsible for, the administration and servicing of Mortgage Loans, whose
name and specimen signature appear on a list of Servicing Officers furnished by
the Servicer to the Trustee, the Master Servicer, the Securities Administrator
and the Depositor on the Closing Date, as such list may from time to time be
amended.
"Servicing Rights Pledgee ": One or more lenders, selected by
the Servicer, to which the Servicer will pledge and assign all of its right,
title and interest in, to and under this Agreement, including Wachovia Bank,
National Association, as the representative of certain lenders.
"Servicing Transfer Date": With respect to the Mortgage Loans
listed on Schedule 6 attached hereto, September 1, 2004 and with respect to the
Mortgage Loans listed on Schedule 7 attached hereto, October 1, 2004.
"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 Servicer or Fremont or a successor to the Servicer or Fremont
(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 Servicer or
Fremont as recoveries of principal in accordance with the provisions of Section
3.13 or pursuant to the Fremont Servicing Agreement, 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 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 Servicer or Fremont or a successor to the Servicer or Fremont
(including the Master Servicer) and distributed pursuant to Section 5.01 of this
Agreement or pursuant to the Fremont Servicing 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 September 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 38.00% 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 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, net of any amount
reimbursable to the Servicer related to such Mortgage Loan or REO Property.
"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 Fremont
Servicing Agreement, as applicable.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02 of this 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.
"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.
"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 38.00% 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
September 2007 to August 2008 2.75%, plus 1/12 of 1.50% for each month thereafter
September 2008 to August 2009 4.25%, plus 1/12 of 1.25% for each month thereafter
September 2009 to August 2010 5.50%, plus 1/12 of 0.50% for each month thereafter
September 2010 and thereafter 6.00%
"Trust": ACE Securities Corp., Home Equity Loan Trust, Series
2004-FM2, 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, National Association a national
banking association, or its successor in interest, or any successor trustee
appointed as herein provided.
"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 4.18 of
this Agreement or pursuant to the Fremont Servicing Agreement, as applicable 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.
"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 the 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 the 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.
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
Servicer pursuant to Section 3.22 of this Agreement or by Fremont pursuant to
the Fremont Servicing Agreement or by the Master Servicer pursuant to Section
4.18 of this Agreement 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 Servicer pursuant
to Section 3.22 of this Agreement or the Master Servicer
pursuant to Section 4.18) 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 among REMIC I Regular Interest I-LTA1A,
REMIC I Regular Interest I-LTA1B, REMIC I Regular Interest
I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular
Interest I-LTA2C, 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 Servicer pursuant
to Section 3.22 of this Agreement or by Fremont pursuant to
the Fremont Servicing Agreement or by the Master Servicer
pursuant to Section 4.18 of this Agreement) 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 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, REMIC I
Regular Interest I-LT3A, REMIC I Regular Interest I-LT3B 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.
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
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 Servicer an
executed copy of the Mortgage Loan Purchase Agreement, the Fremont Assignment
Agreement and the Fremont 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 Servicer 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 4.11, 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 Originator to deliver
to the Servicer and Fremont 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. Neither the Servicer nor Fremont shall be responsible
for any custodian fees or other costs incurred in obtaining such documents and
the Depositor shall cause the Servicer and Fremont to be reimbursed for any such
costs the Servicer or Fremont may incur in connection with performing its
obligations under this Agreement or the Fremont Servicing Agreement, as
applicable.
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 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 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
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 Servicer for deposit in the Collection
Account and the Trustee, upon receipt of written certification from the 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 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.
The Trustee shall enforce the obligations of the Seller under
the Mortgage Loan Purchase Agreement to remedy any breach of a 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.
(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
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 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 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 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
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 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 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 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 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 the Servicer
or receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.05 which materially
and adversely affects the interests of the
Certificateholders in any Mortgage Loan or Prepayment Charge, the Servicer 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 the Servicer, 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 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 THE SERVICER.
The Servicer 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) The Servicer is a limited partnership duly formed, validly
existing and in good standing as a limited partnership under the laws
of the State of Delaware and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Servicer in any state in which a Mortgaged Property
is located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing
business laws of any such State, to the extent necessary to ensure its
ability to enforce each Mortgage Loan and to service the Mortgage
Loans in accordance with the terms of this Agreement;
(ii) The 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 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 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
Servicer, the servicing of the Mortgage Loans by the Servicer
hereunder, the consummation by the 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
Servicer and will not (A) result in a breach of any term or provision
of the limited partnership agreement of the 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 Servicer is a party or by which it may be bound, or any
statute, order or regulation applicable to the Servicer of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Servicer; and the 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 Servicer's knowledge,
would in the future materially and adversely affect, (x) the ability
of the Servicer to perform its obligations under this Agreement, (y)
the business, operations, financial condition, properties or assets of
the Servicer taken as a whole or (z) the legality, validity or
enforceability of this Agreement;
(iv) The 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 Servicer that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Servicer to
service the 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, the 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 Servicer 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 the Servicer of, or compliance by the
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;
(viii) The Servicer 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) The Servicer will not waive any Prepayment Charge 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 the Servicer set forth in Section 2.05(ix) above is breached, the
Servicer 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 the Servicer or receipt of notice
by the Servicer of such breach. Furthermore, notwithstanding any other
provisions of this Agreement, any payments made by the Servicer 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 the Servicer of a breach of any of the foregoing representations,
warranties and covenants which materially and adversely affects the value of any
Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the Trustee. Subject to Section 8.01, unless such breach shall not be
susceptible of cure within 90 days, the obligation of the Servicer set forth in
Section 2.03(e) to cure breaches shall constitute the sole remedy against the
Servicer 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 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.
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 Regular Certificates, shall be as set forth in
this Agreement. The Class R-II Interest and the Regular Certificates shall
constitute the entire beneficial ownership interest in REMIC II.
Section 2.08. ISSUANCE OF RESIDUAL 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-FM2" and does hereby appoint HSBC Bank USA, National
Association as Trustee in accordance with the provisions of this Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS; ACCOUNTS
Section 3.01. THE SERVICER TO ACT AS A SERVICER.
Prior to the related Servicing Transfer Date, the Mortgage Loans will be
serviced and administered by Fremont in accordance with the terms and provisions
of the Fremont Servicing Agreement. In addition, (i) in connection with the
September 2004 Distribution Date, Fremont will make all remittances and prepare
all reports required to be prepared with respect to the Mortgage Loans listed on
Schedule 6 attached hereto in accordance with the terms and provisions of the
Fremont Servicing Agreement and (ii) in connection with the October 2004
Distribution Date, Fremont will make all remittances and prepare all reports
required to be prepared with respect to the Mortgage Loans listed on Schedule 7
attached hereto in accordance with the terms and provisions of the Fremont
Servicing Agreement. On or after the related Servicing Transfer Date, the
Servicer shall service and administer the Mortgage Loans on behalf of the Trust
Fund and in the best interests of and for the benefit of the Certificateholders
(as determined by the Servicer in its reasonable judgment) in accordance with
the terms of this Agreement and the respective 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 the Servicer or any Affiliate of the Servicer
may have with the related Mortgagor;
(ii) the ownership of any Certificate by the Servicer or any Affiliate
of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or Servicing
Advances; or
(iv) the Servicer's right to receive compensation for its services
hereunder.
Notwithstanding anything to the contrary contained in this Agreement,
the Servicer shall have no obligations with respect to any Mortgage Loans
subject to this Agreement until from and after the related Servicing Transfer
Date.
To the extent consistent with the foregoing, the Servicer shall also
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes. Subject only to the above-described servicing standards (the
"Accepted Servicing Practices") and the terms of this Agreement and of the
respective Mortgage Loans, the Servicer shall have full power and authority, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer in its own name is hereby authorized
and empowered by the Trustee when the Servicer 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, and all other comparable instruments, with
respect to the 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. The
Servicer shall service and administer the 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. The Servicer 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 the Servicer, and furnish to
the Servicer a power of attorney in the form of Exhibit D hereto and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder and furnished to the Trustee by
the Servicer, and the Trustee shall not be liable for the actions of the
Servicer under such powers of attorney and shall be indemnified by the Servicer
for any cost, liability or expense incurred by the Trustee in connection with
the Servicer's use or misuse of any such power of attorney.
In accordance with Accepted Servicing Practices, the Servicer
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,
which Servicing Advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.07, and further as
provided in Section 3.09; provided, however, the Servicer shall only make such
Servicing Advance if the Mortgagor has not made such payment, if the failure to
make such Servicing Advance would result in the loss of the Mortgaged Property
due to a tax sale or foreclosure as result of a tax lien. Any cost incurred by
the Servicer in effecting the payment of taxes and assessments on a Mortgaged
Property shall not, for the purpose of calculating the Stated Principal Balance
of a Mortgage Loan or distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
The Servicer further is authorized and empowered by the
Trustee, on behalf of the Certificateholders and the Trustee, in its own name or
in the name of the Sub-Servicer, when the Servicer or the Sub-Servicer, as the
case may be, believes it is appropriate in its best judgment to register any
Mortgage Loan on the MERS(R) System, or cause the removal from the registration
of any Mortgage Loan on the MERS(R) System, to execute and deliver, on behalf of
the Trustee and the Certificateholders or any of them, any and all instruments
of assignment and other comparable instruments with respect to such assignment
or re-recording of a Mortgage in the name of MERS, solely as nominee for the
Trustee and its successors and assigns. Any reasonable expenses incurred in
connection with the actions described in the preceding sentence or as a result
of MERS discontinuing or becoming unable to continue operations in connection
with the MERS(R) System, shall be subject to withdrawal by the Servicer from the
Collection Account.
Notwithstanding anything in this Agreement to the contrary,
the Servicer may not make any future advances with respect to a Mortgage Loan
and the Servicer shall not permit any modification with respect to any 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 Mortgage Loan (unless, as provided in
Section 3.06, the Mortgagor is in default with respect to the 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.
Notwithstanding anything in this Agreement to the contrary, in
the event of a Principal Prepayment in full of a Mortgage Loan, the Servicer may
not waive any Prepayment Charge or portion thereof required by the terms of the
related Mortgage Note unless (i) the related Mortgage Loan is in default or
foreseeable default and such waiver (a) is standard and customary in servicing
mortgage loans similar to the Mortgage Loans and (b) the Servicer determines
that such waiver would maximize recovery of Liquidation Proceeds for such
Mortgage Loan, taking into account the value of such Prepayment Charge, (ii) (A)
the enforceability thereof is limited (1) by bankruptcy, insolvency, moratorium,
receivership, or other similar law relating to creditors' rights generally or
(2) due to acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or prohibited by
applicable law or (iii) the Servicer has not been provided with information
sufficient to enable it to collect the Prepayment Charge. If a Prepayment Charge
is waived as permitted by meeting the standard described in clause (iii) above,
then the Servicer shall enforce the obligation of the Seller to pay the amount
of such waived Prepayment Charge to the Servicer for deposit in the Collection
Account (to the extent paid by the Seller) for the benefit of the Holders of the
Class P Certificates.
Promptly upon the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of the covenant of the Servicer
set forth above which materially and adversely affects the interests of the
Holders of the Class P Certificates in any Prepayment Charge, the Servicer shall
promptly pay the amount of such waived Prepayment Charge (or such portion
thereof as had been waived), (the "Servicer Prepayment Charge Payment Amount")
for the benefit of the holders of the Class P Certificates by depositing such
amount into the Collection Account for distribution in accordance with the terms
of this Agreement. The foregoing shall not, however, limit any remedies
available to the Certificateholders, the Depositor or the Trustee on behalf of
the Trust Fund and for the benefit of the Certificateholders, pursuant to the
Mortgage Loan Purchase Agreement, respecting a breach of the representations,
warranties and covenants of the Seller contained in the Mortgage Loan Purchase
Agreement.
The Trustee, for the benefit of the Certificateholders, shall
enforce the obligations of the Seller under the Mortgage Loan Purchase
Agreement, including, without limitation, any obligation of the Seller to
purchase a Mortgage Loan on account of missing or defective documentation or on
account of a breach of a representation, warranty or covenant, as described in
Section 2.03(a).
Section 3.02. SUB-SERVICING AGREEMENTS BETWEEN THE SERVICER AND SUB-SERVICERS.
The Servicer may arrange for the subservicing of any 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 Mortgage Loans in a manner consistent with the
servicing arrangements contemplated hereunder. Notwithstanding the provisions of
any Sub-Servicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Servicer or a
Sub-Servicer or reference to actions taken through a Servicer or otherwise, the
Servicer shall remain obligated and liable to the Depositor, the Trustee and the
Certificateholders for the servicing and administration of the Mortgage Loans in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such 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 the Servicer alone
were servicing and administering the Mortgage Loans. Every Sub-Servicing
Agreement entered into by the Servicer 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 the Servicer with the same force and effect as if performed directly by the
Servicer.
For purposes of this Agreement, the Servicer shall be deemed
to have received any collections, recoveries or payments with respect to the
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 Servicer shall
be entitled to terminate any Sub-Servicing Agreement and to either itself
directly service the related 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 the successor Servicer (which may be the Trustee or
the Master Servicer) without fee, in accordance with the terms of this
Agreement, in the event that the Servicer (or any successor Servicer) shall, for
any reason, no longer be the Servicer (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 Mortgage Loans involving a Sub-Servicer shall be deemed
to be between the Sub-Servicer and the Servicer alone and the Master Servicer,
Trustee and the Certificateholders shall not be deemed 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 the Servicer
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
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer 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.
The Servicer shall, upon the reasonable request of the Master
Servicer, but at the expense of the Servicer, 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.
Section 3.06. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the 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 Mortgage Loans and held
for its own account. Consistent with the foregoing, the Servicer 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 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 Mortgage Loan for
purposes of any computation hereunder. Notwithstanding the foregoing, in the
event that any Mortgage Loan is in default or, in the judgment of the Servicer,
such default is reasonably foreseeable, the Servicer, 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 Mortgage Loan),
accept payment from the related Mortgagor of an amount less than the Stated
Principal Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor if in the Servicer'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).
