ACE SECURITIES CORP.
Depositor
OCWEN FEDERAL BANK FSB
a Servicer
WELLS FARGO BANK, N.A.
Master Servicer and Securities Administrator
HSBC BANK USA, NATIONAL ASSOCIATION
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2005
ACE Securities Corp. Home Equity Loan Trust, Series 2005-SN1
Asset Backed Pass-Through Certificates
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS..........................................................................................................4
Section 1.01. Defined Terms.................................................................................................4
Section 1.02. Allocation of Certain Interest Shortfalls....................................................................49
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES.....................................................51
Section 2.01. Conveyance of the Mortgage Loans.............................................................................51
Section 2.02. Acceptance of REMIC I by Trustee.............................................................................52
Section 2.03. Repurchase or Substitution of Mortgage Loans.................................................................52
Section 2.04. Representations and Warranties of the Master Servicer........................................................55
Section 2.05. Representations, Warranties and Covenants of Ocwen...........................................................56
Section 2.06. Issuance of the REMIC I Regular Interests and the Class R-I Interest.........................................58
Section 2.07. Conveyance of the REMIC I Regular Interests; Acceptance of REMIC I by the Trustee............................59
Section 2.08. Issuance of Residual Certificates............................................................................59
Section 2.09. Establishment of the Trust...................................................................................59
ARTICLE III ADMINISTRATION AND SERVICING OF THE OCWEN MORTGAGE LOANS; ACCOUNTS..................................................60
Section 3.01. Ocwen to Act as a Servicer...................................................................................60
Section 3.02. Sub-Servicing Agreements Between Ocwen and Sub-Servicers.....................................................62
Section 3.03. Successor Sub-Servicers......................................................................................63
Section 3.04. No Contractual Relationship Between Sub-Servicer, Trustee or the Certificateholders..........................63
Section 3.05. Assumption or Termination of Sub-Servicing Agreement by Successor Servicer...................................63
Section 3.06. Collection of Certain Mortgage Loan Payments.................................................................64
Section 3.07. Collection of Taxes, Assessments and Similar Items; Servicing Accounts.......................................64
Section 3.08. Collection Account, Simple Interest Excess Sub-Account and Distribution Account..............................66
Section 3.09. Withdrawals from the Collection Account and Distribution Account.............................................69
Section 3.10. Investment of Funds in the Investment Accounts...............................................................71
Section 3.11. Maintenance of Hazard Insurance, Errors and Omissions and Fidelity Coverage and Primary
Mortgage Insurance...........................................................................................72
Section 3.12. Enforcement of Due-on-Sale Clauses; Assumption Agreements....................................................74
Section 3.13. Realization Upon Defaulted Mortgage Loans....................................................................75
i
Section 3.14. Trustee to Cooperate; Release of Mortgage Files..............................................................77
Section 3.15. Servicing Compensation.......................................................................................78
Section 3.16. Collection Account Statements................................................................................79
Section 3.17. Statement as to Compliance...................................................................................79
Section 3.18. Independent Public Accountants' Servicing Report.............................................................79
Section 3.19. Annual Certification.........................................................................................80
Section 3.20. Access to Certain Documentation..............................................................................80
Section 3.21. Title, Management and Disposition of REO Property............................................................81
Section 3.22. Obligations of Ocwen in Respect of Prepayment Interest Shortfalls; Relief Act
Interest Shortfalls..........................................................................................84
Section 3.23. Obligations of Ocwen in Respect of Mortgage Rates and Monthly Payments......................................84
Section 3.24. Reserve Fund.................................................................................................84
Section 3.25. Advance Facility.............................................................................................86
Section 3.26. Ocwen's Indemnification Obligation...........................................................................88
ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF THE MORTGAGE LOANS BY THE MASTER SERVICER....................................89
Section 4.01. Master Servicer..............................................................................................89
Section 4.02. REMIC-Related Covenants......................................................................................90
Section 4.03. Monitoring of Servicer.......................................................................................90
Section 4.04. Fidelity Bond................................................................................................91
Section 4.05. Power to Act; Procedures.....................................................................................91
Section 4.06. Due-on-Sale Clauses; Assumption Agreements...................................................................92
Section 4.07. Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee.........................93
Section 4.08. Standard Hazard Insurance and Flood Insurance Policies.......................................................93
Section 4.09. Presentment of Claims and Collection of Proceeds.............................................................93
Section 4.10. Maintenance of Primary Mortgage Insurance Policies...........................................................94
Section 4.11. Trustee to Retain Possession of Certain Insurance Policies and Documents.....................................94
Section 4.12. Realization Upon Defaulted Mortgage Loans....................................................................95
Section 4.13. Compensation for the Master Servicer.........................................................................95
Section 4.14. REO Property.................................................................................................95
Section 4.15. Annual Officer's Certificate as to Compliance................................................................96
Section 4.16. Annual Independent Accountant's Servicing Report.............................................................96
Section 4.17. UCC..........................................................................................................97
Section 4.18. Obligation of the Master Servicer in Respect of Prepayment Interest Shortfalls...............................97
Section 4.19. Prepayment Penalty Verification..............................................................................97
ii
Section 4.20. WMMSC Reporting..............................................................................................98
ARTICLE V PAYMENTS TO CERTIFICATEHOLDERS......................................................................................99
Section 5.01. Distributions................................................................................................99
Section 5.02. Statements to Certificateholders............................................................................106
Section 5.03. Servicer Reports; P&I Advances..............................................................................109
Section 5.04. Allocation of Realized Losses...............................................................................111
Section 5.05. Compliance with Withholding Requirements....................................................................113
Section 5.06. Reports Filed with Securities and Exchange Commission.......................................................113
ARTICLE VI THE CERTIFICATES...................................................................................................115
Section 6.01. The Certificates............................................................................................115
Section 6.02. Registration of Transfer and Exchange of Certificates.......................................................117
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates...........................................................122
Section 6.04. Persons Deemed Owners.......................................................................................122
Section 6.05. Certain Available Information...............................................................................122
ARTICLE VII THE DEPOSITOR, Ocwen AND THE MASTER SERVICER.......................................................................124
Section 7.01. Liability of the Depositor, Ocwen and the Master Servicer..................................................124
Section 7.02. Merger or Consolidation of the Depositor, Ocwen or the Master Servicer......................................124
Section 7.03. Limitation on Liability of the Depositor, Ocwen, the Master Servicer and Others.............................124
Section 7.04. Limitation on Resignation of Ocwen..........................................................................125
Section 7.05. Limitation on Resignation of the Master Servicer............................................................126
Section 7.06. Assignment of Master Servicing..............................................................................127
Section 7.07. Rights of the Depositor in Respect of the Servicers and the Master Servicer.................................127
Section 7.08. Duties of the Credit Risk Manager...........................................................................128
Section 7.09. Limitation Upon Liability of the Credit Risk Manager........................................................128
Section 7.10. Removal of the Credit Risk Manager..........................................................................129
ARTICLE VIII DEFAULT............................................................................................................130
Section 8.01. Servicer Events of Default..................................................................................130
Section 8.02. Master Servicer to Act; Appointment of Successor............................................................134
Section 8.03. Notification to Certificateholders..........................................................................136
Section 8.04. Waiver of Servicer Events of Default........................................................................136
ARTICLE IX CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR............................................................137
Section 9.01. Duties of Trustee and Securities Administrator..............................................................137
iii
Section 9.02. Certain Matters Affecting Trustee and Securities Administrator..............................................138
Section 9.03. Trustee and Securities Administrator not Liable for Certificates or Mortgage Loans..........................140
Section 9.04. Trustee and Securities Administrator May Own Certificates...................................................140
Section 9.05. Fees and Expenses of Trustee and Securities Administrator...................................................140
Section 9.06. Eligibility Requirements for Trustee and Securities Administrator...........................................141
Section 9.07. Resignation and Removal of Trustee and Securities Administrator.............................................142
Section 9.08. Successor Trustee or Securities Administrator...............................................................143
Section 9.09. Merger or Consolidation of Trustee or Securities Administrator..............................................143
Section 9.10. Appointment of Co-Trustee or Separate Trustee...............................................................144
Section 9.11. Appointment of Office or Agency.............................................................................145
Section 9.12. Representations and Warranties..............................................................................145
ARTICLE X TERMINATION........................................................................................................146
Section 10.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans............................................146
Section 10.02. Additional Termination Requirements.........................................................................148
ARTICLE XI REMIC PROVISIONS...................................................................................................150
Section 11.01. REMIC Administration........................................................................................150
Section 11.02. Prohibited Transactions and Activities......................................................................152
Section 11.03. Indemnification.............................................................................................153
ARTICLE XII MISCELLANEOUS PROVISIONS...........................................................................................154
Section 12.01. Amendment...................................................................................................154
Section 12.02. Recordation of Agreement; Counterparts......................................................................155
Section 12.03. Limitation on Rights of Certificateholders..................................................................155
Section 12.04. Governing Law...............................................................................................156
Section 12.05. Notices.....................................................................................................156
Section 12.06. Severability of Provisions..................................................................................157
Section 12.07. Notice to Rating Agencies...................................................................................157
Section 12.08. Article and Section References..............................................................................158
Section 12.09. Grant of Security Interest..................................................................................158
Section 12.10. Survival of Indemnification.................................................................................159
Section 12.11. Servicing Agreements........................................................................................159
iv
Exhibits
- --------
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class M Certificate
Exhibit A-3 Form of Class CE [-1] [-2] Certificate
Exhibit A-4 Form of Class R Certificate
Exhibit B-1 Form of Transferor Representation Letter and Form of
Transferee Representation Letter in Connection with Transfer
Class CE-1 Certificates, Class CE-2 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 Class CE-1 Certificates, Class CE-2 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 Servicing Advances Incurred Prior to the Cut-off Date
v
This Pooling and Servicing Agreement, is dated and effective
as of March 1, 2005, among ACE SECURITIES CORP., as Depositor, OCWEN FEDERAL
BANK FSB, as a Servicer, WELLS FARGO BANK, N.A., as Master Servicer and
Securities Administrator and HSBC BANK USA, 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, 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
REMITTANCE UNCERTIFICATED LATEST POSSIBLE
DESIGNATION RATE BALANCE MATURITY DATE (1)
- ----------- ---- ------- -----------------
I-LTAA Variable(2) $161,905,867.62 November 25, 2039
I-LTA1 Variable(2) $ 970,310.00 November 25, 2039
I-LTA2 Variable(2) $ 586,800.00 November 25, 2039
I-LTM1 Variable(2) $ 45,430.00 November 25, 2039
I-LTM2 Variable(2) $ 24,780.00 November 25, 2039
I-LTM3 Variable(2) $ 12,390.00 November 25, 2039
I-LTM4 Variable(2) $ 12,390.00 November 25, 2039
I-LTZZ Variable(2) $ 1,652,101.38 November 25, 2039
- ----------
(1) 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, for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for the indicated Classes of Certificates.
2
INITIAL
AGGREGATE
PASS- CERTIFICATE
THROUGH PRINCIPAL LATEST POSSIBLE
DESIGNATION RATE BALANCE MATURITY DATE (1)
- ----------- ---- ------- -----------------
Class A-1 Variable(2) $ 97,031,000 November 25, 2039
Class A-2 Variable(2) $ 58,680,000 November 25, 2039
Class M-1 Variable(2) $ 4,543,000 November 25, 2039
Class M-2 Variable(2) $ 2,478,000 November 25, 2039
Class M-3 Variable(2) $ 1,239,000 November 25, 2039
Class M-4 Variable(2) $ 1,239,000 November 25, 2039
Class CE-1 N/A(3) $ 69 November 25, 2039
Class CE-2 N/A(4) N/A(4) November 25, 2039
- ----------
(1) 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 CE-1 Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE-1 Certificates
outstanding from time to time which shall equal the Uncertificated
Balance of the REMIC I Regular Interests. The Class CE-1 Certificates
will not accrue interest on their Certificate Principal Balance.
(4) The Class CE-2 Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE-2 Certificates
which shall equal the Uncertificated Balance of the REMIC I Regular
Interests. The Class CE-2 Certificates will not have a Certificate
Principal Balance.
As of the Cut-off Date, the Mortgage Loans had an aggregate
Scheduled Principal Balance equal to approximately $165,210,069.
In consideration of the mutual agreements herein contained,
the Depositor, Ocwen, the Master Servicer, the Securities Administrator and the
Trustee agree as follows:
3
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 a
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 CE-1 Certificate or Class CE-2
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 and the Mezzanine Certificates, or on the Notional Amount in the
case of the Class CE-1 Certificates and Class CE-2 Certificates, of such
Certificate immediately prior to such Distribution Date. All distributions of
interest on the 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 or Class
CE-1 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 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 CE-1 Certificate, shall be reduced by an amount equal to the
portion allocable to such Class CE-1 Certificate of Realized Losses, if any,
pursuant to Section 1.02 and Section 5.04 hereof.
"Administration Fees": The sum of (i) the Servicing Fee, (ii)
the Master Servicing Fee and (iii) the Credit Risk Management Fee.
"Administration Fee Rate": The sum of (i) the Servicing Fee
Rate, (ii) the Master Servicer Fee Rate and (iii) the Credit Risk Management Fee
Rate.
4
"Advance Facility": As defined in Section 3.25(a).
"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.
"Allocated Realized Loss Amount": With respect to any Class of
Mezzanine Certificates and any Distribution Date, an amount equal to the sum of
any Realized Loss allocated to that Class of Certificates on the Distribution
Date and any Allocated Realized Loss Amount for that Class remaining unpaid from
the previous Distribution Date.
"Amounts Held for Future Distribution": As to any Distribution
Date, the aggregate amount held in the Custodial Account and 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.
"Assignment Agreement": The Assignment, Assumption and
Recognition Agreement, dated as of March 30, 2005, by and among the Seller, the
Depositor and WMMSC evidencing the assignment of the Servicing Agreement to the
Depositor.
"Authorized Officers": A managing director of the whole loan
trading desk and a managing director in global markets.
5
"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 Custodial Account, 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
related 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 Servicing Agreement, (c) the aggregate of
any P&I Advances for such Distribution Date made by the related Servicer
pursuant to Section 5.03 of this Agreement or pursuant to the Servicing
Agreement 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 of this Agreement or pursuant to the Servicing Agreement, reduced (to not
less than zero) by (2) the portion of the amount described in clause (1)(a)
above that represents (i) Amounts Held for Future Distribution, (ii) Principal
Prepayments on the Mortgage Loans received after the related Prepayment Period
(together with any interest payments received with such Principal Prepayments to
the extent they represent the payment of interest accrued on the Mortgage Loans
during a period subsequent to the related Prepayment Period), (iii) Liquidation
Proceeds and Insurance Proceeds received in respect of the Mortgage Loans after
the related Prepayment Period, (iv) amounts reimbursable or payable to the
Depositor, a Servicer, the Trustee, the Master Servicer, the Securities
Administrator or the Custodian pursuant to Section 3.09 or Section 9.05 of this
Agreement or otherwise payable in respect of Extraordinary Trust Fund Expenses
or reimbursable or payable under the Servicing Agreement, (v) amounts deposited
in the Custodial Account, the Collection Account or the Distribution Account in
error, (vi) the Credit Risk Management Fee, (vii) the amount of any Prepayment
Charges collected by a Servicer in connection with the Principal Prepayment of
the Mortgage Loans and (viii) amounts reimbursable to a successor Servicer
(including the Master Servicer) pursuant to Section 8.02 of this Agreement or
pursuant to the Servicing Agreement.
"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,
Florida, Maryland, Washington, California, Illinois, 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.
6
"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 2005-SN1, Class A-1, Class A-2, Class M-1,
Class M-2, Class M-3, Class M-4, Class CE-1, Class CE-2 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-1 Certificates and Class CE-2 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-1
Certificates and Class CE-2 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-1 Certificates and Class CE-2 Certificates) of such Class of
Certificates as of the Closing Date.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof, and solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of or beneficially owned by the Depositor, the Seller, a Servicer, the
Master Servicer, the Securities Administrator, the Trustee or any Affiliate
thereof shall be deemed not to be outstanding and the Voting Rights to which it
is entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 12.01. The Trustee and the
Securities Administrator may conclusively rely upon a certificate of the
Depositor, the Seller, the Master Servicer, the Securities Administrator or a
Servicer in determining whether a Certificate is held by an Affiliate thereof.
All references herein to "Holders" or "Certificateholders" shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights through
the Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee and the Securities Administrator
shall be required to recognize as a "Holder" or "Certificateholder" only the
Person in whose name a Certificate is registered in the Certificate Register.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class A
Certificate or Mezzanine 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
7
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-1 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 and the Mezzanine
Certificates then outstanding. The aggregate initial Certificate Principal
Balance of each Class of Regular Certificates is set forth in the Preliminary
Statement hereto.
"Certificate Register": The register maintained pursuant to
Section 6.02.
"Class": Collectively, all of the Certificates bearing the
same class designation.
"Class A Certificate": Any Class A-1 Certificate or Class A-2
Certificate.
"Class A Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of the Certificate Principal Balances
of the Class A-1 Certificates and Class A-2 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 87.50% 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 A-1 Certificate": Any one of the Class A-1 Certificates
executed and authenticated by the Securities Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-1 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.
"Class A-2 Certificate": Any one of the Class A-2 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 CE-1 Certificate": Any one of the Class CE-1
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 CE-2 Certificate": Any one of the Class CE-2
Certificates executed and authenticated by the Securities Administrator and
delivered by the Trustee, substantially in the
8
form annexed hereto as Exhibit A-3 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
and Class M-4 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) 93.00% 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) 96.00% 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
9
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) 97.50% 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) 99.00% 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
10
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 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-4, and evidencing
the Class R-I Interest and the Class R-II Interest.
"Class R-I Interest": The uncertificated residual interest in
REMIC I.
"Class R-II Interest": The uncertificated residual interest in
REMIC II.
"Closing Date": March 30, 2005.
"Code": The Internal Revenue Code of 1986, as amended from
time to time.
"Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by Ocwen pursuant to Section
3.08(a) of this Agreement, which shall be entitled "Ocwen Federal Bank FSB, 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
2005-SN1, Asset Backed Pass-Through Certificates". The Collection Account
maintained by Ocwen must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office
of the Trustee which office at the date of the execution of this instrument is
located at 452 Fifth Avenue, New York, New York 10018, Attention: ACE Securities
Corp., 2005-SN1, 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 Servicers. The office of the Securities
Administrator, which for purposes of Certificate transfers and surrender is
located at Wells Fargo Bank, N.A., Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479, Attention: Corporate Trust (ACE 2005-SN1), and for
all other purposes is located at Wells Fargo Bank, N.A., P.O. Box 98, Columbia,
Maryland 21046, Attention: Corporate Trust (ACE 2005-SN1) (or for overnight
deliveries, at 9062 Old Annapolis Road, Columbia, Maryland 21045, Attention:
Corporate Trust (ACE 2005-SN1)).
11
"Corresponding Certificate": With respect to each REMIC I
Regular Interest, as follows:
REMIC I Regular Interest Class
------------------------ -----
REMIC I Regular Interest I-LTA1 A-1
REMIC I Regular Interest I-LTA2 A-2
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
"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 and
the Class CE-1 Certificates, and the denominator of which is the aggregate
Stated Principal Balance of the Mortgage Loans, calculated after taking into
account distributions of principal on the Mortgage Loans and distribution of the
Principal Distribution Amount to the Certificates then entitled to distributions
of principal on such Distribution Date.