Section 3.07. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS; SERVICING
ACCOUNTS.
To the extent the terms of a Mortgage provide for Escrow
Payments, the Servicer shall establish and maintain one or more accounts (the
"Servicing Accounts"), into which all collections from the 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. The Servicer 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 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 the Servicer out of related collections for any 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
the Servicer's obligations and responsibilities in respect of the Mortgage Loans
under this Agreement in accordance with
Article X. As part of its servicing duties, the Servicer 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, the Servicer shall not be
obligated to collect Escrow Payments if the related Mortgage Loan does not
require such payments but the Servicer shall nevertheless be obligated to make
Servicing Advances as provided in Section 3.01 and Section 3.11. In the event
the Servicer 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 does not provide for Escrow
Payments, the Servicer (i) shall determine whether any such payments are made by
the Mortgagor in a manner and at a time that is necessary to avoid the loss of
the Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien and (ii) shall ensure that all insurance required to be maintained on the
Mortgaged Property pursuant to this Agreement is maintained. If any such payment
has not been made and the Servicer receives notice of a tax lien with respect to
the Mortgage Loan being imposed, the Servicer 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. The
Servicer assumes full responsibility for the payment of all such bills and shall
effect payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make Servicing Advances to effect such payments subject to its
determination of recoverability.
Section 3.08. COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT.
(a) On behalf of the Trust Fund, the Servicer shall establish and
maintain one or more the "Collection Accounts", held in trust for the benefit of
the Trustee and the Certificateholders. On behalf of the Trust Fund, the
Servicer shall deposit or cause to be deposited in the 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:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other
than proceeds collected in respect of any particular REO
Property and all Subsequent Recoveries and amounts paid by
the Servicer in connection with a purchase of Mortgage Loans
and REO Properties pursuant to Section 9.01);
(iv) any amounts required to be deposited 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 the Servicer
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 the Servicer and all proceeds (net of amounts
payable or reimbursable to the Servicer, the Master
Servicer, the Trustee, the Custodian or the Securities
Administrator) of Mortgage Loans purchased in accordance
with Section 2.03, Section 3.13 or Section 10.01 or pursuant
to any other provision of this Agreement; and
(vii) any Prepayment Charges or amounts required to be
deposited by the Servicer in connection with a breach of its
obligations under Section 3.01 with respect to the waiver of
Prepayment Charges or any amounts paid by the Seller in
respect of any waived Prepayment Charges as described in
Section 3.01.
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 the
Servicer in the Collection Account. In the event the Servicer shall deposit in
the Collection Account any amount not required to be deposited therein, it may
at any time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding.
(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, the Servicer shall
deliver to the Securities Administrator in immediately available funds for
deposit in the Distribution Account on or before 3:00 p.m. 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 the Servicer in connection with
the Principal Prepayment of any of the Mortgage Loans (including any Servicer
Prepayment Charge Payment Amount) then on deposit in the Collection Account and
the amount of any funds reimbursable to an Advance Financing Person pursuant to
Section 3.25. If the balance on deposit in the Collection Account exceeds
$100,000 as of the commencement of business on any Business Day and the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account," the Servicer 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, the
Servicer, the Trustee, the Master Servicer, the Securities Administrator or the
Seller pursuant to Section 3.09 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 Servicer. The Servicer shall pay to the Securities
Administrator interest on any such late payment by the Servicer 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 the Servicer 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 the Servicer of any such interest, or the failure of the
Securities Administrator to notify the Servicer of such interest, shall not be
deemed an extension of time for payment or a waiver of any Event of Default by
the Servicer.
(c) Funds in the Collection Account and the Distribution Account may
be invested in Permitted Investments in accordance with the provisions set forth
in Section 3.10. The Servicer 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 Servicer and the Depositor of
the location of the Distribution Account when established and prior to any
change thereof.
(d) Funds held in the Collection Account at any time may be delivered
by the Servicer in immediately available funds to the Securities Administrator
for deposit in the Distribution Account. In the event the Servicer 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
Trustee 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 Trustee incur liability as a result of withdrawals from the
Distribution Account at the direction of the Servicer in accordance with the
immediately preceding sentence. In addition, the Servicer 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;
(iii) any amounts to be paid in connection with a purchase
of 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.
Section 3.09. WITHDRAWALS FROM THE COLLECTION ACCOUNT AND DISTRIBUTION
ACCOUNT.
(a) The Servicer shall, from time to time, make withdrawals from the
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 the Servicer
(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 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 the Servicer any
unpaid Servicing Fees and reimburse the Servicer 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 Mortgage
Loan;
(iv) to pay to the Servicer 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 Collection Account;
(v) to pay to the Servicer or the Seller, as the case may be,
with respect to each 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;
(vi) to reimburse the Servicer (including any successor
Servicer) for any P&I Advance or Servicing Advance previously
made by it which the Servicer 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 the Servicer or the Depositor for expenses
incurred by or reimbursable to the Servicer or the Depositor,
as the case may be, pursuant to Section 3.01 or Section 7.03;
(viii) to reimburse the Servicer 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 Mortgage Loan, including any expenses
arising out of the enforcement of the purchase obligation;
(ix) to pay, or to reimburse the Servicer for advances in
respect of, expenses incurred in connection with any Mortgage
Loan pursuant to Section 3.13(b); and
(x) to clear and terminate the Collection Account pursuant to
Section 10.01.
The Servicer 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), (viii) and (ix) above. The
Servicer shall provide written notification to the Trustee on or prior to the
next succeeding Servicer Remittance Date, upon making any withdrawals from the
Collection Account pursuant to subclauses (vi) and (vii) 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 and the Master Servicer
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)(vi);
(vii) to pay the Master Servicing Fee to the Master
Servicer; and
(viii) to clear and terminate the Distribution Account
pursuant to Section 10.01.
Section 3.10. INVESTMENT OF FUNDS IN THE INVESTMENT ACCOUNTS.
(a) The Servicer may direct, by means of written directions
(which may be standing directions), any depository institution maintaining the
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 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 the Servicer that
such Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in the
Investment Account.
(b) All income and gain realized from the investment of funds deposited
in the Collection Account, shall be for the benefit of the Servicer and shall be
subject to its withdrawal in accordance with Section 3.09. The Servicer shall
deposit in the Collection Account 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 included in 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, the Servicer shall cause to be maintained for each Mortgaged
Property 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 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. The Servicer 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 Mortgage Loan at the time it became an REO
Property. The Servicer 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 the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the property
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
Collection Account, subject to withdrawal pursuant to Section 3.09, if received
in respect of a 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 the Servicer 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 Mortgage Loan, notwithstanding that the
terms of such 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, the Servicer 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 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 the Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of B:VI 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 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 the Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property or REO Property a policy complying with 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 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, the Servicer 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) The Servicer 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
Mortgage Loans, unless the Servicer, has obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. The Servicer shall also maintain a fidelity bond
in the form and
amount that would meet the requirements of Fannie Mae or Freddie Mac, unless the
Servicer, has obtained a waiver of such requirements from Fannie Mae or Freddie
Mac. The Servicer shall be deemed to have complied with this provision if an
Affiliate of the Servicer, has such errors and omissions and fidelity bond
coverage and, by the terms of such insurance policy or fidelity bond, the
coverage afforded thereunder extends to the Servicer. 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.
(c) The Servicer 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 the Servicer would have been covered
thereunder. The Servicer shall use its best efforts to keep in force and effect
any applicable primary mortgage insurance policy and, to the extent that the
related Mortgage Loan requires the Mortgagor to maintain such insurance, any
other primary mortgage insurance applicable to any Mortgage Loan. Except as
required by applicable law or the related Mortgage Loan Documents, the Servicer
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.
Section 3.12. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS;
RIGHT TO PURCHASE DELINQUENT LOANS
The Servicer shall, to the extent it has knowledge of any
conveyance of any Mortgaged Property by any 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 Mortgage Loan under the "due-on-sale"
clause, if any, applicable thereto; provided, however, that the Servicer shall
not exercise any such rights if prohibited by law from doing so. If the Servicer
reasonably believes that 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, the Servicer shall make reasonable efforts to
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. The
Servicer 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 the
Servicer for mortgage loans similar to the Mortgage Loans. In connection with
any assumption or substitution, the Servicer 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. The Servicer 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 the Servicer in respect of an assumption or
substitution of liability agreement will be retained by the Servicer 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. The Servicer shall
notify
the Trustee (or the Custodian) that any such 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, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer may be restricted by law from preventing, for any
reason 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.
The Servicer (or an affiliate of the Servicer) may, at its
option, repurchase a Mortgage Loan or REO Property which becomes ninety (90) or
more days Delinquent or for which the Servicer has accepted a deed in lieu of
foreclosure. Prior to repurchase pursuant to this Section 3.12, the Servicer
shall be required to continue to make monthly advances pursuant to Section 3.12.
The Servicer shall purchase such (i) delinquent Mortgage Loan at a price equal
to the Principal Balance of the Mortgage Loan plus accrued interest thereon at
the Mortgage Interest Rate from the date to which interest has last been paid to
the Trust Fund to the date of purchase plus any unreimbursed Servicing Advances
and Advances or (ii) REO Property at its fair market value as determined in good
faith by the Servicer. Any such repurchase of a Mortgage Loan or REO Property
pursuant to this Section 3.12 shall be accomplished by delivery to the Trustee
for deposit in the Distribution Account of the amount of the purchase price. The
Trustee shall immediately effectuate the conveyance of such delinquent Mortgage
Loan or REO Property to the Servicer to the extent necessary, including the
prompt delivery of all documentation to the Servicer.
Notwithstanding the preceding paragraph, in the event that the
Servicer or an affiliate thereof is the owner of more than 50% of a class of
Certificates which is then currently in a first loss position and such party is
deemed to be the "Primary Beneficiary" as defined in FIN 40, the Servicer (or an
affiliate of the Servicer) may, at its option, repurchase a Mortgage Loan or REO
Property which becomes 120 or more days Delinquent or for which the Servicer has
accepted a deed in lieu of foreclosure, during the period commencing on the
first day of the calendar quarter succeeding the calendar quarter in which the
Initial Delinquency Date occurred with respect to such Mortgage Loan and ending
on the last Business Day of such calendar quarter. If the Servicer (or an
affiliate of the Servicer) does not exercise its purchase right with respect to
a Mortgage Loan during the period specified in the preceding sentence, such
Mortgage Loan shall thereafter again become eligible for purchase pursuant to
the preceding sentence only after the Mortgage Loan ceases to be 120 days or
more Delinquent and thereafter becomes 120 days Delinquent again. The "Initial
Delinquency Date" of a Mortgage Loan shall mean the date on which the Mortgage
Loan first became 120 days Delinquent. Prior to repurchase pursuant to this
Section 3.12, the Servicer shall be required to continue to make monthly
advances pursuant to Section 3.12. The Servicer shall not use any procedure in
selecting Mortgage Loans to be repurchased which is materially adverse to the
interests of the Certificateholders. The Servicer shall purchase such (i)
delinquent Mortgage Loan at a price equal to the Principal Balance of the
Mortgage Loan plus accrued interest thereon at the Mortgage Interest Rate from
the date to
which interest has last been paid to the Trust Fund to the date of purchase plus
any unreimbursed Servicing Advances and Advances or (ii) REO Property at its
fair market value as determined in good faith by the Servicer. Any such
repurchase of a Mortgage Loan or REO Property pursuant to this Section 3.12
shall be accomplished by delivery to the Trustee for deposit in the Distribution
Account of the amount of the purchase price. The Trustee shall immediately
effectuate the conveyance of such delinquent Mortgage Loan or REO Property to
the Servicer to the extent necessary, including the prompt delivery of all
documentation to the Servicer.
Section 3.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Servicer 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 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. The Servicer 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 the Servicer 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, the Servicer 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 Mortgage Loan after reimbursement to
itself for such expenses. In addition the Servicer may write off any second lien
mortgage loan that is delinquent by 180 days or more.
(b) Notwithstanding the foregoing provisions of this Section 3.13 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Servicer has received actual notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, 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 the Servicer 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
(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 the Servicer, subject to the Servicer's
right to be reimbursed therefor from the 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 Mortgage Loans.
If the Servicer 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
the Servicer 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 the Servicer, subject to the
Servicer's right to be reimbursed therefor from the 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
Collection Account received in respect of the affected Mortgage Loan or other
Mortgage Loans.
(c) The Servicer shall have the right to purchase from REMIC I
any defaulted Mortgage Loan that is 90 days or more delinquent, which the
Servicer determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee, in form and substance satisfactory to the Servicer and the Trustee
prior to purchase), at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account, and the Trustee, upon receipt of written certification from the
Servicer of such deposit, shall release or cause to be released to the Servicer
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as the Servicer shall furnish and as shall be
necessary to vest in the Servicer title to any 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 Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer 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 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 Mortgage Loan. If the amount of the
recovery so allocated to interest is less than the full amount of accrued and
unpaid interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Servicer 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 the
Servicer 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 Mortgage Loan shall be applied as follows: first,
to reimburse the Servicer for any related
unreimbursed Servicing or P&I Advances in accordance with Section 3.09(a)(ii)
and any other amounts reimbursable to the Servicer 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 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 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
Collection Account have been or will be so deposited) and shall request that the
Custodian, on behalf of the Trustee, deliver to the 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 Servicer and the Trustee and Custodian shall have no
further responsibility with regard to such Mortgage File. Upon any such payment
in full, the 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
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 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 Servicer to return the Mortgage File to the
Custodian on behalf of the Trustee, when the need therefor by the Servicer no
longer exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a 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 Servicer fails to do so.
Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the 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 Servicer Event of Default shall have occurred and
be continuing, the 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 the Servicer, hereunder, the Servicer
shall be entitled to the Servicing Fee with respect to each Mortgage Loan
payable solely from payments of interest in respect of such Mortgage Loan,
subject to Section 3.22. In addition, the Servicer 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 receive the Servicing Fee may not be transferred in whole or in
part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement to the extent permitted
herein.