"Credit Risk Management Agreements": The agreement between the
Credit Risk Manager and each Servicer, and the agreement between the Credit Risk
Manager and the Master Servicer, each regarding the loss mitigation and advisory
services to be provided by the Credit Risk Manager.
"Credit Risk Management Fee": The amount payable to the Credit
Risk Manager on each Distribution Date as compensation for all services rendered
by it in the exercise and performance of any and all powers and duties of the
Credit Risk Manager under the Credit Risk Management Agreements, which amount
shall equal one twelfth of the product of (i) the Credit Risk Management Fee
Rate multiplied by (ii) the Scheduled Principal Balance of the Mortgage Loans
and any related REO Properties as of the first day of the related Due Period.
"Credit Risk Management Fee Rate": 0.025% per annum.
"Credit Risk Manager": Risk Management Group, LLC, a New York
limited liability company, and its successors and assigns.
"Custodial Account": Shall mean the account or accounts
maintained by WMMSC under the Servicing Agreement.
"Custodial Agreement": The Custodial Agreement dated as of
March 1, 2005, among the Trustee, the Custodian and the Servicers as such
agreement may be amended or supplemented from time to time, or any other
custodial agreement entered into after the date hereof with respect to any
Mortgage Loan subject to this Agreement.
"Custodian": Wells Fargo or any other custodian appointed
under any custodial agreement entered into after the date of this Agreement.
"Cut-off Date": With respect to each Mortgage Loan, March 1,
2005. With respect to all Qualified Substitute Mortgage Loans, their respective
dates of substitution.
12
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).
13
"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 Ocwen and each
Distribution Date, the 15th day of the calendar month in which such Distribution
Date occurs, or if such 15th day is not a Business Day, the Business Day
immediately preceding such 15th day. With respect to WMMSC, the date specified
in the 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 related Servicer,
on behalf of the Trustee, shall not be considered to Directly Operate an REO
Property solely because the related Servicer establishes rental terms, chooses
tenants, enters into or renews leases, deals with taxes and insurance, or makes
decisions as to repairs or capital expenditures with respect to such REO
Property.
"Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for Freddie Mac, a majority of its board of directors
is not selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the holding of an Ownership Interest in a
Residual Certificate by such Person may cause any Trust REMIC or any Person
having an Ownership Interest in any Class of Certificates (other than such
Person) to incur a liability for any federal tax imposed under the Code that
would not otherwise be imposed but for the Transfer of an Ownership Interest in
a Residual Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
"Distribution Account": The trust account or accounts created
and maintained by the Securities Administrator pursuant to Section 3.08(c) 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
2005-SN1". 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.
14
"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in April 2005.
"Due Date": With respect to each Distribution Date, the day of
the month on which the Monthly Payment is due on a Mortgage Loan during the
related Due Period, exclusive of any days of grace.
"Due Period": With respect to any
Distribution Date, the period commencing on the second day of the month
immediately preceding the month in which such Distribution Date occurs and
ending on the first day of the month in which such
Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts
maintained with a Depository Institution, (ii) an account or accounts the
deposits in which are fully insured by the FDIC or (iii) a trust account or
accounts maintained with a federal depository institution or state chartered
depository institution acting in its fiduciary capacity. Eligible Accounts may
bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Liquidation Proceeds": To the extent that such amount
is not required by law to be paid to the related mortgagor, the amount, if any,
by which Liquidation Proceeds with respect to a liquidated Mortgage Loan exceed
the sum of (i) the outstanding principal balance of such Mortgage Loan and
accrued but unpaid interest at the related Net Mortgage Rate through the last
day of the month in which the related Liquidation Event occurs, plus (ii)
related liquidation expenses or other amounts to which the related Servicer is
entitled to be reimbursed from Liquidation Proceeds with respect to such
liquidated Mortgage Loan pursuant to Section 3.09 of this Agreement or pursuant
to the 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.
15
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Maturity Date": The Distribution Date occurring in
November 2039.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by an originator, the Seller or the Master Servicer pursuant to or as
contemplated by Section 2.03, Section 3.13(c) or Section 10.01), a determination
made by the related Servicer that all Insurance Proceeds, Liquidation Proceeds
and other payments or recoveries which the related 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 thereto.
"Freddie Mac": Freddie Mac, formerly known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
"Independent": When used with respect to any specified Person,
any such Person who (a) is in fact independent of the Depositor, the Master
Servicer, the Securities Administrator, the Servicers, the Seller, any
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 Servicers, the
Seller, any originator or any Affiliate thereof, and (c) is not connected with
the Depositor, the Master Servicer, the Securities Administrator, the Servicers,
the Seller, any 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 Servicers,
the Seller, any originator or any Affiliate thereof merely because such Person
is the beneficial owner of 1% or less of any class of securities issued by the
Depositor, the Master Servicer, the Securities Administrator, the Servicers, the
Seller, any originator or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than a
Servicer) that would be an "independent contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including a Servicer) if the Trustee has received an Opinion of Counsel to the
effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
16
"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 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 or Mezzanine 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 Distribution Amount": With respect to any
Distribution Date and any Class A Certificates, any Mezzanine Certificates, the
Class CE-1 Certificates and the Class CE-2 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 portion of the Available Distribution Amount for such Distribution
Date that represents interest received or advanced on the Mortgage Loans (other
than any Simple Interest Excess, if applicable, and 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 Credit Risk Manager or the Servicers pursuant to this
Agreement, the Servicing Agreement or the Custodial Agreement), plus any amounts
withdrawn from the Simple Interest Excess Sub-Account.
"Last Scheduled Distribution Date": The Distribution Date in
November 2039, which is the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date.
"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.
17
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.13(c) or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property or (ii) such REO
Property is removed from REMIC I by reason of its being purchased pursuant to
Section 10.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds, amounts received in respect of the rental of any REO Property prior to
REO Disposition, or required to be released to a Mortgagor or a senior
lienholder in accordance with applicable law or the terms of the related
Mortgage Loan Documents) received by the related Servicer in connection with (i)
the taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation (other than amounts required to be released to
the Mortgagor or a senior lienholder), (ii) the liquidation of a defaulted
Mortgage Loan through a trustee's sale, foreclosure sale or otherwise, (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.13(c), Section 3.21 or Section
10.01 of this Agreement or pursuant to the 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.
"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-1 Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the REMIC I Remittance Rate for each of REMIC I Regular Interest
I-LTA1, REMIC I Regular I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4 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 related 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.
"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
18
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": 0.080% per annum.
"Master Servicing Fee": With respect to each Mortgage Loan and
for any calendar month, an amount equal to one twelfth of the product of the
Master Servicer Fee Rate multiplied by the Scheduled Principal Balance of the
Mortgage Loans as of the Due Date in the preceding calendar month.
"Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LTZZ for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralization Amount, in each
case for such Distribution Date, over (ii) Uncertificated Interest on REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3 and REMIC I Regular Interest I-LTM4 with the rate on each such REMIC I
Regular Interest subject to a cap equal to the related Pass-Through Rate for the
corresponding Certificate for the purpose of this calculation for such
Distribution Date.
"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
or Class M-4 Certificate.
"MIN": The Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
19
"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 related Servicer pursuant to Section 3.01 of this
Agreement or pursuant to the 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.
"Mortgage File": The Mortgage Loan Documents pertaining to a
particular Mortgage Loan.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee and the Mortgage Loan Documents for which have been delivered to
the Custodian pursuant to Section 2.01 of this Agreement and pursuant to the
Custodial Agreement, as held from time to time as a part of the Trust Fund, the
Mortgage Loans so held being identified in the Mortgage Loan Schedule.
"Mortgage Loan Documents": The documents evidencing or
relating to each Mortgage Loan delivered to the Custodian under the Custodial
Agreement on behalf of the Trustee.
"Mortgage Loan Purchase Agreement": Shall mean the Mortgage
Loan Purchase Agreement dated as of March 30, 2005, 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 Mortgage
Loans, attached hereto as Schedule 1. The Depositor shall deliver or cause the
delivery of the initial Mortgage Loan Schedule to the Servicers, 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;
20
(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) a code indicating the purpose of the loan
(i.e., purchase financing, rate/term refinancing, cash-out
refinancing);
(xviii) the Mortgage Rate at origination;
(xix) 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;
(xx) a code indicating the documentation style
(i.e., full, stated or limited);
21
(xxi) 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;
(xxii) the Appraised Value of the Mortgaged
Property;
(xxiii) the sale price of the Mortgaged Property, if
applicable;
(xxiv) 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;
(xxv) the product type (e.g., 2/28, 15 year fixed,
30 year fixed, 15/30 balloon, etc.);
(xxvi) the Mortgagor's debt to income ratio;
(xxvii) the FICO score at origination;
(xxviii) whether such Mortgage Loan is a Simple
Interest Mortgage Loan;
(xxix) the Servicing Fee with respect to each
Servicer and any primary Servicer of the related Mortgage Loans; and
(xxx) the Servicer.
The Mortgage Loan Schedule shall set forth the following
information with respect to the Mortgage Loans in the aggregate as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Rate of the
Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any Qualified
Substitute Mortgage Loan, the Cut-off Date shall refer to the related Cut-off
Date for such Mortgage Loan, determined in accordance with the definition of
Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence
of the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note. 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.
22
"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 (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 Simple Interest Excess": As of any Distribution Date, an
amount equal to the excess, if any, of the aggregate amount of Simple Interest
Excess with respect to the Mortgage Loans over the amount of Simple Interest
Shortfall with respect to the Mortgage Loans.
"Net Simple Interest Shortfall": As of any Distribution Date,
an amount equal to the excess, if any, of the aggregate amount of Simple
Interest Shortfall with respect to the Mortgage Loans over the amount of Simple
Interest Excess with respect to the Mortgage Loans.