Additional servicing compensation in the form of assumption
fees, late payment charges, customary real estate referral fees and other
miscellaneous fees (other than Prepayment Charges) shall be retained by the
Servicer only to the extent such fees or charges are received by the Servicer.
The Servicer shall also be entitled pursuant to Section 3.09(a)(iv) to withdraw
from the 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. The Servicer 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.
Not later than fifteen days after each Distribution Date, the Servicer shall
forward to the Master Servicer, the Securities Administrator, the Trustee and
the Depositor a statement prepared by the institution at which the Collection
Account is maintained setting forth the status of the 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 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 the Servicer to
the Securities Administrator.
Section 3.17. STATEMENT AS TO COMPLIANCE.
Not later than March 15th of each calendar year commencing in 2005, the Servicer
shall deliver to the Trustee, the Master Servicer and the Depositor an Officers'
Certificate in a form acceptable for filing with the Securities and Exchange
Commission as an exhibit to Form 8-K or other required form (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 the Servicer 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, the Servicer 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 the Servicer to the Trustee.
Section 3.18. INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
Not later than March 15th of each calendar year commencing in
2005, the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report in
a form acceptable for filing with the Securities and Exchange Commission as an
exhibit to Form 8-K or other required form stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Servicer which includes an assertion that the Servicer has complied with certain
minimum residential mortgage loan servicing standards, identified in 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 the Servicer
has complied in all material respects, subject to such exceptions and other
qualifications that may be appropriate. Immediately upon receipt of such report,
the Servicer 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 the Servicer's expense,
provided that such statement is delivered by the Servicer to the Trustee.
Section 3.19. ANNUAL CERTIFICATION.
(a) The Servicer 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 later 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
the Servicer. In addition, the Servicer shall provide such other information
with respect to the Mortgage Loans and the servicing and administration thereof
within the control of the Servicer 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) The Servicer 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 the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 3.19 or the Servicer'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 the Servicer 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 the Servicer on
the other in connection with a breach of the Servicer's obligations under this
Section 3.19.
Section 3.20. ACCESS TO CERTAIN DOCUMENTATION.
The Servicer 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 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 the
Servicer designated by it. Nothing in this Section 3.20 shall limit the
obligation of the Servicer to comply with any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Servicer 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 the Servicer to collect, create, collate or otherwise
generate any information that it does not generate in its usual course of
business. The Servicer 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. In addition, access to the documentation regarding the Mortgage
Loans will be provided to any Certificate Owner, the Trustee and to any Person
identified to the Servicer, as a prospective transferee of a Certificate, upon
reasonable request during normal business hours at the offices of the Servicer
designated by it at the expense of the Person requesting such access.
Section 3.21. TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
(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. The Servicer, 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 860(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 the Servicer 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. The Servicer 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) The Servicer 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. The Servicer shall be permitted
to allow the Collection Account to serve as the REO Account, subject to separate
ledgers for each REO Property. The Servicer shall be entitled to retain or
withdraw any interest income paid on funds deposited in the REO Account.
(c) The Servicer 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 the Servicer manages and operates similar property owned by the Servicer
or any of its Affiliates, all on such terms and for such period as the Servicer
deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer 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, the Servicer
shall advance from its own funds such amount as is necessary for such purposes
if, but only if, the Servicer would make such advances if the Servicer owned the
REO Property and if in the Servicer'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, the Servicer,
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 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, the Servicer has obtained an Opinion of Counsel,
provided to the Servicer 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 the Servicer may take such actions as are specified in
such Opinion of Counsel.
The Servicer 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 the Servicer 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 the Servicer 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
(iv) the Servicer 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.
The Servicer 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 the Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Servicer shall be solely liable for all fees
owed by it to any such Independent Contractor, irrespective of whether the
Servicer'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 the
Servicer shall for any reason, no longer be the Servicer (including termination
due to a Servicer Event of Default).
(d) In addition to the withdrawals permitted under Section 3.21(c), the
Servicer 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
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 Mortgage Loan. On the Servicer Remittance Date, the Servicer 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 the Servicer at such price and upon such
terms and conditions as the Servicer 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 Mortgage Loan and net
of any payment or reimbursement to the Servicer 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 4.01.
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) The Servicer 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.
Section 3.22. OBLIGATIONS OF THE SERVICER IN RESPECT OF PREPAYMENT INTEREST
SHORTFALLS; RELIEF ACT INTEREST SHORTFALLS.
The Servicer shall deliver to the Securities Administrator for
deposit into the Distribution Account on or before 5:00 pm 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
Principal Prepayments in full on the Mortgage Loans for the related Distribution
Date resulting solely from voluntary Principal Prepayments received by the
Servicer during the related Prepayment Period and (ii) 50% of its aggregate
Servicing Fee for the most recently ended Prepayment Period. The Servicer shall
not have the right to reimbursement for any amounts remitted to the Securities
Administrator in respect of this Section 3.22. The Servicer 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 or similar state and
locals.
Section 3.23. OBLIGATIONS OF THE SERVICER IN RESPECT OF MORTGAGE RATES AND
MONTHLY PAYMENTS.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Servicer in a manner not consistent with the terms of the
related Mortgage Note and this Agreement, the Servicer, upon discovery or
receipt of notice thereof, immediately shall deliver to the 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
the Servicer 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-FM2, Asset Backed
Pass-Through Certificates." The amount deposited in the Reserve Fund shall be
increased by any payments received by the Securities Administrator under the Cap
Contracts relating to the Group IA Mortgage Loans and deposited into Reserve
Fund for the benefit of the Class A-1A Certificates, Mezzanine Certificates and
the Class B Certificates, under the Cap Contract relating to the Group IB
Mortgage Loans and deposited in the Reserve Fund for the benefit of the Class
A-1B Certificates, the 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)(ix),
rather than distributing such amounts to the Class CE Certificateholders, and
Section 5.01(a)(7)(x). On each such Distribution 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).
(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 shall be treated as amounts distributed
by REMIC II to 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 payments from the Reserve Fund in respect of any
Net WAC Rate Carryover Amount shall be assigned a value of $56,565.00 with
respect to Certificates covered by the Group IA Cap
Contract, $67,281.00 with respect to Certificates covered by the Group IB Cap
Contract and $631,153.00 with respect to Certificates covered by the Group II
Cap Contract.
Section 3.25. ADVANCE FACILITY.
(a) The Servicer is hereby authorized to enter into a financing or
other facility (any such arrangement, an "Advance Facility"), the documentation
for which complies with Section 3.25(e) below, under which (1) the Servicer
assigns or pledges its rights under this Agreement to be reimbursed for any or
all P&I Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the P&I Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund P&I Advances
and/or Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant
to this Agreement to make P&I Advances and/or Servicing Advances pursuant to and
as required by this Agreement and (ii) shall not be relieved of such obligations
by virtue of such Advance Facility and (B) neither the Advance Financing Person
nor any Servicer's Assignee (as hereinafter defined) shall have any right to
proceed against or otherwise contact any Mortgagor for the purpose of collecting
any payment that may be due with respect to any related Mortgage Loan or
enforcing any covenant of such Mortgagor under the related Mortgage Loan
documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and
the related Advance Financing Person shall deliver to the Trustee at the address
set forth in Section 12.05 a written notice (an "Advance Facility Notice"),
stating (a) the identity of the Advance Financing Person and (b) the identity of
the Person (the "Servicer's Assignee") that will, subject to Section 3.25(c),
have the right to make withdrawals from the Collection Account pursuant to
Section 3.09(a) to reimburse previously unreimbursed P&I Advances and/or
Servicing Advances ("Advance Reimbursement Amounts"). Advance Reimbursement
Amounts (i) shall consist solely of amounts in respect of P&I Advances and/or
Servicing Advances for which the Servicer would be permitted to reimburse itself
in accordance with Section 3.09(a), assuming the Servicer had made the related
P&I Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of amounts
payable to a successor Servicer in accordance with Section 3.09(a) to the extent
permitted under Section 3.25(d).
(c) Notwithstanding the existence of an Advance Facility, the Servicer,
on behalf of the Advance Financing Person and the Servicer's Assignee, shall be
entitled to receive reimbursements of P&I Advances and/or Servicing Advances in
accordance with Section 3.09(a), which entitlement may be terminated by the
Advance Financing Person identified in the
Advance Facility Notice pursuant to a written notice to the Trustee, the Master
Servicer and the Servicer in the manner set forth in Section 12.05. Upon receipt
of such written notice, the Servicer shall no longer be entitled to receive
reimbursement for any Advance Reimbursement Amounts and the Servicer's Assignee
shall immediately have the right to receive from the Collection Account all
Advance Reimbursement Amounts. Notwithstanding the foregoing, and for the
avoidance of doubt, (i) the Servicer and/or the Servicer's Assignee shall only
be entitled to reimbursement of Advance Reimbursement Amounts from the
Collection Account pursuant to Section 3.09(a) to the extent of and from the
funds that the Servicer would have been entitled to reimbursement hereunder and
shall not otherwise be entitled to receive amounts designated for distribution
to Certificateholders and (ii) none of the Trustee or the Certificateholders
shall have any right to, or otherwise be entitled to, any Advance Reimbursement
Amounts to which the Servicer or the Servicer's Assignee, as applicable, shall
be entitled to pursuant to this Section 3.25. An Advance Facility may be
terminated by the joint written direction of the Servicer and the related
Advance Financing Person. Written notice of such termination shall be delivered
to the Trustee and the Master Servicer in the manner set forth in Section 12.05
hereof. None of the Depositor, the Master Servicer or the Trustee shall, as a
result of the existence of any Advance Facility, have any additional duty or
liability with respect to the calculation or payment of any Advance
Reimbursement Amount, nor, as a result of the existence of any Advance Facility,
shall the Depositor, the Master Servicer or the Trustee have any additional
responsibility to track or monitor the administration of the Advance Facility or
the payment of Advance Reimbursement Amounts to the Servicer's Assignee. The
Servicer shall indemnify the Depositor, the Trustee, the Master Servicer, any
successor Servicer and the Trust Fund for any claim, loss, liability or damage
resulting from any claim by the related Advance Financing Person or the
Servicer's Assignee, except to the extent that such claim, loss, liability or
damage resulted from or arose out of the gross negligence, recklessness or
willful misconduct on the part of the Depositor, the Trustee, the Master
Servicer or any successor Servicer, as the case may be, or the breach of any
obligations under this Agreement by the successor Servicer, the Master Servicer
or the Trustee, as the case may be. The Servicer shall maintain and provide to
any successor Servicer and, upon request, the Trustee and the Master Servicer a
detailed accounting on a loan-by-loan basis as to amounts advanced by, pledged
or assigned to, and reimbursed to any Advance Financing Person. The successor
Servicer shall be entitled to rely on any such information provided by the
predecessor Servicer, and the successor Servicer (including the Trustee or the
Master Servicer) shall not be liable for any errors in such information.
(d) As between a predecessor Servicer and its Advance Financing Person,
on the one hand, and a successor Servicer and its Advance Financing Person, if
any, on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis
with respect to each Mortgage Loan as to which an Advance and/or Servicing
Advance shall have been made and be outstanding shall be allocated on a
"first-in, first out" basis. In the event the Servicer's Assignee shall have
received some or all of an Advance Reimbursement Amount related to Advances
and/or Servicing Advances that were made by a Person other than such predecessor
Servicer or its related Advance Financing Person in error, then such Servicer's
Assignee shall be required to remit any portion of such Advance Reimbursement
Amount to each Person entitled to such portion of such Advance Reimbursement
Amount. Without limiting the generality of the foregoing, the Servicer shall
remain entitled to be reimbursed by the Advance Financing Person for all
Advances and/or Servicing Advances funded by the Servicer to the extent the
related Advance Reimbursement Amounts have not been assigned or pledged to such
Advance Financing Person or Servicer's Assignee.
(e) For purposes of any Officer's Certificate of the Servicer made
pursuant to Section 4.03(d), any Nonrecoverable P&I Advance or Nonrecoverable
Servicing Advance referred to therein may have been made by such Servicer or any
predecessor Servicer. In making its determination that any P&I Advance or
Servicing Advance theretofore made has become a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, as applicable, the Servicer shall apply the
same criteria in making such determination regardless of whether such P&I
Advance or Servicing Advance shall have been made by the Servicer or any
predecessor Servicer.
(f) 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, may be entered
into by the Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 12.01. All
reasonable costs and expenses (including attorneys' fees and disbursements) of
each party hereto of any such amendment shall be borne solely by the Servicer
without reimbursement from the Trust Fund. The parties hereto hereby acknowledge
and agree that: (a) the P&I Advances and/or Servicing Advances financed by
and/or pledged to an Advance Financing Person under any Advance Facility are
obligations owed to the Servicer payable only from the cash flows and proceeds
received under this Agreement for reimbursement of P&I Advances and/or Servicing
Advances only to the extent provided herein, and the Trustee and the Trust are
not, as a result of the existence of any Advance Facility, obligated or liable
to repay any P&I Advances and/or Servicing Advances financed by the Advance
Financing Person; (b) the Servicer will be responsible for remitting to the
Advance Financing Person the applicable amounts collected by it as reimbursement
for P&I Advances and/or Servicing Advances funded by the Advance Financing
Person, subject to the provisions of this Agreement; and (c) the Trustee shall
not have any responsibility to track or monitor the administration of the
financing arrangement between the Servicer and any Advance Financing Person.
Section 3.26. THE SERVICER INDEMNIFICATION.
The Servicer 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 negligence in the
performance of its duties under this Agreement or by reason of the Servicer'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 the Servicer, the Trustee, the Master Servicer and the
Securities Administrator. Any payment hereunder made by the Servicer to any such
Person shall be from the Servicer's own funds, without reimbursement from REMIC
I therefor.
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 Servicer and Fremont to service and administer the Mortgage
Loans in accordance with the terms of this Agreement and the Fremont 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 Servicer and
Fremont 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 Servicer and
Fremont and shall cause the Servicer and Fremont to perform and observe the
covenants, obligations and conditions to be performed or observed by the
Servicer and Fremont under this Agreement and the Fremont Servicing Agreement,
as applicable. The Master Servicer shall independently and separately monitor
the Servicer's and Fremont'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, Fremont'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 Servicer to the Distribution Account pursuant to the terms
hereof based on information provided to the Master Servicer by the Servicer and
Fremont.
The Trustee shall furnish the Servicer, Fremont and the Master
Servicer with any limited powers of attorney and other documents in form as
provided to it necessary or appropriate to enable the Servicer, Fremont 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, Fremont or the Servicer pursuant to any such limited power of attorney
and shall be indemnified by the Master Servicer, Fremont or the 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 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 Servicer, Fremont
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 Servicer, Fremont 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 Agreement 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 SERVICER AND FREMONT.
(a) The Master Servicer shall be responsible for monitoring
the compliance by the Servicer and Fremont with its duties under this Agreement
or the Fremont Servicing Agreement, as applicable. In the review of the
Servicer's and Fremont's activities, the Master Servicer may rely upon an
officer's certificate of the Servicer or Fremont with regard to the Servicer's
or Fremont's compliance with the terms of this Agreement or the Fremont
Servicing Agreement, as applicable. In the event that the Master Servicer, in
its judgment, determines that the Servicer should be terminated in accordance
with the terms hereof or, with respect to Fremont, with the terms of the Fremont
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 a Servicer Event of Default, the Master Servicer shall notify the
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 the Servicer under this
Agreement or the obligations of Fremont under the Fremont Servicing Agreement
and shall, in the event that the Servicer fails to perform its obligations in
accordance with this Agreement or if Fremont fails to perform its obligations in
accordance with the terms of the Fremont Servicing Agreement, subject to this
Section and Article VIII, cause the Trustee to terminate the rights and
obligations of the Servicer hereunder in accordance with the provisions of
Article VIII or terminate the obligations of Fremont under the Fremont Servicing
Agreement. Such enforcement, including,
without limitation, the legal prosecution of claims and the pursuit of other
appropriate remedies, shall be in such form and 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.
(c) The Master Servicer shall be entitled to be reimbursed by
the Servicer or Fremont, as applicable (or from amounts on deposit in the
Distribution Account if the Servicer or Fremont is unable to fulfill its
obligations hereunder or under the Fremont Servicing Agreement) for all
reasonable out-of-pocket or third party costs associated with the transfer of
servicing from Fremont or 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.
(d) The Master Servicer shall require the Servicer and Fremont
to comply with the remittance requirements and other obligations set forth in
this Agreement or with respect to Fremont, set forth in the Fremont Servicing
Agreement.
(e) If the Master Servicer acts as successor to the 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.
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 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 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
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 Servicer and shall be indemnified by the Master Servicer or the
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.
To the extent Mortgage Loans contain enforceable due-on-sale
clauses, the Master Servicer shall cause the Servicer and Fremont to enforce
such clauses in accordance with this Agreement or the Fremont Servicing
Agreement, as applicable. 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 Fremont 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 Fremont Servicing Agreement.
Section 4.07. 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 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 4.08. STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES.
For each Mortgage Loan, the Master Servicer shall enforce the
obligation of the Servicer and Fremont under this Agreement and the Fremont
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. It is understood and agreed that such
insurance shall be with insurers meeting the eligibility requirements set forth
in Section 3.11 or set forth in the Fremont Servicing Agreement 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.
Section 4.09. PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The Master Servicer shall enforce the Servicer's or Fremont's
obligations under this Agreement or the Fremont Servicing Agreement 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 4.10. MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES.
(a) The Master Servicer shall not take, or permit the Servicer
or Fremont to take (to the extent such action is prohibited by this Agreement or
the Fremont 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, the
Servicer or Fremont, as applicable, would have been covered thereunder. The
Master Servicer shall use its best reasonable efforts to cause the Servicer and
Fremont 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 and the Fremont Servicing Agreement. The Master Servicer shall not,
and shall not permit the Servicer or Fremont 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 Fremont
Servicing Agreement.
(b) The Master Servicer agrees to cause the Servicer and
Fremont 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 4.11. 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 or the Fremont Servicing Agreement. Until all
amounts distributable in respect of the Certificates have been distributed in
full and the Master Servicer, the Servicer and Fremont have otherwise fulfilled
their respective obligations under this Agreement or the Fremont Servicing
Agreement, as applicable, 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 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 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 4.12. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
The Master Servicer shall cause the Servicer and Fremont 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
Fremont Servicing Agreement.
Section 4.13. 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 4.18. 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 or the Fremont Servicing Agreement, as applicable.
Section 4.14. 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 Servicer and Fremont to
sell, any REO Property as expeditiously as possible and in accordance with the
provisions of this Agreement or the Fremont Servicing Agreement, as applicable.
Further, the Master Servicer shall cause the Servicer and Fremont 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
Servicer and Fremont 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 Servicer and
Fremont 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
Servicer and Fremont to protect and conserve, such REO Property in the manner
and to the extent required by this Agreement or the Fremont Servicing Agreement,
as applicable, 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.
(b) The Master Servicer shall cause the Servicer and Fremont
to deposit all funds collected and received in connection with the operation of
any REO Property in the REO Account or the account established by Fremont under
the Fremont Servicing Agreement for such purposes.
Section 4.15. 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 4.16. 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 (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 4.17. 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 4.18. 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 Servicer with respect to Prepayment Interest
Shortfalls attributable to Principal Prepayments in full on the Mortgage Loans
for the related Distribution Date, and not so paid by the Servicer and (ii) the
aggregate
amount of the related Master Servicing Fees for such Distribution Date, without
reimbursement therefor.
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-LTAIA, REMIC I Regular Interest I-LTA1B, REMIC
I Regular Interest I-LTA2A, REMIC I Regular Interest I-LTA2B,
REMIC I Regular Interest I-LTA2C, 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-LTA1A, REMIC
I Regular Interest I-LTA1B, REMIC I Regular Interest I-LTA2A,
REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest
I-LTA2C, 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, REMIC I Regular Interest I-LT3A, REMIC I
Regular Interest I-LT3B 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:
(b) 98.00% of such remainder to the Holders of REMIC I Regular
Interest I-LTAA, until the Uncertificated Balance of such Uncertificated REMIC I
Regular Interest is reduced to zero;
(c) 2.00% of such remainder, first, to the Holders of REMIC I
Regular Interest I-LTA1A, REMIC I Regular Interest I-LTA1B, REMIC I Regular
Interest I-LTA2A, REMIC I Regular Interest I-LTA2B, REMIC I Regular Interest
I-LTA2C, 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 % of and 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 and second to the Holders of REMIC I
Regular Interest I-LTZZ, 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 (8) 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 IA 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 IA Interest Remittance Amount
remaining for such Distribution Date:
FIRST, to the Holders of the Class A-1A Certificates, the Senior
Interest Distribution Amount allocable to the Class A-1A Certificates,
and
SECOND, concurrently, to the Holders of the Class A1-B, Class A-2A,
Class A-2B and Class A-2C Certificates, the Senior Interest
Distribution Amount allocable to each such Class, to the extent
remaining unpaid after the distributions of the Group IB Interest
Remittance Amount as set forth in Section 5.01(a)(3) below and the
Group II Interest Remittance Amount as set forth in Section 5.01(a)(4)
below, on a PRO RATA basis, based on the entitlement of each 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 IB 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 IB Interest
Remittance Amount remaining for such Distribution Date:
FIRST, to the Holders of the Class A-1B Certificates, the Senior
Interest Distribution Amount allocable to the Class A-1B Certificates;
and
SECOND, concurrently, to the Holders of the Class A-1A, Class A-2A,
Class A-2B and Class A-2C 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 IA Interest Remittance
Amount as set forth in Section 5.01(a)(2) above and the Group II
Interest Remittance Amount as set forth in Section 5.01(a)(4) below.
(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 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, Class A-2B and
Class A-2C Certificates, the Senior Interest Distribution Amount
allocable to each such Class, on a PRO RATA basis, based on the
entitlement of each such Class;
SECOND, concurrently, to the Holders of the Class A-1A Certificates and
Class A-1B 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 IA Interest Remittance Amount as set
forth in Section 5.01(a)(2) above and the Group IB Interest Remittance
Amount as set forth in Section 5.01(a)(3) above.
(5) 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 IA Interest Remittance Amount, the Group IB Interest
Remittance Amount and the Group II Interest
Remittance Amount remaining after the distributions required by clauses (2), (3)
and (4) above and make the following disbursements and transfers in the order of
priority described below, in each case to the extent of the Group IA Interest
Remittance Amount, the Group IB Interest Remittance Amount and Group II Interest
Remittance Amount remaining for such Distribution Date:
sequentially, to the Holders of the Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6 Certificates and Class B Certificates,
in that order, the Interest Distribution Amount allocable to each such
Class.
(6) 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 IA Principal Distribution Amount, the Group IB 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 IA Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-1A Certificates,
until the Certificate Principal Balance of Class A-1A
Certificates has been reduced to zero; and
SECOND, concurrently, (i) to the Holders of the Class
A-1B Certificates and (ii) to the Holders of the Class
A-2 Certificates, after taking into account the
distribution of the Group IB Principal Distribution
Amount and the Group II Principal Distribution Amount
pursuant to Section 5.01(a)(6)(ii) and Section
5.01(a)(6)(iii) respectively below, 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-2
Certificates pursuant to this clause second shall be
based on the total Certificate Principal Balance of the
Class A-2 Certificates, but shall be distributed
sequentially to the Class A-2A, Class A-2B and Class
A-2C Certificates, in that order, until the Certificate
Principal Balance of each such Class has been reduced to
zero.
(ii) The Group IB Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-1B Certificates,
until the Certificate Principal Balance of Class A-1B
Certificates has been reduced to zero; and
SECOND, concurrently, (i) to the Holders of the Class
A-1A Certificates and (ii) to the Holders of the Class
A-2 Certificates, after taking into account the
distribution of the Group IA Principal Distribution
Amount and the Group II Principal Distribution Amount
pursuant to Section 5.01(a)(6)(i) above and Section
5.01(a)(6)(iii), below, respectively, 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-2
Certificates pursuant to this clause second shall be
based on the total Certificate Principal Balance of the
Class A-2 Certificates, but shall be distributed
sequentially to the Class A-2A, Class A-2B and Class
A-2C Certificates, in that order, until the Certificate
Principal Balance of each such Class has been reduced to
zero.
(iii) 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,
Class A-2B and Class A-2C Certificates, based on the
Certificate Principal Balance of each such Class, until
the Certificate Principal Balance of each such Class has
been reduced to zero; and
SECOND, concurrently, to the Holders of the Class A-1A
Certificates and Class A-1B Certificates, after taking
into account the distribution of the Group IA Principal
Distribution Amount and Group IB Principal Distribution
Amount, each as described above in Section 5.01(a)(6)(i)
and Section 5.01(a)(6)(ii), respectively, 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.
(iv) The Group IA Principal Distribution Amount, Group IB
Principal Distribution Amount and Group II Principal Distribution
Amount remaining after distributions pursuant to Sections
5.01(a)(6)(i), (ii) and (iii) above shall be distributed in the
following order of priority:
sequentially, to the Holders of the Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6 and Class B
Certificates, in that order, until the Certificate
Principal Balance of each such Class has been reduced to
zero.
(7) 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 IA Principal Distribution Amount, the Group IB
Principal Distribution Amount and the Group II Principal Distribution Amount and
distribute to the Certificateholders the following amounts, in the following
order of priority:
(v) The Group IA Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-1A Certificates,
the Class A-1A Principal Distribution Amount, until the
Certificate Principal Balance of Class A-1A Certificates
has been reduced to zero; and
SECOND, up to an amount equal to sum of the amounts, if
any, of the Class A-1B Principal Distribution Amount and
the Class A-2 Principal Distribution Amount remaining
unpaid on such Distribution Date and after taking into
account the distributions of the Group IB Principal
Distribution Amount and
the Group II Principal Distribution Amount,
concurrently, (i) to the Holders of the Class A-1B
Certificates and (ii) to the Holders of the Class A-2
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-2 Certificates pursuant
to this clause SECOND shall be based on the total
Certificate Principal Balance of the Class A-2
Certificates, but shall be distributed sequentially to
the Class A-2A, Class A-2B and Class A-2C Certificates,
in that order, until the Certificate Principal Balance
of each such Class has been reduced to zero.
(vi) The Group IB Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-1B Certificates,
the Class A-1B Principal Distribution Amount, until the
Certificate Principal Balance of the Class A-1B
Certificates has been reduced to zero; and
SECOND, up to an amount equal to sum of the amounts, if
any, of the Class A-1A Principal Distribution Amount and
the Class A-2 Principal Distribution Amount remaining
unpaid on such Distribution Date and after taking into
account the distributions of the Group IA Principal
Distribution Amount and the Group II Principal
Distribution Amount, concurrently, (i) to the Holders of
the Class A-1A Certificates and (ii) to the Holders of
the Class A-2 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-2 Certificates
pursuant to this clause SECOND shall be based on the
total Certificate Principal Balance of the Class A-2
Certificates, but shall be distributed sequentially to
the Class A-2A, Class A-2B and Class A-2C Certificates,
in that order, until the Certificate Principal Balance
of each such Class has been reduced to zero.
(vii) 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,
Class A-2B and Class A-2C Certificates, in that order,
the Class A-2 Principal Distribution Amount, until the
Certificate Principal Balance of each such Class has
been reduced to zero; and
SECOND, up to an amount equal to sum of the amounts, if
any, of the Class A-1A Principal Distribution Amount and
the Class A-1B Principal Distribution Amount remaining
unpaid on such Distribution Date and after taking into
account the distributions of the Group IA Principal
Distribution Amount and the Group IB Principal
Distribution Amount. concurrently, (i) to the Holders of
the Class A-1A Certificates and (ii) to the Holders of
the Class A-1B 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.