"Net WAC Pass-Through Rate": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, a rate
per annum equal to the weighted average of the Expense Adjusted Mortgage Rates
on the then outstanding Mortgage Loans, weighted based on their Stated Principal
Balances as of the first day of the calendar month preceding the month in which
the Distribution Date occurs. For federal income tax purposes, the economic
equivalent of such rate shall be expressed as the weighted average of the REMIC
I Remittance Rates on the REMIC I Regular Interests, weighted on the basis of
the Uncertificated Balance of each such REMIC I Regular Interest; provided that
for purposes of this definition the REMIC I Remittance Rate shall be calculated
using a Servicing Fee Rate equal to 0.50%.
"Net WAC Rate Carryover Amount" : With respect to any Class A
Certificate or Mezzanine 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.
23
"Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the related Servicer or a successor to the
related Servicer (including 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.
"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 related Servicer will
not or, in the case of a proposed Servicing Advance, would not be ultimately
recoverable from related Late Collections, Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein or in the
Servicing Agreement.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount" : With respect to the Class CE-1
Certificates and Class CE-2 Certificates and any Distribution Date, the
Uncertificated Balance of the REMIC I Regular Interests for such Distribution
Date. As of the Closing Date, the Notional Amount of the Class CE-1 Certificates
is equal to $165,210,069.
"Ocwen": Ocwen Federal Bank FSB, or any successor thereto.
"Ocwen Mortgage Loans": The Mortgage Loans serviced by Ocwen
pursuant to the terms of this Agreement as specified on the Mortgage Loan
Schedule.
"Ocwen Servicing Fee Rate": The rate set forth in a separate
letter agreement among Ocwen, the Depositor, the Trustee, the Master Servicer,
the Securities Administrator and the Class CE-2 Certificateholder.
"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 related Servicer, the
Seller or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor, the related 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 equal to or less than 10% of
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.
24
"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 and the Mezzanine 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 and the Mezzanine Certificates and any Distribution Date is
any amount of Net Monthly Excess Cashflow actually applied as an accelerated
payment of principal to the extent the Required Overcollateralization Amount
exceeds the Overcollateralization Amount.
"Overcollateralization Reduction Amount" : With respect to any
Distribution Date, is the lesser of (i) the amount by which the
Overcollateralization Amount exceeds the Required Overcollateralization Amount
and (ii) the Principal Remittance Amount; provided however that on any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Reduction Amount shall equal zero.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the related Servicer in respect of any Determination Date
pursuant to Section 5.03 of this Agreement, 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 pursuant to the 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-1
Certificates, a rate per annum equal to the lesser of (i) 4.25% and (ii) the Net
WAC Pass Through Rate for such Distribution Date.
With respect to the Class A-2 Certificates, a rate per annum
equal to the lesser of (i) 5.13% in the case of each Distribution Date through
and including the Optional Termination Date, or 5.63%, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass Through Rate for such
Distribution Date.
With respect to the Class M-1 Certificates, a rate per annum
equal to the lesser of (i) 5.52% in the case of each Distribution Date through
and including the Optional Termination Date, or 6.02%, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass Through Rate for such
Distribution Date.
With respect to the Class M-2 Certificates, a rate per annum
equal to the lesser of (i) 5.77% in the case of each Distribution Date through
and including the Optional Termination
25
Date, or 6.27%, in the case of any Distribution Date thereafter and (ii) the Net
WAC Pass Through Rate for such Distribution Date.
With respect to the Class M-3 Certificates, a rate per annum
equal to the lesser of (i) 6.00% in the case of each Distribution Date through
and including the Optional Termination Date, or 6.50%, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass Through Rate for such
Distribution Date.
With respect to the Class M-4 Certificates, a rate per annum
equal to the lesser of (i) 6.00% in the case of each Distribution Date through
and including the Optional Termination Date, or 6.50%, in the case of any
Distribution Date thereafter and (ii) the Net WAC Pass Through Rate for such
Distribution Date.
With respect to the Class CE-1 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 (viii) below, and the denominator of which is the
aggregate Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC I Regular Interest I-LTM4 and REMIC I Regular Interest I-LTZZ. For
purposes of calculating the Pass-Through Rate for the Class CE-1 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 I Regular Interest I-LTAA;
(ii) the REMIC I Remittance Rate for REMIC I
Regular Interest I-LTA1 minus the Marker Rate, applied to an amount
equal to the Uncertificated Balance of REMIC I Regular Interest I-LTA1;
(iii) the REMIC I Remittance Rate for REMIC I
Regular Interest I-LTA2 minus the Marker Rate, applied to an amount
equal to the Uncertificated Balance of REMIC I Regular Interest I-LTA2;
(iv) 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;
(v) 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;
(vi) 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;
26
(vii) 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;
and
(viii) 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.
With respect to the Class CE-2 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 (viii) below, and the denominator of which is the
aggregate Uncertificated Balances of the REMIC I Regular Interests. For purposes
of calculating the Pass-Through Rate for the Class CE-2 Certificates, the
numerator is equal to the sum of the following components:
(i) the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTAA over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTAA (calculated for
purposes of clause (ii) of this definition using a Servicing Fee Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTAA;
(ii) the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTA1 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTA1 (calculated for
purposes of clause (ii) of this definition using a Servicing Fee Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA1;
(iii) the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTA2 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTA2 (calculated for
purposes of clause (ii) of this definition using a Servicing Fee Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA2;
(iv) the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTM1 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTM1 (calculated for
purposes of clause (ii) of this definition using a Servicing Fee Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM1;
(v) the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTM2 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTM2 (calculated for
purposes of clause (ii) of this definition using a Servicing Fee Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM2;
27
(vi) the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTM3 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTM3 (calculated for
purposes of clause (ii) of this definition using a Servicing Fee Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM3;
(vii) the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTM4 over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTM4 (calculated for
purposes of clause (ii) of this definition using a Servicing Fee Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM4; and
(viii) the excess of (i) the REMIC I Remittance
Rate for REMIC I Regular Interest I-LTZZ over (ii) the REMIC I
Remittance Rate on REMIC I Regular Interest I-LTZZ (calculated for
purposes of clause (ii) of this definition using a Servicing Fee Rate
equal to 0.50% per annum), applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTZZ.
"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 and the Mezzanine
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 CE-1 Certificates and Class CE-2
Certificates are issuable only in minimum Percentage Interests corresponding to
minimum initial Notional 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 Notional 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.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, a Servicer, the Master Servicer,
the Trustee or any of their respective Affiliates:
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United
States;
(ii) (A) demand and time deposits in,
certificates of deposit of, bankers' acceptances issued by or federal
funds sold by any depository institution or trust company (including
the Trustee or its agent acting in their respective commercial
28
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;
(iii) repurchase obligations with a term not to
exceed 30 days with respect to any security described in clause (i)
above and entered into with a depository institution or trust company
(acting as principal) rated A-1+ or higher by S&P, 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;
(iv) securities bearing interest or sold at a
discount that are issued by any corporation incorporated under the laws
of the United States of America or any state thereof and that are rated
by each Rating Agency that rates such securities in its highest
long-term unsecured rating categories at the time of such investment or
contractual commitment providing for such investment;
(v) commercial paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than 30
days after the date of acquisition thereof) that is rated by each
Rating Agency that rates such securities in its highest short-term
unsecured debt rating available at the time of such investment;
(vi) units of money market funds that have been
rated "AAA" by Fitch (if rated by Fitch), "AAAm" by S&P or "Aaa" by
Moody's including any such money market fund managed or advised by the
Master Servicer, the Trustee or any of their Affiliates; and
(vii) if previously confirmed in writing to the
Trustee, any other demand, money market or time deposit, or any other
obligation, security or investment,
29
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 Mortgage
Loans of 30% CPR. 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.
"Prepayment Charge": With respect to any Principal Prepayment,
any prepayment premium, penalty or charge payable by a Mortgagor in connection
with any Principal Prepayment on a Mortgage Loan pursuant to the terms of the
related Mortgage Note.
"Prepayment Charge Schedule": As of any date, the list of
Mortgage Loans providing for a Prepayment Charge included in the Trust Fund on
such date, attached hereto as Schedule 2 (including the prepayment charge
summary attached thereto). The Depositor shall deliver or cause the delivery of
the Prepayment Charge Schedule to the related Servicer, the Master Servicer and
the Trustee on the Closing Date. The Prepayment Charge Schedule shall set forth
the following information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment
Charge;
(iii) the date on which the first Monthly Payment
was due on the related Mortgage Loan;
(iv) the term of the related Prepayment Charge;
30
(v) the original Stated Principal Balance of the
related Mortgage Loan; and
(vi) the Stated Principal Balance of the related
Mortgage Loan as of the Cut-off Date.
"Prepayment Interest Excess": With respect to each Ocwen
Mortgage Loan that was the subject of a Principal Prepayment in full during the
portion of the related Prepayment Period occurring between the first day of the
calendar month in which such Distribution Date occurs and the Determination Date
of the calendar month in which such Distribution Date occurs, an amount equal to
interest (to the extent received) at the applicable Net Mortgage Rate on the
amount of such Principal Prepayment for the number of days commencing on the
first day of the calendar month in which such Distribution Date occurs and
ending on the last date through which interest is collected from the related
Mortgagor. Ocwen may withdraw such Prepayment Interest Excess from the
Collection Account in accordance with Section 3.09(a)(x).
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each such Mortgage Loan that was the subject of a
Principal Prepayment in full or in part during the portion of the related
Prepayment Period occurring between the first day of the related Prepayment
Period and the last day of the calendar month preceding the month in which such
Distribution Date occurs that was applied by the related Servicer to reduce the
outstanding principal balance of such Mortgage Loan on a date preceding the Due
Date in the succeeding Prepayment Period, an amount equal to interest at the
applicable Net Mortgage Rate on the amount of such Principal Prepayment for the
number of days commencing on the date on which the prepayment is applied and
ending on the last day of the calendar month preceding such Distribution Date.