(viii) The Principal Distribution Amount remaining after
distributions pursuant to Section 5.01(a)(7)(i)(ii) and (iii)
above shall be distributed in the following order of priority:
FIRST, to the Holders of 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 the
Class M-1 Certificates has been reduced to zero;
SECOND, to the Holders of the Class M-2 Certificates,
the lesser of (x) the excess of (i) the remaining
Principal Distribution Amount over (ii) the amounts
distributed to the Holders of the Class M-1 Certificates
under clause FIRST above, and (y) the Class M-2
Principal Distribution Amount, until the Certificate
Principal Balance of the Class M-2 Certificates has been
reduced to zero;
THIRD, to the Holders of 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
under clause FIRST above and to the Holders of the Class
M-2 Certificates under clause SECOND above, and (y) the
Class M-3 Principal Distribution Amount, until the
Certificate Principal Balance of the Class M-3
Certificates has been reduced to zero;
FOURTH, to the Holders of 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 under clause FIRST above, to the Holders of
the Class M-2 Certificates under clause SECOND above and
to the Holders of the Class M-3 Certificates under
clause THIRD above, and (y) the Class M-4 Principal
Distribution Amount, until the Certificate Principal
Balance of the Class M-4 Certificates has been reduced
to zero;
FIFTH, to the Holders of 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
under clause FIRST above, to the Holders of the Class
M-2 Certificates under clause SECOND above, to the
Holders of the Class M-3 Certificates under clause THIRD
above and to the Holders of the Class M-4 Certificates
under clause FOURTH above, 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 the Class M-5
Certificates has been reduced to zero;
SIXTH, to the Holders of 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 under clause FIRST above, to the
Holders of the Class M-2 Certificates under clause
SECOND above, to the Holders of the Class M-3
Certificates under clause THIRD above, to the Holders of
the Class M-4 Certificates under clause FOURTH above and
to the Holders of the Class M-5 Certificates under
clause FIFTH above, and (y) the Class M-6 Principal
Distribution Amount, shall be distributed to the Holders
of the Class M-6 Certificates, until the Certificate
Principal Balance of the Class M-6 Certificates has been
reduced to zero; and
SEVENTH, to the Holders of 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
under clause FIRST above, to the Holders of the Class
M-2 Certificates under clause SECOND above, to the
Holders of the Class M-3 Certificates under clause THIRD
above, to the Holders of the Class M-4 Certificates
under clause FOURTH above, to the Holders of the Class
M-5 Certificates under clause fifth above and to the
Holders of the Class M-6 Certificates under clause SIXTH
above, and (y) the Class B Principal Distribution
Amount, until the Certificate Principal Balance of the
Class B Certificates has been reduced to zero.
(8) 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:
(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) sequentially, to the Holders of the Class M-1,
Class M-2, Class M-3, Class M-4, Class M-5, Class M-6
and Class B Certificates, in that order, in an amount
equal to the Interest Carry Forward Amount allocable to
each such Class;
(iii) sequentially, to the Holders of the Class M-1,
Class M-2, Class M-3, Class M-4, Class M-5, Class M-6
and Class B Certificates, in that order, in an amount
equal to the Allocated Realized Loss Amount allocable to
each such Class;
(iv) concurrently, to the Holders of the Class A
Certificates, in an amount equal to such Certificates'
allocated share of any Prepayment Interest Shortfalls on
the related Mortgage Loans to the extent not covered by
payments pursuant to Section 3.22 or 4.18 and any
shortfalls resulting from the application of the Relief
Act or similar state or local law or the bankruptcy code
with respect to the related Mortgage Loans to the extent
not previously reimbursed pursuant to 1.02;
(v) sequentially, to the Holders of the Class M-1, Class
M-2, Class M-3, Class M-4, Class M-5, Class M-6 and
Class B Certificates, in that order, in an amount equal
to such certificates' share of any Prepayment Interest
Shortfalls on the Mortgage Loans to the extent not
covered by payments pursuant to Sections 3.22 or Section
4.18 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;
(vi) 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 Certificates
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;
(vii) 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;
(viii) to the Holders of the Class CE Certificates the
Interest Distribution Amount and any
Overcollateralization Reduction Amount for such
Distribution Date; and
(ix) to the Holders of the Class CE 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.
It is the intention of all of the parties hereto that the Class CE Certificates
receive all principal and interest received by the Trust on the Mortgage Loans
that is not otherwise distributable to any other Class of Regular Certificates
or REMIC Regular Interests. If the Securities Administrator determines that the
Residual Certificates are entitled to any distributions, the Securities
Administrator, prior to any such distribution to any Residual Certificate, shall
notify the Depositor of such impending distribution. Upon such notification, the
Depositor will request an amendment to the Pooling and Servicing Agreement to
revise such mistake in the distribution provisions.
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.
(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, concurrently to the holders of the Class A-1A
Certificates, the Class A-1B Certificates and the
Class A-2 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-2 Certificates
pursuant to this clause FIRST shall be based on the
total Certificate Principal Balance of the Class A-2
Certificates, but shall be distributed sequentially to
the Class A-2A, Class A-2B and Class A-2C
Certificates, in that order, until the Certificate
Principal Balance of each such class has been reduced
to zero;
SECOND, sequentially, to the Holders of the Class M-1,
Class M-2, Class M-3, Class M-4, Class M-5, Class M-6
and Class B Certificates, in that order, until the
Certificate Principal Balance of each such Class 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 IA Principal
Distribution Amount and (y) the Class A-1A Principal
Distribution Amount, shall be distributed to the
Holders of the Class A-1A Certificates until the
Certificate Principal Balance of the Class A-1A
Certificates has been reduced to zero, (b) the lesser
of (x) the Group IB Principal Distribution Amount and
(y) the Class A-1B Principal Distribution Amount,
shall be distributed to the Holders of the Class A-1B
Certificates until the Certificate Principal Balance
of the Class A-1B Certificates has been reduced to
zero and (c) 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, Class
A-2B and Class A-2C Certificates, in that order,
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, 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, 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 responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Depositor, the Servicer, 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
Servicer, 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.
(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 Servicer 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;
(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 Servicer pursuant to Section 3.22 of this Agreement or pursuant to
the Fremont Servicing Agreement or the Master Servicer pursuant to
Section 4.18 of this Agreement;
(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;
(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)(8)(vi);
(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.
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 the Business Day following each Determination Date,
the Servicer shall deliver to the Master Servicer and the Securities
Administrator by telecopy (or by such other means as the Servicer, the Master
Servicer and the Securities Administrator may agree from time to time) a
Servicer Report with respect to the related Distribution Date, in a form
mutually acceptable to the Servicer, the Master Servicer and the Securities
Administrator. On the same date, the Servicer shall electronically transmit to
the Master Servicer and the Securities Administrator, a data file containing the
information set forth in such Servicer Report with respect to the related
Distribution Date. Such Servicer Report shall include (i) the amount of P&I
Advances to be made by the Servicer in respect of the related Distribution Date,
the aggregate amount of P&I Advances outstanding after giving effect to such P&I
Advances, and the aggregate amount of Nonrecoverable P&I Advances in respect of
such Distribution Date and (ii) such other information with respect to the
Mortgage Loans as the Securities Administrator may reasonably require to perform
the calculations necessary to make the distributions contemplated by Section
5.01 and to prepare the statements to Certificateholders contemplated by Section
5.02. The Securities Administrator shall not be responsible to recompute,
recalculate or verify any information provided to it by the Servicer.
(b) The amount of P&I Advances to be made by the Servicer on
any Distribution Date shall equal, subject to Section 5.03(d) below, (i) the
aggregate amount of Monthly Payments (net of the related Servicing Fees), due
during the related Due Period in respect of the 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, which was
acquired during or prior to the related Prepayment Period and as to which an REO
Disposition did not occur during the related Prepayment Period, an amount equal
to the excess, 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 Collection Account pursuant to Section 3.21 for distribution on
such Distribution Date; provided, however, the Servicer shall not be required to
make P&I Advances with respect to Relief Act Interest Shortfalls or shortfalls
due to the application of similar state and local laws, or with respect to
Prepayment Interest Shortfalls in excess of its obligations under Section 3.22.
The Servicer will not make any advances with respect to simple interest loans
and shall not make any advances with respect to the principal portion of the
Monthly Payments that would have been due on the related Due Date with respect
to REO Properties and second liens.
By 3 p.m. New York time on the Servicer Remittance Date, the
Servicer 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 Mortgage
Loans for the related Distribution Date either (i) from its own funds or (ii)
from the 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 Collection Account that Amounts Held For
Future Distribution have been, as permitted by this Section 5.03, used by the
Servicer 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 the Servicer with respect to the Mortgage Loans. In addition, the
Servicer 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 the Servicer to make P&I Advances
or to reimburse itself for outstanding P&I Advances shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the 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 the Servicer
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 the Servicer to
the Securities Administrator on such date is less than the P&I Advances required
to be made by the Servicer for the related Distribution Date.
(c) The obligation of the Servicer 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 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 the
Servicer 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 the Servicer 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 the Servicer fails to make any required P&I Advance,
then the Master Servicer (in its capacity as successor servicer) or any other
successor Servicer shall be required to make such P&I Advance on the
Distribution Date on which the 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, the Servicer shall
determine as to each Mortgage Loan and REO Property and include in the monthly
remittance report provided to the Master Servicer and the Securities
Administrator (substantially in the form of Schedule 4 hereto) such information
as is reasonably available to the Servicer 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 the
Servicer 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, the Servicer shall also determine as to each 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 of the Class B Certificates has been reduced to zero, FOURTH, to the
Class M-6 Certificates, until the Certificate Principal Balance of the Class M-6
Certificates has been reduced to zero; FIFTH, to the Class M-5 Certificates,
until the Certificate Principal Balance of the Class M-5 Certificates has been
reduced to zero; SIXTH, to the Class M-4 Certificates, until the Certificate
Principal Balance of the Class M-4 Certificates has been reduced to zero;
SEVENTH, to the Class M-3 Certificates, until the Certificate Principal Balance
of the Class M-3 Certificates has been reduced to zero; EIGHTH, to the Class M-2
Certificates, until the Certificate Principal Balance of the Class M-2
Certificates has been reduced to zero; and NINTH, to the Class M-1 Certificates,
until the Certificate Principal Balance of to the Class M-1 Certificates 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)(8)(xi).
No allocations of any Realized Losses shall be made to the Certificate Principal
Balances of the Class A Certificates or Class P Certificates.
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.
In addition, in the event that the Servicer receives any
Subsequent Recoveries, the Servicer shall deposit such funds into the Collection
Account pursuant to Section 3.08. 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 and not previously reimbursed to such
Class of Subordinate Certificates with Net Monthly Excess Cashflow pursuant to
Section 5.01(a)(8). 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 and not previously reimbursed to such Class of Subordinate
Certificates with Net Monthly Excess Cashflow pursuant to Section
5.01(a)(8)(iii). 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. Any such increases shall be applied to the Certificate Principal Balance
of each Subordinate Certificate of such Class in accordance with its respective
Percentage Interest.
(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 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.
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 (or other comparable Form containing the same
or comparable information or other information mutually agreed upon) 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 Servicer to be delivered pursuant to this
Agreement or pursuant to the Fremont Servicing Agreement, 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 4.15 and
4.16. 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
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.
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 as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Servicer 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 Class CE and Class P 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.
(e) The Trustee, the Servicer, 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.
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, the Servicer, 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 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 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 the Servicer), 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 the Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.
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 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
the 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, the
Servicer, 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,
the Servicer, 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 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 or Class B
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 and in
the case of a Class B Certificate that it will obtain a representation from any
transferee that such transferee is an accredited investor so long as it is
required to obtain a representation regarding compliance with the Securities Act
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, the Servicer, 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.
(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.
(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 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.
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, the Servicer, 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, the Servicer, 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 B,
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 B, 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 since the Closing Date and (C) any copies of
all Officers' Certificates of the Servicer 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.
ARTICLE VII
THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER
Section 7.01. LIABILITY OF THE DEPOSITOR, THE SERVICER AND THE MASTER
SERVICER.
The Depositor, the Servicer 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, Servicer and Master Servicer and undertaken hereunder by the
Depositor, the Servicer and the Master Servicer herein.
Section 7.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR, THE SERVICER 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, the
Servicer will keep in full effect its existence, rights and franchises as a
limited partnership under the laws of the jurisdiction of its formation. 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, the Servicer 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, the Servicer 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, the Servicer or the Master
Servicer shall be a party, or any Person succeeding to the business of the
Depositor, the Servicer or the Master Servicer, shall be the successor of the
Depositor, the Servicer 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 the Servicer 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, THE SERVICER, THE
MASTER SERVICER AND OTHERS.
None of the Depositor, the Servicer, the Securities
Administrator, the Master Servicer or any of the directors, officers, employees
or agents of the Depositor, the Servicer 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, the Servicer, 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 willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Servicer, the Securities
Administrator, the Master Servicer and any director, officer, employee or agent
of the Depositor, the Servicer, 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, the Servicer, the Securities Administrator, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Servicer, 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 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, the Servicer, 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, the Servicer, 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, the Servicer, the Securities Administrator
and the Master Servicer shall be entitled to be reimbursed therefor from the
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 Collection Account
and the Distribution Account.
Notwithstanding anything to the contrary contained herein, the
Servicer shall not be liable for any actions or inactions prior to the related
Servicing Transfer Date of any prior servicer of the Mortgage Loans and the
Master Servicer shall not be liable for any action or inaction of the Servicer,
except to the extent expressly provided herein.
Section 7.04. LIMITATION ON RESIGNATION OF THE SERVICER.
(a) The 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 or as provided in Section
7.04(c). Any such determination pursuant to the preceding sentence permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect obtained at the expense of the Servicer and delivered to the Trustee
and the Rating Agencies. No resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer'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, the Servicer 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 the Servicer hereunder. The
foregoing prohibition on assignment shall not prohibit the Servicer from
designating a Sub-Servicer as payee of any indemnification amount payable to the
Servicer 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) The Trustee and the Depositor hereby specifically (i)
consent to the pledge and assignment by the Servicer of all of the Servicer's
right, title and interest in, to and under this Agreement to the Servicing
Rights Pledgee, for the benefit of certain lenders and (ii) provided that no
Servicer Event of Default exists, agree that upon delivery to the Trustee by the
Servicing Rights Pledgee of a letter signed by the Servicer whereunder the
Servicer shall resign as Servicer under this Agreement, the Trustee shall
appoint the Servicing Rights Pledgee or its designee as successor Servicer,
provided that at the time of such appointment, the Servicing Rights Pledgee or
such designee meets the requirements of a successor Servicer pursuant to Section
8.02(c)(2) hereof and agrees to be subject to the terms of this Agreement. If,
pursuant to any provision hereof, the duties of the Servicer are transferred to
a successor servicer, the entire amount of the Servicing Fee and other
compensation payable to the Servicer pursuant hereto shall thereafter be payable
to such successor servicer.