The obligations of Ocwen and the Master Servicer in respect of any Prepayment
Interest Shortfall are set forth in Section 3.22 and Section 4.18, respectively
of this Agreement. The obligations of WMMSC in respect of any Prepayment
Interest Shortfalls are set forth in the Servicing Agreement.
"Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the month in which the related Distribution Date
occurs with respect to prepayments in part, and the period beginning on the 16th
day of the month preceding the related Distribution Date (or, the period
commencing on the Cut-off Date, in connection with the first Prepayment Period)
and ending on the 15th day of the month in which such Distribution Date occurs
with respect to prepayments in full.
"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 will be the sum of (i) the principal portion of all Monthly
Payments on the 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 Mortgage Loan
or, in the case of a substitution, certain amounts representing a principal
adjustment, during the
31
related Prepayment Period pursuant to or as contemplated by Section 2.03,
Section 3.13(c) and Section 10.01 of this Agreement or the Servicing Agreement;
(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 Mortgage Loans, net in each case of
payments or reimbursements to the Trustee, the Custodian, the Master Servicer,
the Securities Administrator, the Servicers or the Credit Risk Manager and (iv)
the amount of any Overcollateralization Increase Amount for such Distribution
Date MINUS (v) the amount of any Overcollateralization Reduction Amount for such
Distribution Date.
"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 Principal Distribution 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 a 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 a 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 a 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(d).
"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
32
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) have a remaining term to maturity not greater than (and not more
than one year less than) that of the Deleted Mortgage Loan, (iv) have the same
Due Date as the Due Date on the Deleted Mortgage Loan, (v) 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, (vi) be secured by the same
lien priority on the related Mortgaged Property as the Deleted Loan, (vii) have
a credit grade at least equal to the credit grading assigned on the Deleted
Mortgage Loan, (viii) be a "qualified mortgage" as defined in the REMIC
Provisions and (ix) 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 (iii) hereof
shall be determined on the basis of weighted average remaining term to maturity,
the Loan-to-Value Ratios described in clause (v) hereof shall be satisfied as to
each such mortgage loan, the credit grades described in clause (vii) 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 (ix) 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 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 Servicers.
"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 Ocwen to the Master Servicer (in substantially the form of
Schedule 4 hereto) or by WMMSC to the Master Servicer pursuant to the Servicing
Agreement, 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 or Custodial Account
33
in respect of such Mortgage Loan pursuant to Section 3.09(a)(ix) and Section
3.13(b) of this Agreement or pursuant to the Servicing Agreement, 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 a Servicer with respect to such Mortgage Loan pursuant
to Section 3.09(a)(iii) of this Agreement or pursuant to the Servicing
Agreement.
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 or Custodial
Account in respect of the related Mortgage Loan pursuant to Section 3.09(a)(ix)
and Section 3.13(b) of this Agreement or pursuant to the Servicing Agreement,
minus (v) the aggregate of all P&I Advances and Servicing Advances (in the case
of Servicing Advances, without duplication of amounts netted out of the rental
income, Insurance Proceeds and Liquidation Proceeds described in clause (vi)
below) made by a Servicer in respect of such REO Property or the related
Mortgage Loan for which a Servicer has been or, in connection with such Final
Recovery Determination, will be reimbursed pursuant to Section 3.21 of this
Agreement or pursuant to the Servicing Agreement out of rental income, Insurance
Proceeds and Liquidation Proceeds received in respect of such REO Property,
minus (vi) the total of all net rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property that has been, or
in connection with such Final Recovery Determination, will be transferred to the
Distribution Account pursuant to Section 3.21 of this Agreement or pursuant to
the Servicing Agreement.
With respect to each Mortgage Loan which has
become the subject of a Deficient Valuation, the difference between the
principal balance of the Mortgage Loan outstanding immediately prior to such
Deficient Valuation and the principal balance
of the Mortgage Loan as reduced by the Deficient Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.
To the extent a Servicer receives Subsequent Recoveries, with
respect to any Mortgage Loan, the amount of Realized Loss with respect to that
Mortgage Loan will be reduced
34
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 any
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 CE-1 Certificate or Class CE-2 Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"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 Assignment Agreement and the Servicing
Agreement and (v) the Custodial Accounts, 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
35
Loans on or before the Cut-off Date and all Prepayment Charges payable in
connection with Principal Prepayments made before the Cut-off Date; and (ii) the
Reserve Fund and any amounts on deposit therein from time to time and any
proceeds thereof.
"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 Overcollateralization
Amount": With respect to any date of determination, (i) 1.00% of the aggregate
Uncertificated Balances of the REMIC I Regular Interests minus (ii) the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular
Interest I-LTM4, 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) 1.00% of the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular
Interest I-LTM4 and the denominator of which is the aggregate of the
Uncertificated Balances of REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 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-LTA1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal,
36
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-LTA2": 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-LTA2
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-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 Remittance Rate": With respect to each REMIC I
Regular Interest, the weighted average of the Expense Adjusted Mortgage Rates of
the Mortgage Loans.
37
"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 or Class R
Certificate.
"REMIC II Certificateholder": The Holder of any REMIC II
Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.
"REMIC Regular Interest": Any REMIC I Regular Interest.
"REMIC Remittance Rate": The REMIC I Remittance Rate.
"Remittance Report": A report by Ocwen pursuant to Section
5.03(a) of this Agreement or WMMSC pursuant to the Servicing Agreement.
"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 Ocwen in respect of an REO Property pursuant to Section
3.21 of this Agreement or by WMMSC pursuant to the Servicing Agreement.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
10.01 of this Agreement that is allocable to such REO Property) or otherwise,
net of any portion of such
38
amounts (i) payable in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to Ocwen
pursuant to Section 3.21(d) of this Agreement or WMMSC pursuant to the Servicing
Agreement for unpaid Servicing Fees in respect of the related Mortgage Loan and
unreimbursed Servicing Advances and P&I Advances in respect of such REO Property
or the related Mortgage Loan, over (b) the REO Imputed Interest in respect of
such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Trustee
or its nominee on behalf of REMIC I through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.21 of this Agreement or WMMSC pursuant to
the Servicing Agreement.
"Required Overcollateralization Amount" : As of the Closing
Date, $0. With respect to any Distribution Date, the product of (A) 0.50% and
(B) the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date. Notwithstanding the foregoing, on and after any Distribution Date
following the reduction of the aggregate principal balance of the Class A
Certificates and Mezzanine Certificates to zero, the Required
Overcollateralization Amount shall be zero.
"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.
"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 cooperative, (v) a townhouse, (vi) a manufactured home, or (vii) a
detached one-family dwelling in a planned unit development, none of which is a
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(d).
"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
39
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": Ocwen or WMMSC, or any successor thereto appointed
hereunder or under the Servicing Agreement, as applicable, in connection with
the servicing and administration of the related Mortgage Loans.
"Servicer Event of Default": One or more of the events
described in Section 8.01(a).
"Servicer Remittance Date": With respect to any Distribution
Date and (i) Ocwen, by 12:00 noon on the 22nd of day of each month; provided
that if the 22nd day of a given month is not a Business Day, the Servicer
Remittance Date shall be the immediately preceding Business Day and (ii) WMMSC,
as set forth in the Servicing Agreement.
40
"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 related Servicer pursuant to Section 5.03(a) of this Agreement
or pursuant to the Servicing Agreement, as applicable, with such additions,
deletions and modifications as agreed to by the Master Servicer, the Securities
Administrator and the related Servicer.
"Servicing Advances": The customary and reasonable
"out-of-pocket" costs and expenses incurred prior to or on or after the Cut-off
Date (the amounts incurred prior to the Cut-off Date are identified on Schedule
6 hereto) by the related Servicer in connection with a default, delinquency or
other unanticipated event by the related Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including but not limited to foreclosures,
in respect of a particular Mortgage Loan, including any expenses incurred in
relation to any such proceedings that result from the Mortgage Loan being
registered on the MERS(R) System, (iii) the management (including reasonable
fees in connection therewith) and liquidation of any REO Property and (iv) the
performance of its obligations under Section 3.01, Section 3.07, Section 3.11,
Section 3.13 and Section 3.21 of this Agreement or under the Servicing
Agreement. Servicing Advances also include any reasonable "out-of-pocket" cost
and expenses (including legal fees) incurred by the related Servicer in
connection with executing and recording instruments of satisfaction, deeds of
reconveyance or Assignments to the extent not recovered from the Mortgagor or
otherwise payable under this Agreement or the Servicing Agreement. The Servicers
shall not be required to make any Nonrecoverable Servicing Advances.
"Servicing Agreement": The Servicing Agreement, dated as of
January 1, 2005 between Washington Mutual Mortgage Securities Corp. and DB
Structured Products Inc.
"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; provided,
however, that the Servicers shall only be entitled to a portion of the servicing
fee calculated at the Ocwen Servicing Fee Rate or WMMSC Servicing Fee Rate, as
applicable.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the related 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 related 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.
"Simple Interest Excess": As of any Determination Date for
each Simple Interest Qualifying Loan, the excess, if any, of (i) the portion of
the Monthly Payment received from the Mortgagor for such Mortgage Loan allocable
to interest with respect to the related Due Period,
41
over (ii) 30 days' interest on the Scheduled Principal Balance of such Mortgage
Loan at the Mortgage Rate.
"Simple Interest Excess Sub-Account": The sub-account of the
Collection Account established by Ocwen pursuant to Section 3.08(b). Each Simple
Interest Excess Sub-Account shall be an Eligible Account.
"Simple Interest Mortgage Loan": Any Mortgage Loan for which
the interest due thereon is calculated based on the actual number of days
elapsed between the date on which interest was last paid through the date on
which the most current payment is received and identified as such on the
Mortgage Loan Schedule.
"Simple Interest Qualifying Loan": As of any Determination
Date, any Simple Interest Mortgage Loan that was neither prepaid in full during
the related Due Period, nor delinquent with respect to a payment that became due
during the related Due Period as of the close of business on the Determination
Date following such Due Period.
"Simple Interest Shortfall": As of any Determination Date for
each Simple Interest Qualifying Loan, the excess, if any, of (i) 30 days'
interest on the Scheduled Principal Balance of such Mortgage Loan at the
Mortgage Rate, over (ii) the portion of the Monthly Payment received from the
Mortgagor for such Mortgage Loan allocable to interest with respect to the
related Due Period.
"Single Certificate": With respect to any Class of
Certificates (other than the Residual Certificates), a hypothetical Certificate
of such Class evidencing a Percentage Interest for such Class corresponding to
an initial Certificate Principal Balance of $1,000. With respect to the Residual
Certificates, a hypothetical Certificate of such Class evidencing a 100%
Percentage Interest in such Class.
"Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 11.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the extent received from the Mortgagor
or advanced by the related Servicer or a successor to such Servicer (including
the Master Servicer) and distributed pursuant to Section 5.01 of this Agreement
on or before such date of determination, (ii) all Principal Prepayments received
after the Cut-off Date, to the extent distributed pursuant to Section 5.01 of
this Agreement on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by the related Servicer as recoveries of
principal in accordance with the provisions of Section 3.13 of this Agreement or
pursuant to the 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
42
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 related
Servicer or a successor to such Servicer (including the Master Servicer) and
distributed pursuant to Section 5.01 of this Agreement, on or before such date
of determination and (ii) the aggregate amount of REO Principal Amortization in
respect of such REO Property for all previously ended calendar months, to the
extent distributed pursuant to Section 4.01 of this Agreement on or before such
date of determination; and (b) as of any date of determination coinciding with
or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stepdown Date": The earlier to occur of (i) the later to
occur of (a) the Distribution Date occurring in April 2008 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 12.50% 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 and the Class CE-1 Certificates.
"Subsequent Recoveries": As of any Distribution Date, amounts
received during the related Prepayment Period by the related Servicer
specifically related to a defaulted Mortgage Loan or disposition of an REO
Property prior to the related Prepayment Period that resulted in a Realized
Loss, after the liquidation or disposition of such defaulted Mortgage Loan, net
of any amount reimbursable to the related Servicer with respect to such
defaulted 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 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 or Servicing
Agreement, as applicable.
"Substitution Shortfall Amount": As defined in Section 2.03.
43
"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.
"Terminator": As defined in Section 10.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect to
a Distribution Date if either (x) the Delinquency Percentage exceeds 44.00% 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
- ----------------- ----------
April 2008 to March 2008 1.50%, plus 1/12 of 0.25% for each month
thereafter
April 2009 to March 2009 1.75%, plus 1/12 of 0.50% for each month
thereafter
April 2010 to March 2010 2.25%, plus 1/12 of 0.25% for each month
thereafter
April 2011 and thereafter 2.50%
"Trust": ACE Securities Corp., Home Equity Loan Trust, Series
2005-SN1, 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.
"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.
44
"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 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 Servicing Agreement and (b)
the aggregate amount of any Relief Act Interest Shortfall, if any allocated, in
each case, to such REMIC I Regular Interest or REMIC I Regular Interest pursuant
to Section 1.02. In addition, Uncertificated Interest with respect to each
Distribution Date, as to any Uncertificated REMIC Regular Interest, shall be
reduced by Realized Losses, if any, allocated to such Uncertificated REMIC
Regular Interest pursuant to Section 1.02 and Section 5.04.
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.11.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof
(except, in the case of a partnership, to the extent provided in regulations)
provided that, for purposes solely of the restrictions on the transfer of any
Class R Certificate, no partnership or other entity treated as a partnership for
United States federal income tax purposes shall be treated as a United States
Person unless all persons that own an interest in such partnership either
directly or through any entity that is not a corporation for United States
federal income tax purposes are required to be United States Persons, or an
estate whose income is subject to United States federal income tax regardless of
its source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust. To the extent prescribed in regulations by the Secretary of the Treasury,
a trust which was in existence on August 20, 1996 (other than a trust treated as
owned by the grantor under subpart E of part I of subchapter J of chapter I of
the Code), and which was treated as a United States person on August 20, 1996
may elect to continue to be treated as a United States person notwithstanding
the previous sentence. The term "United States" shall have the meaning set forth
in Section 7701 of the Code.
45
"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 related 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 related originator of the Mortgage Loan in accordance with the
related 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 related 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 related originator of the Mortgage Loan in accordance
with the related 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 related 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.
"Verification Report": As defined in Section 4.19.
"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, 99% of all Voting Rights will be allocated among the
holders of the Class A Certificates, the Mezzanine Certificates and the Class
CE-1 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 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.
"WMMSC": Washington Mutual Mortgage Securities Corp.
"WMMSC Mortgage Loans": The Mortgage Loans serviced by WMMSC
pursuant to the terms of the Servicing Agreement as specified on the Mortgage
Loan Schedule.
"WMMSC Servicing Fee Rate": With respect to each WMMSC
Mortgage Loan, as set forth on the Mortgage Loan Schedule.
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 and the Class CE-1 Certificates for any
Distribution Date, (1) the aggregate amount
46
of any Prepayment Interest Shortfalls (to the extent not covered by payments by
the related Servicer pursuant to Section 3.22 of this Agreement or pursuant to
the 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-1 Certificates, second, to the Class M-4 Certificates, third, to the Class
M-3 Certificates, fourth, to the Class M-2 Certificates, fifth, to the Class M-1
Certificates and sixth, 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 Certificate, and (2) the amount of any
Realized Losses allocated to the Mezzanine Certificates and Net WAC Rate
Carryover Amounts paid to the Class A Certificates and the Mezzanine
Certificates incurred for any Distribution Date shall be allocated to the Class
CE-1 Certificates 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, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the related Servicer pursuant to Section 3.22 of this
Agreement or the Servicing Agreement or 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 among
REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1, REMIC I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest
I-LTM4 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.
47
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 and the
Servicers on or with respect to the Mortgage Loans (other than payments of
principal and interest due on such Mortgage Loans on or before the Cut-off
Date). The Depositor herewith delivers to the Trustee and the Servicers an
executed copy of the Mortgage Loan Purchase Agreement.
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 related originator to
deliver to each Servicer copies of all trailing documents required to be
included in the Mortgage File at the same time the originals or certified copies
thereof are delivered to the Trustee or Custodian, such documents including the
mortgagee policy of title insurance and any Mortgage Loan Documents upon return
from the recording office. The Servicers shall not be responsible for any
custodian fees or other costs incurred in obtaining such documents and the
Depositor shall cause the Servicers to be reimbursed for any such costs the
Servicers may incur in connection with performing its obligations under this
Agreement or the 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
48
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, as defined in the New Mexico Home Loan Protection
Act effective January 1, 2004, as defined in the Massachusetts Predatory Home
Loan Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C) or as
defined in the Indiana High Cost Home Loan Act) 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, as defined in
the New Mexico Home Loan Protection Act effective January 1, 2004 or as defined
in the Massachusetts Predatory Home Loan Practices Act, effective November 7,
2004 (Mass. Ann. Laws Ch. 183C). 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, as defined in the New
Mexico Home Loan Protection Act effective January 1, 2004, as defined in the
Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004
(Mass. Ann. Laws Ch. 183C) or as defined in the Indiana High Cost Home Loan Act.
Section 2.02. Acceptance of REMIC I by Trustee.
The Trustee acknowledges receipt, subject to the provisions of
Section 2.01 hereof and Section 2 of the Custodial Agreement, of the Mortgage
Loan Documents and all other assets included in the definition of "REMIC I"
under clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited into
the Distribution Account) and declares that it holds (or the Custodian on its
behalf holds) and will hold such documents and the other documents delivered to
it constituting a Mortgage Loan Document, and that it holds (or the Custodian on
its behalf holds) or will hold all such assets and such other assets included in
the definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.
Section 2.03. Repurchase or Substitution of Mortgage Loans.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
a breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
and adversely affects the value of such Mortgage Loan or the interest therein of
the Certificateholders, the Trustee shall promptly notify the Seller and the
related Servicer of such defect, missing document or breach and request that the
Seller deliver such missing document, cure such defect or breach within 60 days
from the date the Seller was notified of such missing document, defect or
breach, and if the Seller does not deliver such missing document or cure such
defect or breach in all material respects during such period, the Trustee shall
enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement
to repurchase such Mortgage Loan from REMIC I at the Purchase Price within 90
days after the date on which the Seller was notified of such missing document,
defect or breach, if and to the extent that the Seller is obligated to do so
under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be remitted to the related Servicer for
49
deposit in the Collection Account or the Custodial Account, as applicable, and
the Trustee, upon receipt of written certification from the related Servicer of
such deposit, shall release or cause the Custodian (upon receipt of a request
for release in the form attached to the Custodial Agreement) to release to the
Seller the related Mortgage File and the Trustee shall execute 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 the representation
or covenant of the Seller set forth in Section 5(xiii) of the Mortgage Loan
Purchase Agreement which materially and adversely affects the interests of the
Holders of the Class CE-1 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 related
Servicer, with respect to such Qualified Substitute Mortgage Loan or Loans, an
initial certification pursuant to the Custodial Agreement, with any applicable
exceptions noted thereon. Within one year of the date of substitution, the
Custodian on behalf of the Trustee shall deliver to the Depositor, the Trustee
and the related Servicer a final certification pursuant to the Custodial
Agreement with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
REMIC I and will be retained by the Seller. For the month of substitution,
distributions to Certificateholders will reflect the Monthly Payment due on such
Deleted Mortgage Loan on or before the Due Date in the month of substitution,
and the Seller
50
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 related Servicer. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall
constitute part of the Trust Fund and shall be subject in all respects to the
terms of this Agreement and the Mortgage Loan Purchase Agreement, including all
applicable representations and warranties thereof included herein or in the
Mortgage Loan Purchase Agreement.