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 meeting the criteria specified in Section
7.06 shall have assumed the Master Servicer's responsibilities, duties,
liabilities (other than those liabilities arising prior to the appointment of
such successor) and obligations under this Agreement.
Section 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 THE SERVICER AND THE
MASTER SERVICER.
Each of the Master Servicer and the Servicer 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 the Servicer
(and any such Sub-Servicer) in respect of the Servicer's rights and obligations
hereunder and access to officers of the Master Servicer or the Servicer (and
those of any such Sub-Servicer) responsible for such obligations, and the Master
Servicer shall have access to all such records maintained by the Servicer and
any Sub-Servicers. Upon request, each of the Master Servicer and the Servicer
shall furnish to the Depositor and the Trustee its (and any such Sub-Servicer's)
most recent financial statements (or, in the case of the Servicer, the most
recent financial statements of the consolidated group that includes the
Servicer) and such other information relating to the Master Servicer's or the
Servicer'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 the Servicer'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, the
Servicer or the Master Servicer, (iv) disclosure as required pursuant to this
Agreement or (v) disclosure of any and all 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, the Servicer 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 the
Servicer to comply with any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer 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
the Servicer to collect, create, collate or otherwise generate any information
that it does not generate in its usual course of business. The Servicer 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 the Servicer under this Agreement and may, but is not obligated to,
perform, or cause a designee to perform, any defaulted obligation of the Master
Servicer or the Servicer under this Agreement or exercise the
rights of the Master Servicer or the Servicer under this Agreement; provided
that neither the Master Servicer nor the Servicer 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 the
Servicer and is not obligated to supervise the performance of the Master
Servicer or the Servicer under this Agreement or otherwise.
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 the Servicer 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 the Servicer by the Depositor or
the Trustee (in which case notice shall be provided by telecopy), or
to the Servicer, 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 the Servicer duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Servicer contained in this Agreement, or
the material breach by the Servicer 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 the
Servicer by the Depositor or the Trustee or to the Servicer, 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 the
Servicer can demonstrate to the reasonable satisfaction of the Trustee
that the Servicer 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 the
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 90 days; or
(iv) the 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
(v) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
(vi) failure by the Servicer 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 the Servicer by any party to
this Agreement; or
(vii) any failure of the Servicer 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 the Servicer (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 the Servicer in
its capacity as the 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 the Servicer, the Depositor and the Master
Servicer, terminate all of the rights and obligations of the Servicer in its
capacity as the 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
the Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Certificates (other than as a
Holder of any Certificate) or the 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 the 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 Servicer 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 the Servicer's
functions under this Agreement, and to cooperate with the Master Servicer in
effecting the termination of the Servicer'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 the Servicer to the Collection
Account held by or on behalf of the Servicer or thereafter be received with
respect to the Mortgage Loans or any REO Property (provided, however, that the
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, 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 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 the Servicer (or from
amounts on deposit in the Distribution Account if the 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
Trust), 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. The Servicer shall be responsible for
the costs set forth in this paragraph with respect to one servicing transfer.
(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 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
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 the Servicer receives a notice of
termination, the Master Servicer shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein, and 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 the Servicer 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, the Servicer'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
the Servicer's failure to provide information required by Section 8.01 shall not
be considered a default by the Master Servicer as successor to the Servicer
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 90 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 the Servicer's failure to provide information required by Section 8.01 shall
not be considered a default by the Master Servicer as successor to the Servicer
hereunder. As compensation therefor, the Master Servicer shall be entitled to
the Servicing Fee and all funds relating to the Mortgage Loans to which the
Servicer 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 the Servicer under this Agreement in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer under
this Agreement.
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 the Servicer (other than liabilities of the Servicer hereunder
incurred prior to termination of the Servicer 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 the
Servicer'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 Mortgage
Loans as it and such successor shall agree; PROVIDED, HOWEVER, that no such
compensation shall be in excess of that permitted the Servicer 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 the Servicer under this
Agreement, the Master Servicer shall act in such capacity as hereinabove
provided.
(c) (1) In the event of a Servicer Event of Default,
notwithstanding anything to the contrary above, the Trustee and the Depositor
hereby agree that upon delivery to the Trustee by the Servicing Rights Pledgee
of a letter signed by the Servicer within ten Business Days of when notification
of such event shall have been provided to the Trustee, whereunder the Servicer
shall resign as Servicer under this Agreement, the Trustee shall appoint the
Servicing Rights Pledgee or its designee as successor Servicer, provided that at
the time of such appointment, the Servicing Rights Pledgee or such designee
meets the requirements of a successor Servicer set forth in paragraph (c)(2)
below and the Servicing Rights Pledgee or such designee agrees to be subject to
the terms of this Agreement.
(2) In the event that the Servicing Rights Pledgee does not
deliver to the Trustee the letter described in preceding paragraph within the
time period specified therein, the Trustee shall give notice thereof in writing
to the Master Servicer and upon receipt of such notice, the Master Servicer
shall be the successor in all respects to the Servicer in its capacity as
Servicer under this Agreement and the transactions set forth or provided for
herein, and 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 the Servicer 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 3.23(c))
by the terms and provisions hereof including, without limitation, the Servicer's
obligations to make P&I Advances pursuant to Section 5.03; provided, however,
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 the following provisions and (2) any
failure to perform such duties or responsibilities caused by the Servicer's
failure to provide information required by Section 8.01 shall not be considered
a default by the Master Servicer as successor to the Servicer hereunder. As
compensation therefor, the Master Servicer shall be entitled to the Servicing
Fee and all funds relating to the Mortgage Loans to which the Servicer 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, an
established mortgage loan servicing institution acceptable to each Rating Agency
and having a net worth of not less than $15,000,000, as the successor to the
Servicer under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer under this Agreement.
Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination of the Servicer or the Master
Servicer pursuant to Section 8.01(a) or (b) or any appointment of a successor to
the Servicer 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.
(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.
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 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 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 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 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, the 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 the Collection Account
by the 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.
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 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 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.
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.
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, the Servicer 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.
(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.
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, the Master Servicer, the
Securities Administrator, the Servicer and the Trustee (other than the
obligations of the Master Servicer to the Trustee pursuant to Section 9.05 and
of the Servicer 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 Servicer 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 Servicer of all Mortgage Loans
and each REO Property remaining in REMIC I shall be at a price (the "Termination
Price") equal to 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 Servicer and the Trustee in their reasonable discretion plus any amounts due
the Servicer and the Master Servicer in respect of unpaid Servicing Fees, Master
Servicing Fees and outstanding P&I Advances and Servicing Advances.
(b) The Servicer 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 Servicer 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.
(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 Servicer,
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
Servicer, the Servicer 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 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 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 Servicer 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 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 Servicer 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 Servicer;
(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 Servicer 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 Servicer (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 Servicer 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.
(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.
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 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 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 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 the Servicer pursuant to Section 11.03, if such tax arises out of or
results from a breach by the Servicer 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, the Servicer, 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 Collection Account or the Distribution Account for gain, nor accept any
contributions to any Trust 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 the Servicer 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 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) The Servicer 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 the Servicer's failure to perform
its covenants set forth in Article III in accordance with the standard of care
of the Servicer set forth in this Agreement.
(c) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor, the Servicer and the Trustee for any taxes and costs including
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor, the Servicer 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, the Servicer or the
Trustee including any reasonable attorneys' fees imposed on or incurred by the
Trust Fund, the Depositor, the Servicer 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.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. AMENDMENT.
This Agreement may be amended from time to time by the
Depositor, the Servicer, 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, the Servicer, 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
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 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 the Servicer, 4828
Loop Central Drive, Houston, Texas 77081, Attention: Janice McClure (telecopy
number: (713) 960-0539)), 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 the Servicer, (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-FM2 (telecopy number:
(410) 715-2380), or such other address or telecopy number as may hereafter be
furnished to the Trustee, the Depositor and the Servicer 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 Servicer, the Master Servicer,
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 the 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
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.
The Servicer shall make available to each Rating Agency copies
of the following:
8. Each annual statement as to compliance described in Section
3.17; and
9. Each annual independent public accountants' servicing report
described in Section 3.18.
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 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. FREMONT SERVICING AGREEMENT.
With respect to the Mortgage Loans prior to the related
ServicingTransfer Date, in the event of any conflict between the provisions of
this Agreement and the provisions of the Fremont Servicing Agreement, the
provisions of the Fremont Servicing Agreement shall control.
IN WITNESS WHEREOF, the Depositor, the Servicer, 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:
LITTON LOAN SERVICING LP
as Servicer
By:
-----------------------------------------------
Name:
Title:
HSBC BANK USA, NATIONAL ASSOCIATION
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:
ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTION 9.05:
DB STRUCTURED PRODUCTS, INC
By:
-----------------------------------------------
Name:
Title:
By:
-----------------------------------------------
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of August 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 August 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 August 2004, before me, a notary public in
and for said State, personally appeared _______________ known to me to be a
_______________ ________________, of Litton Loan Servicing LP, one of the
limited partnerships 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 August 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 August 2004, before me, a notary public in
and for said State, personally appeared ____________________, known to me to be
a __________________ of HSBC Bank USA, National Association 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-[1A][1B][2A][2B][2C] 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-FM2, Class A-[1A][1B][2A][2B][2C] Aggregate Certificate Principal Balance of the
Class A-[1A][1B][2A][2B][2C]Certificates as of
the Issue Date: $
Pass-Through Rate: Variable Denomination: $
Date of Pooling and Servicing Agreement and Master Servicer: Wells Fargo Bank, N.A.
Cut-off Date: August 1, 2004
First Distribution Date: September 25, 2004 Trustee: HSBC Bank USA, National Association
No.__ Issue Date: August 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-FM2
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-[1A][1B][2A][2B][2C]Certificates as of the Issue Date) in that certain
beneficial ownership interest evidenced by all the Class A-[1A][1B][2A][2B][2C]
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"), Litton Loan Servicing LP, as servicer (the "Servicer") and HSBC
Bank USA, National Association 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-[1A][1B][2A][2B][2C]
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-[1A][1B][2A][2B][2C] Certificates the aggregate initial Certificate Principal
Balance of which is
A-1-3
in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class A-[1A][1B][2A][2B][2C]
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 the Cap Contracts, 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
A-1-4
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.
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-[1A][1B][2A][2B][2C] 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 ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the 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-FM2, 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 Issue Date: $______________
Pass-Through Rate: Variable Denomination: $______________
Date of Pooling and Servicing Agreement Master Servicer: Wells Fargo Bank, N.A.
and Cut-off Date: August 1, 2004
First Distribution Date: September 25, 2004 Trustee: HSBC Bank USA, National
Association
No.___ Issue Date: August 30, 2004
CUSIP:_________________
A-2-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-FM2
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 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"), Litton Loan Servicing LP , as
servicer (the "Servicer") and HSBC Bank USA, National Association, 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
A-2-3
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 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 the Cap Contracts, 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.
A-2-4
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.
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.
A-2-5
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-2-6
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 Signatory
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 ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to _____% evidenced by the 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 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.
[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 A CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
AGREEMENT.
A-3-2
Series ACE 2004-FM2, Class B Aggregate Certificate Principal Balance of
the Class B Certificates as of the Issue
Date: $
Pass-Through Rate: Variable Denomination: $
Date of Pooling and Servicing Agreement Master Servicer: Wells Fargo Bank, N.A.
and Cut-off Date: August 1, 2004
First Distribution Date: September 25, 2004 Trustee: HSBC Bank USA, National
Association
No. ______ Issue Date: August 30, 2004
CUSIP:
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-FM2
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"), Litton Loan Servicing LP, as servicer (the "Servicer") and HSBC
Bank USA, National Association, 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.
A-3-3
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 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 and payments received pursuant to the
Cap Contracts, 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-3-4
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, 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, (ii) if such transfer is purportedly being made in reliance upon
Rule 501(a) 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 form attached to the Agreement as Exhibit B-2
and (iii) 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
A-3-5
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 shall be made to any person unless the
Transferee provides a certification pursuant to Section 6.02(d) of the
Agreement.
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-3-6
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, address including postal zip code, and
Taxpayer Identification Number 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 (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.
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.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
AGREEMENT.
Series 2004-FM2, Class CE Aggregate Certificate Principal Balance
of the Class CE Certificates as of the
Issue Date: $_____________
Pass-Through Rate: Variable Denomination: $_________________
Cut-off Date and date of Pooling and Master Servicer: Wells Fargo Bank, N.A.
Servicing Agreement: August 1, 2004
First Distribution Date: September 25, 2004 Trustee: HSBC Bank USA, National
Association
No. __ Issue Date: August 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-FM2
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"), Litton Loan Servicing LP, as servicer (the
"Servicer") and HSBC Bank USA, National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To
A-4-2
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
A-4-3
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 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,
(ii) if such transfer is purportedly being made in reliance upon Rule 501(a)
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 form attached to the Agreement as Exhibit B-2 and (iii) 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
A-4-4
"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 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-4-5
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 ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the 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 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 (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.
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.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES A CERTIFICATION PURSUANT TO SECTION 6.02(C) OF THE
AGREEMENT.
Series 2004-FM2, 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 Denomination: $100.00
Servicing Agreement: August 1, 2004
First Distribution Date: September 25, 2004 Master Servicer: Wells Fargo Bank, N.A.
No. __ Trustee: HSBC Bank USA, National
Association
Issue Date: August 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-5-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-FM2
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"), Litton Loan Servicing LP, as servicer (the "Servicer") and HSBC
Bank USA, National Association, 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
A-5-3
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 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
A-5-4
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, (ii) if such transfer is purportedly being made in
reliance upon Rule 501(a) 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 form attached to the Agreement as
Exhibit B-2 and (iii) 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.
A-5-5
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-5-6
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
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 _______________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the 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 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-FM2, Class R Aggregate Percentage Interest of the
Class R Certificates as of the Issue Date:
100.00%
Date of Pooling and Servicing Agreement Master Servicer: Wells Fargo Bank, N.A.
and Cut-off Date: August 1, 2004
First Distribution Date: September 25, 2004 Trustee: HSBC Bank USA, National
Association
No __ Issue Date: August 30, 2004
A-6-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2004-FM2
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-6-3
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"), Litton Loan Servicing LP, as the servicer (the "Servicer") and
HSBC Bank USA, National Association, 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
A-6-4
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.
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
A-6-5
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 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,
A-6-6
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-6-7
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 ________________
(State)
JT TEN - as joint tenants with right
if survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to _____% evidenced by the 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 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
B-1-2
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.
B-1-3
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-FM2
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-FM2
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
August 1, 2004, among ACE Securities Corp. as Depositor, Litton Loan Servicing
LP as Servicer, Wells Fargo Bank, N.A. as Master Servicer and Securities
Administrator and HSBC Bank USA, National Association as trustee (the "Pooling
and Servicing Agreement"), pursuant to which Pooling and Servicing Agreement the
Certificates were issued.
B-1-4
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-1-5
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-FM2
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-FM2
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. Sec.2510.3-101 or (b) [[for Class CE, Class P and Class R] has provided
the Securities 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
B-1-6
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.] [[for Class B] represents and warrants that it has acquired and is
holding such certificate in reliance on Prohibited Transaction Exemption ("PTE")
2002-41, and that it understands that there are certain conditions to the
availability of PTE 2002-41, including that such certificate must be rated, at
the time of purchase, not lower than "BBB-" (or its equivalent) by S&P, Fitch or
Moody's Investors Service, Inc., and such certificate is so rated, and that it
is an "accredited investor" as defined in Rule 501(a)(1) of Regulation D issued
under the Securities Act and will obtain a representation from any transferee
that such transferee is an accredited investor so long as it is required to
obtain a representation regarding compliance with the Securities Act or (c)(i)
it is an insurance company, (ii) 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 (iii) the conditions in Sections I and III of PTCE 95-60 have been
satisfied.
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 August 1, 2004, among ACE Securities Corp. as Depositor, Wells Fargo
Bank, N.A. as Master Servicer and Securities Administrator, Litton Loan
Servicing LP as Servicer and HSBC Bank USA, National Association as Trustee,
pursuant to which the Certificates were issued.
[TRANSFEREE]
By:_____________________________________
Name:
Title:
B-1-7
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 $________________ 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-1-8
___ 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?
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
B-1-9
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-1-10
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-1-11
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-1-12
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-1-13
ANNEX A EXHIBIT B-1
FORM OF REGULATION S TRANSFER CERTIFICATE
[Date]
Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2004-FM2
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-FM2
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 August 1, 2004, among ACE Securities Corp. (the
"Depositor"), Wells Fargo Bank, N.A., as master servicer and securities
administrator (the "Master Servicer"), Litton Loan Servicing LP, as servicer
(the "Servicer") and HSBC Bank USA, National Association, 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 August __,
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-1-14
(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-1-15
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-1-16
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-FM2
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-FM2
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-FM2
Re: Ace Securities Corp. Home Equity Loan Trust, Series 2004-FM2
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 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.
B-2-2
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. Sec.2510.3-101 or (b)
[[for Class CE, Class P and Class R] 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.] [[for Class B]
represents and warrants that it has acquired and is holding such
certificate in reliance on Prohibited Transaction Exemption ("PTE")
2002-41, and that it understands that there are certain conditions to the
availability of PTE 2002-41, including that such certificate must be rated,
at the time of purchase, not lower than "BBB-" (or its equivalent) by S&P,
Fitch or Moody's Investors Service, Inc., and such certificate is so rated,
and that it is an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D issued under the Securities Act and will obtain a
representation from any transferee that such transferee is an accredited
investor so long as it is required to obtain a representation regarding
compliance with the Securities Act or (c)(i) it is an insurance company,
(ii) 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 (iii)
the conditions in Sections I and III of PTCE 95-60 have been satisfied.]
B-2-3
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-2-4
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-FM2 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 April 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)
B-2-5
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 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.
B-3-2
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
with any transfer of the Class R Certificate, the Owner shall obtain
an agreement substantially similar to this clause from any subsequent
owner.
B-3-3
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-3-4
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-3-5
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 Loan Equity Trust Series, 2004-FM2 (the
"Trust")
Mortgage Pass-Through Certificates, Series 2004-FM2
-------------------------------------------------------
I, [identify the certifying individual], certify to 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 the servicer
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 the servicer under the pooling and
servicing agreement has been provided to the Master Servicer
3. I am responsible for reviewing the activities performed by the
servicer under the pooling and servicing agreement and based upon my
knowledge and the 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, the servicer has fulfilled
its obligations under the pooling and servicing agreement; and
4. I have disclosed to the Master Servicer all significant deficiencies
relating to the servicer's 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
Date:______________________________
___________________________________
[Signature]
___________________________________
[Title]
C-2
EXHIBIT D
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
LITTON LOAN SERVICING LP
4828 Loop Central Drive
Houston, Texas 77081
Attn: _________________________________
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that , having its principal
place of business at , as Trustee (the "Trustee") pursuant to
that Pooling and Servicing Agreement among (the
"Depositor"), Litton Loan Servicing LP (the "Servicer"), and the Trustee, dated
as of 1, 200__ (the "Pooling and Servicing Agreement"), hereby
constitutes and appoints the Servicer, by and through the Servicer's officers,
the Trustee's true and lawful Attorney-in-Fact, in the Trustee's name, place and
stead and for the Trustee's benefit, in connection with all mortgage loans
serviced by the Servicer pursuant to the Pooling and Servicing Agreement for the
purpose of performing all acts and executing all documents in the name of the
Trustee as may be customarily and reasonably necessary and appropriate to
effectuate the following enumerated transactions in respect of any of the
mortgages or deeds of trust (the "Mortgages" and the "Deeds of Trust",
respectively) and promissory notes secured thereby (the "Mortgage Notes") for
which the undersigned is acting as Trustee for various certificateholders
(whether the undersigned is named therein as mortgagee or beneficiary or has
become mortgagee by virtue of endorsement of the Mortgage Note secured by any
such Mortgage or Deed of Trust) and for which the Servicer is acting as
servicer, all subject to the terms of the Pooling and Servicing Agreement.
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recordings is for the purpose of correcting the Mortgage
or Deed of Trust to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance
was issued and said modification or re-recording, in either instance, does
not adversely affect the lien of the Mortgage or Deed of Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an easement
in favor of a public utility company of a government agency or unit with
powers of eminent domain; this section shall include, without limitation,
the execution of partial
C-3
satisfactions/releases, partial reconveyances or the execution or requests
to trustees to accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the closing of
the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
4. The completion of loan assumption agreements.
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage Note.
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the refinancing
thereof, including, without limitation, the assignment of the related
Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of
a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of any
such foreclosure, including, without limitation, any and all of the
following acts:
a. the substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
b. the preparation and issuance of statements of breach or
non-performance;
c. the preparation and filing of notices of default and/or notices of
sale;
d. the cancellation/rescission of notices of default and/or notices of
sale;
e. the taking of a deed in lieu of foreclosure; and
f. the preparation and execution of such other documents and performance
of such other actions as may be necessary under the terms of the
Mortgage, Deed of Trust or state law to expeditiously complete said
transactions in paragraphs 8.a. through 8.e., above.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
C-4
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.
IN WITNESS WHEREOF, ___________________ as Trustee pursuant to that Pooling and
Servicing Agreement among the Depositor, the Servicer, and the Trustee, dated as
of _________ 1, 200__ (_______________ Mortgage Loan Asset Backed Certificates,
Series 200__-___), has caused its corporate seal to be hereto affixed and these
presents to be signed and acknowledged in its name and behalf by
its duly elected and authorized Vice President this ____ day of ________ ,
200__.
____________________________________
as Trustee for _____ Mortgage Loan Asset
Backed Certificates, Series 200__-___
By _______________________________________
STATE OF _______
COUNTY OF ______
On _____________ , 200__, before me, the undersigned, a Notary Public in and for
said state, personally appeared _____________ , Vice President of ______
___________________ as Trustee for __________ Mortgage Loan Asset Backed
Certificates, Series 200__-___, personally known to me to be the person whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed that same in his/her authorized capacity, and that by his/her signature
on the instrument the entity upon behalf of which the person acted and executed
the instrument.
WITESS my hand and official seal.
(SEAL)
____________________________________
Notary Public
My Commission Expires ________________________
C-5
SCHEDULE 1
MORTGAGE LOAN SCHEDULE
C-6
SCHEDULE 2
PREPAYMENT CHARGE SCHEDULE
C-1
SCHEDULE 3
[RESERVED]
C-1
SCHEDULE 4
STANDARD FILE LAYOUT- DELINQUENCY REPORTING
EXHIBIT 1: STANDARD FILE LAYOUT - DELINQUENCY REPORTING
- ------------------------------------------------------------------------------------------------------------------------------
COLUMN/HEADER NAME DESCRIPTION DECIMAL FORMAT
COMMENT
- ------------------------------------------------------------------------------------------------------------------------------
SERVICER_LOAN_NBR A unique number assigned to a loan by the Servicer. This may be
different than the LOAN_NBR
- ------------------------------------------------------------------------------------------------------------------------------
LOAN_NBR A unique identifier assigned to each loan by the originator.
- ------------------------------------------------------------------------------------------------------------------------------
CLIENT_NBR Servicer Client Number
- ------------------------------------------------------------------------------------------------------------------------------
SERV_INVESTOR_NBR Contains a unique number as assigned by an external servicer to
identify a group of loans in their system.
- ------------------------------------------------------------------------------------------------------------------------------
BORROWER_FIRST_NAME First Name of the Borrower.
- ------------------------------------------------------------------------------------------------------------------------------
BORROWER_LAST_NAME Last name of the borrower.
- ------------------------------------------------------------------------------------------------------------------------------
PROP_ADDRESS Street Name and Number of Property
- ------------------------------------------------------------------------------------------------------------------------------
PROP_STATE The state where the property located.
- ------------------------------------------------------------------------------------------------------------------------------
PROP_ZIP Zip code where the property is located.
- ------------------------------------------------------------------------------------------------------------------------------
BORR_NEXT_PAY_DUE_DATE The date that the borrower's next payment is due to the servicer at MM/DD/YYYY
the end of processing cycle, as reported by Servicer.
- ------------------------------------------------------------------------------------------------------------------------------
LOAN_TYPE Loan Type (i.e. FHA, VA, Conv)
- ------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_FILED_DATE The date a particular bankruptcy claim was filed. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_CHAPTER_CODE The chapter under which the bankruptcy was filed.
- ------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_CASE_NBR The case number assigned by the court to the bankruptcy filing.
- ------------------------------------------------------------------------------------------------------------------------------
POST_PETITION_DUE_DATE The payment due date once the bankruptcy has been approved by MM/DD/YYYY
the courts
- ------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_DCHRG_DISM_DATE The Date The Loan Is Removed From Bankruptcy. Either by MM/DD/YYYY
Dismissal, Discharged and/or a Motion For Relief Was Granted.
- ------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_APPR_DATE The Date The Loss Mitigation Was Approved By The Servicer MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_TYPE The Type Of Loss Mitigation Approved For A Loan Such As;
- ------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_EST_COMP_DATE The Date The Loss Mitigation /Plan Is Scheduled To End/Close MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_ACT_COMP_DATE The Date The Loss Mitigation Is Actually Completed MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FRCLSR_APPROVED_DATE The date DA Admin sends a letter to the servicer with instructions to MM/DD/YYYY
begin foreclosure proceedings.
- ------------------------------------------------------------------------------------------------------------------------------
ATTORNEY_REFERRAL_DATE Date File Was Referred To Attorney to Pursue Foreclosure MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FIRST_LEGAL_DATE Notice of 1st legal filed by an Attorney in a Foreclosure Action MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_EXPECTED_DATE The date by which a foreclosure sale is expected to occur. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_DATE The actual date of the foreclosure sale. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_AMT The amount a property sold for at the foreclosure sale. 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
EVICTION_START_DATE The date the servicer initiates eviction of the borrower. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
EVICTION_COMPLETED_DATE The date the court revokes legal possession of the property from the MM/DD/YYYY
borrower.
- ------------------------------------------------------------------------------------------------------------------------------
LIST_PRICE The price at which an REO property is marketed. 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
LIST_DATE The date an REO property is listed at a particular price. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
C-1
- ------------------------------------------------------------------------------------------------------------------------------
OFFER_AMT The dollar value of an offer for an REO property. 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
OFFER_DATE_TIME The date an offer is received by DA Admin or by the Servicer. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
REO_CLOSING_DATE The date the REO sale of the property is scheduled to close. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
REO_ACTUAL_CLOSING_DATE Actual Date Of REO Sale MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
OCCUPANT_CODE Classification of how the property is occupied.
- ------------------------------------------------------------------------------------------------------------------------------
PROP_CONDITION_CODE A code that indicates the condition of the property.
- ------------------------------------------------------------------------------------------------------------------------------
PROP_INSPECTION_DATE The date a property inspection is performed. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
APPRAISAL_DATE The date the appraisal was done. MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
CURR_PROP_VAL The current "as is" value of the property based on brokers price 2
opinion or appraisal.
- ------------------------------------------------------------------------------------------------------------------------------
REPAIRED_PROP_VAL The amount the property would be worth if repairs are completed 2
pursuant to a broker's price opinion or appraisal.