For any month in which the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
related Servicer will determine the amount (the "Substitution Shortfall
Amount"), if any, by which the aggregate Purchase Price of all such Deleted
Mortgage Loans exceeds the aggregate of, as to each such Qualified Substitute
Mortgage Loan, the Scheduled Principal Balance thereof as of the date of
substitution, together with one month's interest on such Scheduled Principal
Balance at the applicable Net Mortgage Rate, plus all outstanding P&I Advances
and Servicing Advances (including Nonrecoverable P&I Advances and Nonrecoverable
Servicing Advances) related thereto. On the date of such substitution, the
Seller will deliver or cause to be delivered to the related Servicer for deposit
in the Collection Account an amount equal to the Substitution Shortfall Amount,
if any, and the Trustee or the Custodian on behalf of the Trustee, upon receipt
of the related Qualified Substitute Mortgage Loan or Loans, upon receipt of a
request for release in the form attached to the Custodial Agreement and
certification by the related Servicer of such deposit, shall release to the
Seller the related Mortgage File or Files and the Trustee shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as the Seller shall deliver to it and as
shall be necessary to vest therein any Deleted Mortgage Loan released pursuant
hereto.
In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on any Trust
REMIC, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) any Trust REMIC
to fail to qualify as a REMIC at any time that any Certificate is outstanding.
(c) Upon discovery by the Depositor, the Seller, a
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
51
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 Ocwen
or receipt of notice by Ocwen of the breach of any representation, warranty or
covenant of Ocwen set forth in Section 2.05 which materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan or
Prepayment Charge, Ocwen shall cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Master
Servicer.
The Master Servicer hereby represents, warrants and covenants
to the Servicers, 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,
52
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
Ocwen.
Ocwen hereby represents, warrants and covenants to the Master
Servicer, the Securities Administrator, the Depositor and the Trustee, for the
benefit of each of such Persons and the Certificateholders that as of the
Closing Date or as of such date specifically provided herein:
(i) Ocwen is federally chartered savings bank
duly organized and validly existing under the laws of the United States
and is duly authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by Ocwen in any state in
which a Mortgaged Property related to an Ocwen Mortgage Loan
53
is located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing
business laws of any such State, to the extent necessary to ensure its
ability to enforce each Ocwen Mortgage Loan and to service the Ocwen
Mortgage Loans in accordance with the terms of this Agreement;
(ii) Ocwen has the full power and authority to
conduct its business as presently conducted by it and to execute,
deliver and perform, and to enter into and consummate, all transactions
contemplated by this Agreement. Ocwen has duly authorized the
execution, delivery and performance of this Agreement, has duly
executed and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of Ocwen, enforceable
against it in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity;
(iii) The execution and delivery of this Agreement
by Ocwen, the servicing of the Ocwen Mortgage Loans by Ocwen hereunder,
the consummation by Ocwen of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms
hereof are in the ordinary course of business of Ocwen and will not (A)
result in a breach of any term or provision of the charter or bylaws of
Ocwen or (B) conflict with, result in a breach, violation or
acceleration of, or result in a default under, the terms of any other
material agreement or instrument to which Ocwen is a party or by which
it may be bound, or any statute, order or regulation applicable to
Ocwen of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Ocwen; and Ocwen is not a
party to, bound by, or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to Ocwen's knowledge, would in the
future materially and adversely affect, (x) the ability of Ocwen to
perform its obligations under this Agreement, (y) the business,
operations, financial condition, properties or assets of Ocwen taken as
a whole or (z) the legality, validity or enforceability of this
Agreement;
(iv) Ocwen does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant made by it and contained in this Agreement;
(v) No litigation is pending against Ocwen that
would materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of Ocwen to service the
Ocwen Mortgage Loans or to perform any of its other obligations
hereunder in accordance with the terms hereof;
(vi) There are no actions or proceedings against,
or investigations known to it of, Ocwen before any court,
administrative or other tribunal (A) that might prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit
or materially and
54
adversely affect the performance by Ocwen of its obligations under, or
the validity or enforceability of, this Agreement;
(vii) No consent, approval, authorization or order
of any court or governmental agency or body is required for the
execution, delivery and performance by Ocwen of, or compliance by Ocwen
with, this Agreement or the consummation by it of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
Closing Date;
(viii) Ocwen has fully furnished and will continue
to fully furnish, in accordance with the Fair Credit Reporting Act and
its implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax,
Experian and Trans Union Credit Information Company or their successors
on a monthly basis; and
(ix) Ocwen will not waive any Prepayment Charge
other than in accordance with the standard set forth in Section 3.01.
Notwithstanding anything to the contrary contained in this
Agreement, if the covenant of Ocwen set forth in Section 2.05(ix) above is
breached, Ocwen will pay the amount of such waived Prepayment Charge, from its
own funds without any right of reimbursement, for the benefit of the Holders of
the Class CE-1 Certificates, by depositing such amount into the Collection
Account within 90 days of the earlier of discovery by Ocwen or receipt of notice
by Ocwen of such breach. Furthermore, notwithstanding any other provisions of
this Agreement, any payments made by Ocwen in respect of any waived Prepayment
Charges pursuant to this paragraph shall be deemed to be paid outside of the
Trust Fund.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive the
resignation or termination of the parties hereto, the termination of this
Agreement and the delivery of the Mortgage Files to the Custodian and shall
inure to the benefit of the Trustee, the Master Servicer, the Securities
Administrator, the Depositor and the Certificateholders. Upon discovery by any
such Person or Ocwen of a breach of any of the foregoing representations,
warranties and covenants which materially and adversely affects the value of any
Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the Trustee. Subject to Section 8.01, unless such breach shall not be
susceptible of cure within 90 days, the obligation of Ocwen set forth in Section
2.03(e) to cure breaches shall constitute the sole remedy against Ocwen
available to the Certificateholders, the Depositor or the Trustee on behalf of
the Certificateholders respecting a breach of the representations, warranties
and covenants contained in this Section 2.05.
Section 2.06. Issuance of the REMIC I Regular Interests and
the Class R-I Interest.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to the Custodian on its behalf of the Mortgage Loan
Documents, subject to the
55
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;
Acceptance of REMIC I by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests). The Trustee
acknowledges receipt of the REMIC I Regular Interests and declares that it holds
and will hold the same in trust for the exclusive use and benefit of all present
and future Holders of the Class R-II Interest and REMIC II (as holder of the
REMIC I Regular Interests). The rights of the Holder of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC II in respect of the Class R-II
Interest and the Regular Certificates, 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 2005-SN1" and does hereby appoint HSBC Bank USA, National
Association as Trustee in accordance with the provisions of this Agreement.
56
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE OCWEN MORTGAGE LOANS; ACCOUNTS
Section 3.01. Ocwen to Act as a Servicer.
From and after the Closing Date, the WMMSC Mortgage Loans will
be serviced and administered by WMMSC pursuant to the Servicing Agreement, and
Ocwen will have no responsibility to service or administer the WMMSC Mortgage
Loans or have any other obligation with respect to the WMMSC Mortgage Loans
(including reporting or remitting funds to the Master Servicer). On and after
the Closing Date, Ocwen shall service and administer the Ocwen Mortgage Loans on
behalf of the Trust Fund and in the best interests of and for the benefit of the
Certificateholders (as determined by Ocwen in its reasonable judgment) in
accordance with the terms of this Agreement and the respective Ocwen Mortgage
Loans and all applicable law and regulations and, to the extent consistent with
such terms, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary and
usual standards of practice of prudent mortgage lenders and loan servicers
administering similar mortgage loans but without regard to:
(i) any relationship that Ocwen or any Affiliate
of Ocwen may have with the related Mortgagor;
(ii) the ownership of any Certificate by Ocwen or
any Affiliate of Ocwen;
(iii) Ocwen's obligation to make P&I Advances or
Servicing Advances; or
(iv) Ocwen's right to receive compensation for
its services hereunder.
To the extent consistent with the foregoing, Ocwen shall also
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes and shall waive (or permit a Sub-Servicer to waive) a
Prepayment Charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans and such waiver is
related to a default or reasonably foreseeable default and would, in the
reasonable judgment of Ocwen, maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and the related Mortgage Loan and,
if such waiver is made in connection with a refinancing of the related Mortgage
Loan, such refinancing is related to a default or a reasonably foreseeable
default, (ii) such Prepayment Charge is unenforceable in accordance with
applicable law or the collection of such related Prepayment Charge would
otherwise violate applicable law or (iii) the collection of such Prepayment
Charge would be considered "predatory" pursuant to written guidance published or
issued by any applicable federal, state or local regulatory authority acting in
its official capacity and having jurisdiction over such matters. Notwithstanding
any provision in this Agreement to the contrary, in the event the Prepayment
Charge payable under the terms of the Mortgage Note is less than the amount of
the Prepayment Charge set forth in the Prepayment Charge Schedule or other
information
57
provided to Ocwen, Ocwen shall not have any liability or obligation with respect
to such difference, and in addition shall not have any liability or obligation
to pay the amount of any uncollected Prepayment Charge if the failure to collect
such amount is the direct result of inaccurate or incomplete information on the
Prepayment Charge Schedule.