- ------------------------------------------------------------------------------------------------------------------------------
IF APPLICABLE:
- --------------
- ------------------------------------------------------------------------------------------------------------------------------
DELINQ_STATUS_CODE FNMA Code Describing Status of Loan
- ------------------------------------------------------------------------------------------------------------------------------
DELINQ_REASON_CODE The circumstances which caused a borrower to stop paying on a
loan. Code indicates the reason why the loan is in default for this
cycle.
- ------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_FILED_DATE Date Mortgage Insurance Claim Was Filed With Mortgage Insurance MM/DD/YYYY
Company.
- ------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_AMT Amount of Mortgage Insurance Claim Filed No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_PAID_DATE Date Mortgage Insurance Company Disbursed Claim Payment MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_AMT_PAID Amount Mortgage Insurance Company Paid On Claim 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_FILED_DATE Date Claim Was Filed With Pool Insurance Company MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_AMT Amount of Claim Filed With Pool Insurance Company 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_PAID_DATE Date Claim Was Settled and The Check Was Issued By The Pool MM/DD/YYYY
Insurer
- ------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_AMT_PAID Amount Paid On Claim By Pool Insurance Company 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_FILED_DATE Date FHA Part A Claim Was Filed With HUD MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_AMT Amount of FHA Part A Claim Filed 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_DATE Date HUD Disbursed Part A Claim Payment MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_AMT Amount HUD Paid on Part A Claim 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_FILED_DATE Date FHA Part B Claim Was Filed With HUD MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_AMT Amount of FHA Part B Claim Filed 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_DATE Date HUD Disbursed Part B Claim Payment MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_AMT Amount HUD Paid on Part B Claim 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
VA_CLAIM_FILED_DATE Date VA Claim Was Filed With the Veterans Admin MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
VA_CLAIM_PAID_DATE Date Veterans Admin. Disbursed VA Claim Payment MM/DD/YYYY
- ------------------------------------------------------------------------------------------------------------------------------
VA_CLAIM_PAID_AMT Amount Veterans Admin. Paid on VA Claim 2 No commas(,) or
dollar signs ($)
- ------------------------------------------------------------------------------------------------------------------------------
C-2
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING
The LOSS MIT TYPE field should show the approved Loss Mitigation Code as
---------------
follows:
- ASUM- Approved Assumption
- BAP- Borrower Assistance Program
- CO- Charge Off
- DIL- Deed-in-Lieu
- FFA- Formal Forbearance Agreement
- MOD- Loan Modification
- PRE- Pre-Sale
- SS- Short Sale
- MISC- Anything else approved by the PMI or Pool Insurer
NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
- -----
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.
The OCCUPANT CODE field should show the current status of the property code as
--------------
follows:
- Mortgagor
- Tenant
- Unknown
- Vacant
The PROPERTY CONDITION field should show the last reported condition of the
-------------------
property as follows:
- Damaged
- Excellent
- Fair
- Gone
- Good
- Poor
- Special Hazard
- Unknown
C-3
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED
The FNMA DELINQUENT REASON CODE field should show the Reason for Delinquency as
---------------------------
follows:
- ------------------------------------------------------
DELINQUENCY DELINQUENCY DESCRIPTION
CODE
- ------------------------------------------------------
001 FNMA-Death of principal mortgagor
- ------------------------------------------------------
002 FNMA-Illness of principal mortgagor
- ------------------------------------------------------
003 FNMA-Illness of mortgagor's family member
- ------------------------------------------------------
004 FNMA-Death of mortgagor's family member
- ------------------------------------------------------
005 FNMA-Marital difficulties
- ------------------------------------------------------
006 FNMA-Curtailment of income
- ------------------------------------------------------
007 FNMA-Excessive Obligation
- ------------------------------------------------------
008 FNMA-Abandonment of property
- ------------------------------------------------------
009 FNMA-Distant employee transfer
- ------------------------------------------------------
011 FNMA-Property problem
- ------------------------------------------------------
012 FNMA-Inability to sell property
- ------------------------------------------------------
013 FNMA-Inability to rent property
- ------------------------------------------------------
014 FNMA-Military Service
- ------------------------------------------------------
015 FNMA-Other
- ------------------------------------------------------
016 FNMA-Unemployment
- ------------------------------------------------------
017 FNMA-Business failure
- ------------------------------------------------------
019 FNMA-Casualty loss
- ------------------------------------------------------
022 FNMA-Energy environment costs
- ------------------------------------------------------
023 FNMA-Servicing problems
- ------------------------------------------------------
026 FNMA-Payment adjustment
- ------------------------------------------------------
027 FNMA-Payment dispute
- ------------------------------------------------------
029 FNMA-Transfer of ownership pending
- ------------------------------------------------------
030 FNMA-Fraud
- ------------------------------------------------------
031 FNMA-Unable to contact borrower
- ------------------------------------------------------
INC FNMA-Incarceration
- ------------------------------------------------------
C-4
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED
The FNMA DELINQUENT STATUS CODE field should show the Status of Default as
------------------------------
follows:
- -------------------------------------------------------
STATUS CODE STATUS DESCRIPTION
- -------------------------------------------------------
09 Forbearance
- -------------------------------------------------------
17 Pre-foreclosure Sale Closing Plan Accepted
- -------------------------------------------------------
24 Government Seizure
- -------------------------------------------------------
26 Refinance
- -------------------------------------------------------
27 Assumption
- -------------------------------------------------------
28 Modification
- -------------------------------------------------------
29 Charge-Off
- -------------------------------------------------------
30 Third Party Sale
- -------------------------------------------------------
31 Probate
- -------------------------------------------------------
32 Military Indulgence
- -------------------------------------------------------
43 Foreclosure Started
- -------------------------------------------------------
44 Deed-in-Lieu Started
- -------------------------------------------------------
49 Assignment Completed
- -------------------------------------------------------
61 Second Lien Considerations
- -------------------------------------------------------
62 Veteran's Affairs-No Bid
- -------------------------------------------------------
63 Veteran's Affairs-Refund
- -------------------------------------------------------
64 Veteran's Affairs-Buydown
- -------------------------------------------------------
65 Chapter 7 Bankruptcy
- -------------------------------------------------------
66 Chapter 11 Bankruptcy
- -------------------------------------------------------
67 Chapter 13 Bankruptcy
- -------------------------------------------------------
C-5
EXHIBIT 3: CALCULATION OF REALIZED LOSS/GAIN FORM 332- INSTRUCTION SHEET
1. The numbers on the form correspond with the numbers listed below.
Liquidation and Acquisition Expenses:
----------------------------------------
1. The Actual Unpaid Principal Balance of the Mortgage Loan. For
documentation, an Amortization Schedule from date of default
through liquidation breaking out the net interest and servicing
fees advanced is required.
2. The Total Interest Due less the aggregate amount of servicing fee
that would have been earned if all delinquent payments had been
made as agreed. For documentation, an Amortization Schedule from
date of default through liquidation breaking out the net interest
and servicing fees advanced is required.
3. Accrued Servicing Fees based upon the Scheduled Principal Balance
of the Mortgage Loan as calculated on a monthly basis. For
documentation, an Amortization Schedule from date of default
through liquidation breaking out the net interest and servicing
fees advanced is required.
4-12. Complete as applicable. All line entries must be supported by
copies of appropriate statements, vouchers, receipts, bills,
canceled checks, etc., to document the expense. Entries not
properly documented will not be reimbursed to the Servicer.
13. The total of lines 1 through 12.
2. Credits:
--------
14-21. Complete as applicable. All line entries must be supported by
copies of the appropriate claims forms, EOBs, HUD-1 and/or other
proceeds verification, statements, payment checks, etc. to
document the credit. If the Mortgage Loan is subject to a
Bankruptcy Deficiency, the difference between the Unpaid
Principal Balance of the Note prior to the Bankruptcy Deficiency
and the Unpaid Principal Balance as reduced by the Bankruptcy
Deficiency should be input on line 20.
22. The total of lines 14 through 21.
Please note: For HUD/VA loans, use line (15) for Part A/Initial proceeds
-------------
and line (16) for Part B/Supplemental proceeds.
3. Total Realized Loss (or Amount of Any Gain)
--------------------------------------------------
23. The total derived from subtracting line 22 from 13. If the amount
represents a realized gain, show the amount in parenthesis ( ).
C-6
EXHIBIT 3A: CALCULATION OF REALIZED LOSS/GAIN FORM 332
WELLS FARGO BANK, N.A.
CALCULATION OF REALIZED LOSS/GAIN
Prepared by: __________________ Date: _______________
Phone: ______________________ Email Address:_____________________
------------------- --------------- ------------------
Servicer Loan No. Servicer Name Servicer Address
------------------- --------------- ------------------
WELLS FARGO BANK, N.A. Loan No._____________________________
Borrower's Name:______________________________________________________
Property Address:__________________________________________________________
LIQUIDATION AND ACQUISITION EXPENSES:
(1) Actual Unpaid Principal Balance of Mortgage Loan $_______________ (1)
(2) Interest accrued at Net Rate _______________ (2)
(3) Accrued Servicing Fees _______________ (3)
(4) Attorney's Fees _______________ (4)
(5) Taxes _______________ (5)
(6) Property Maintenance _______________ (6)
(7) MI/Hazard Insurance Premiums _______________ (7)
(8) Utility Expenses _______________ (8)
(9) Appraisal/BPO _______________ (9)
(10) Property Inspections _______________ (10)
(11) FC Costs/Other Legal Expenses _______________ (11)
(12) Other (itemize) $_______________ (12)
Cash for Keys__________________________ _______________
HOA/Condo Fees_________________________ _______________
_______________________________________ _______________
_______________________________________ _______________
TOTAL EXPENSES $ ______________ (13)
CREDITS:
(14) Escrow Balance $ ______________ (14)
(15) HIP Refund _______________ (15)
(16) Rental Receipts _______________ (16)
(17) Hazard Loss Proceeds _______________ (17)
(18) Primary Mortgage Insurance Proceeds _______________ (18)
(19) Pool Insurance Proceeds _______________ (19)
(20) Proceeds from Sale of Acquired Property _______________ (20)
C-7
(21) Other (itemize) _______________ (21)
_________________________________________ _______________
_________________________________________ _______________
TOTAL CREDITS $_______________ (22)
TOTAL REALIZED LOSS (OR AMOUNT OF GAIN) $_______________ (23)
C-8
SCHEDULE 5
STANDARD FILE LAYOUT- SCHEDULED/SCHEDULED
EXHIBIT 1: STANDARD FILE LAYOUT - SCHEDULED/SCHEDULED
- --------------------------------------------------------------------------------------------------------------
COLUMN NAME DESCRIPTION DECIMAL FORMAT COMMENT
- --------------------------------------------------------------------------------------------------------------
LOAN_NBR Loan Number assigned by investor Text up to 10 digits
- --------------------------------------------------------------------------------------------------------------
SERVICER LOAN_NBR Servicer Loan Number Text up to 10 digits
- --------------------------------------------------------------------------------------------------------------
BORROWER_NAME Mortgagor name assigned to Note Max length of 30
- --------------------------------------------------------------------------------------------------------------
No commas(,) or dollar signs
SCHED_PMT_AMT P&I constant 2 ($)
- --------------------------------------------------------------------------------------------------------------
NOTE_INT_RATE Gross Interest Rate 4 Max length of 6
- --------------------------------------------------------------------------------------------------------------
Gross Interest Rate less the Service Fee 4
NET_RATE Rate Max length of 6
- --------------------------------------------------------------------------------------------------------------
SERV_FEE_RATE Service Fee Rate 4 Max length of 6
- --------------------------------------------------------------------------------------------------------------
NEW_PAY_AMT ARM loan's forecasted P&I constant 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
NEW_LOAN_RATE ARM loan's forecasted Gross Interest Rate 4 Max length of 6
- --------------------------------------------------------------------------------------------------------------
ARM_INDEX_RATE ARM loan's index Rate used 4 Max length of 6
- --------------------------------------------------------------------------------------------------------------
ACTL_BEG_BAL Beginning Actual Balance 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
ACTL_END_BAL Ending Actual Balance 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
NEXT_DUE_DATE Borrower's next due date MM/DD/YYYY
- --------------------------------------------------------------------------------------------------------------
CURT_AMT_1 Curtailment Amount 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
CURT_DATE_1 Due date Curtailment was applied to MM/DD/YYYY
- --------------------------------------------------------------------------------------------------------------
CURT_ADJ_ AMT_1 Curtailment Interest if applicable 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
CURT_AMT_2 Curtailment Amount 2 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
CURT_DATE_2 Due date Curtailment was applied to MM/DD/YYYY
- --------------------------------------------------------------------------------------------------------------
CURT_ADJ_ AMT2 Curtailment Interest if applicable 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
CURT_AMT_3 Curtailment Amount 3 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
CURT_DATE_3 Due date Curtailment was applied to MM/DD/YYYY
- --------------------------------------------------------------------------------------------------------------
CURT_ADJ_AMT3 Curtailment Interest, if applicable 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
SCHED_BEG_BAL Beginning Scheduled Balance 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
SCHED_END_BAL Ending Scheduled Balance 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
SCHED_PRIN_AMT Scheduled Principal portion of P&I 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
Scheduled Net Interest (less Service Fee)
SCHED_NET_INT portion of P&I 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
Liquidation Principal Amt to bring balance to
LIQ_AMT zero 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
PIF_DATE Liquidation Date MM/DD/YYYY
- --------------------------------------------------------------------------------------------------------------
ACTION_CODE Either 60 for liquidation or 65 for Repurchase Max length of 2
- --------------------------------------------------------------------------------------------------------------
Principal Adjustments made to loan, if
PRIN_ADJ_AMT applicable 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
Interest Adjustment made to loan, if
INT_ADJ_AMT applicable 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
PREPAYMENT
PENALTY AMT Prepayment penalty amount, if applicable 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
SOILDER_SAILOR ADJ Soldier and Sailor Adjustment amount, if
AMT applicable 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------
NON ADV LOAN AMT Non Recoverable Loan Amount, if applicable 2 No commas(,) or dollar signs ($)
- --------------------------------------------------------------------------------------------------------------