Subject only to the above-described servicing standards (the
"Accepted Servicing Practices") and the terms of this Agreement and of the
respective Ocwen Mortgage Loans, Ocwen shall have full power and authority, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable with the goal of
maximizing proceeds of the Mortgage Loan. Without limiting the generality of the
foregoing, Ocwen in its own name is hereby authorized and empowered by the
Trustee when Ocwen believes it appropriate in its best judgment, to execute and
deliver, on behalf of the Trust Fund, the Certificateholders and the Trustee or
any of them, and upon written notice to the Trustee, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge or
subordination, and all other comparable instruments, with respect to the Ocwen
Mortgage Loans and the related Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee, for the benefit of the Trust Fund and the
Certificateholders. Ocwen shall service and administer the Ocwen Mortgage Loans
in accordance with applicable state and federal law and shall provide to the
Mortgagors any reports required to be provided to them thereby. Ocwen shall also
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any standard hazard insurance policy. Subject
to Section 3.14, the Trustee shall execute, at the written request of a
Servicer, and furnish to such Servicer a power of attorney in the form of
Exhibit D hereto and other documents necessary or appropriate to enable the
related Servicer to carry out its servicing and administrative duties hereunder
or under the Servicing Agreement, as applicable, and furnished to the Trustee by
the related Servicer, and the Trustee shall not be liable for the actions of the
related Servicer under such powers of attorney and shall be indemnified by the
related 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, Ocwen shall
make or cause to be made Servicing Advances as necessary for the purpose of
effecting the payment of taxes and assessments on the Mortgaged Properties
related to the Ocwen Mortgage Loans, which Servicing Advances shall be
reimbursable in the first instance from related collections from the related
Mortgagors pursuant to Section 3.07, and further as provided in Section 3.09;
provided, however, Ocwen shall only make such Servicing Advance if the related
Mortgagor has not made such payment and if the failure to make such Servicing
Advance would result in the loss of the related Mortgaged Property due to a tax
sale or foreclosure as result of a tax lien. Any cost incurred by Ocwen in
effecting the payment of taxes and assessments on a Mortgaged Property related
to a Ocwen Mortgage Loan shall not, for the purpose of calculating the Stated
Principal Balance of such Ocwen Mortgage Loan or distributions to
Certificateholders, be added to the unpaid principal balance of the related
Ocwen Mortgage Loan, notwithstanding that the terms of such Ocwen Mortgage Loan
so permit.
The parties to this Agreement acknowledge that Servicing
Advances shall be reimbursable pursuant to Section 3.06 of this Agreement, and
agree that no Servicing Advance
58
shall be rejected or disallowed by any party unless it has been shown that such
Servicing Advance was not made in accordance with the terms of this Agreement.
Notwithstanding the foregoing, the Servicers shall be reimbursed for Servicing
Advances made by the Seller or the related Servicer prior to the Cut-off Date to
the extent not previously reimbursed.
Notwithstanding anything in this Agreement to the contrary,
Ocwen may not make any future advances with respect to an Ocwen Mortgage Loan
and Ocwen shall not permit any modification with respect to any related Ocwen
Mortgage Loan that would change the Mortgage Rate, reduce or increase the
principal balance (except for reductions resulting from actual payments of
principal) or change the final maturity date on such related Ocwen Mortgage Loan
(unless, as provided in Section 3.06, the related Mortgagor is in default with
respect to the related Ocwen Mortgage Loan or such default is, in the judgment
of Ocwen, reasonably foreseeable) or any modification, waiver or amendment of
any term of any Ocwen Mortgage Loan that would both (A) effect an exchange or
reissuance of such Ocwen 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.
In the event that the Mortgage Loan Documents relating to any
Ocwen Mortgage Loan contain provisions requiring the related Mortgagor to
arbitrate disputes (at the option of the Trustee, on behalf of the Trust), the
Trustee hereby authorizes Ocwen to waive the Trustee's right or option to
arbitrate disputes and to send written notice of such waiver to the Mortgagor,
although the Mortgagor may still require arbitration at its option.
From and after the Closing Date, Ocwen will 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.
Section 3.02. Sub-Servicing Agreements Between Ocwen and
Sub-Servicers.
Ocwen may arrange for the subservicing of any Ocwen Mortgage
Loan by a Sub- Servicer pursuant to a Sub-Servicing Agreement; provided that
such sub-servicing arrangement and the terms of the related Sub-Servicing
Agreement must provide for the servicing of such Ocwen Mortgage Loans in a
manner consistent with the servicing arrangements contemplated hereunder. Each
Sub-Servicer shall be (i) authorized to transact business in the state or states
where the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Sub-Servicer to perform its
obligations hereunder and under the Sub-Servicing Agreement and (ii) a Freddie
Mac or Fannie Mae approved mortgage servicer. Notwithstanding the provisions of
any Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between Ocwen or a Sub-Servicer or reference to
actions taken through Ocwen or otherwise, Ocwen shall remain obligated and
liable to the Depositor, the Trustee and the Certificateholders for the
servicing and administration of the Ocwen Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and
59
under the same terms and conditions as if Ocwen alone were servicing and
administering the Mortgage Loans. Every Sub-Servicing Agreement entered into by
Ocwen shall contain a provision giving the successor Servicer the option to
terminate such agreement in the event a successor Servicer is appointed. All
actions of each Sub-Servicer performed pursuant to the related Sub-Servicing
Agreement shall be performed as an agent of Ocwen with the same force and effect
as if performed directly by Ocwen.
For purposes of this Agreement, Ocwen shall be deemed to have
received any collections, recoveries or payments with respect to the Ocwen
Mortgage Loans that are received by a Sub-Servicer regardless of whether such
payments are remitted by the Sub-Servicer to Ocwen.
Section 3.03. Successor Sub-Servicers.
Any Sub-Servicing Agreement shall provide that Ocwen shall be
entitled to terminate any Sub-Servicing Agreement and to either itself directly
service the related Ocwen Mortgage Loans or enter into a Sub-Servicing Agreement
with a successor Sub-Servicer which qualifies under Section 3.02. Any
Sub-Servicing Agreement shall include the provision that such agreement may be
immediately terminated by any successor to Ocwen (which may be the Trustee or
the Master Servicer) without fee, in accordance with the terms of this
Agreement, in the event that Ocwen (or any successor to Ocwen) shall, for any
reason, no longer be the Servicer of the Ocwen Mortgage Loans (including
termination due to a Servicer Event of Default).
Section 3.04. No Contractual Relationship Between
Sub-Servicer, Trustee or the Certificateholders.
Any Sub-Servicing Agreement and any other transactions or
services relating to the Ocwen Mortgage Loans involving a Sub-Servicer shall be
deemed to be between the Sub-Servicer and Ocwen alone and the Master Servicer,
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 Ocwen hereunder
by a successor Servicer (which may be the Trustee or the Master Servicer)
pursuant to Section 8.02, it is understood and agreed that Ocwen's rights and
obligations under any Sub-Servicing Agreement then in force between Ocwen and a
Sub-Servicer shall be assumed simultaneously by such successor Servicer without
act or deed on the part of such successor Servicer; provided, however, that any
successor Servicer may terminate the Sub-Servicer.
Ocwen shall, upon the reasonable request of the Master
Servicer, but at its own expense, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best
60
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
The Servicing Fee payable to any such successor Servicer shall
be payable from payments received on the Ocwen Mortgage Loans in the amount and
in the manner set forth in this Agreement.
Section 3.06. Collection of Certain Mortgage Loan Payments.
Ocwen shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Ocwen Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
Accepted Servicing Practices, follow such collection procedures as it would
follow with respect to mortgage loans comparable to the Ocwen Mortgage Loans and
held for its own account. Consistent with the foregoing, Ocwen may in its
discretion (i) waive any late payment charge or, if applicable, penalty interest
or (ii) extend the due dates for the Monthly Payments due on a Mortgage Note
related to a Ocwen Mortgage Loan for a period of not greater than 180 days;
provided that any extension pursuant to this clause shall not affect the
amortization schedule of any Ocwen Mortgage Loan for purposes of any computation
hereunder. Notwithstanding the foregoing, in the event that any Ocwen Mortgage
Loan is in default or, in the judgment of Ocwen, such default is reasonably
foreseeable, Ocwen, consistent with Accepted Servicing Practices may waive,
modify or vary any term of such Ocwen Mortgage Loan (including modifications
that change the Mortgage Rate, forgive the payment of principal or interest or
extend the final maturity date of such Ocwen Mortgage Loan), accept payment from
the related Mortgagor of an amount less than the Stated Principal Balance in
final satisfaction of such Ocwen Mortgage Loan, or consent to the postponement
of strict compliance with any such term or otherwise grant indulgence to any
Mortgagor if in Ocwen's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the Certificateholders
(taking into account any estimated Realized Loss that might result absent such
action).
Section 3.07. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
To the extent the terms of a Mortgage related to a Ocwen
Mortgage Loan provide for Escrow Payments, Ocwen shall establish and maintain
one or more accounts (the "Servicing Accounts"), into which all collections from
the Mortgagors (or related advances from Sub-Servicers) for the payment of
taxes, assessments, fire, flood, and hazard insurance premiums, and comparable
items for the account of the Mortgagors ("Escrow Payments") shall be deposited
and retained. Servicing Accounts shall be Eligible Accounts. Ocwen shall deposit
in the clearing account in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Ocwen's receipt thereof, all Escrow Payments collected on account of the
Mortgage Loans and shall thereafter deposit such Escrow Payments in the
Servicing Accounts, in no event later than the second Business Day after the
deposit of good funds into the clearing account, 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
61
to (i) effect timely payment of taxes, assessments, fire, flood, and hazard
insurance premiums, and comparable items; (ii) reimburse itself out of related
collections for any Servicing Advances made pursuant to Section 3.01 (with
respect to taxes and assessments) and Section 3.11, (with respect to fire, flood
and hazard insurance); (iii) refund to Mortgagors any sums as may be determined
to be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; or (v) clear and terminate the
Servicing Account at the termination of Ocwen's obligations and responsibilities
in respect of the Ocwen Mortgage Loans under this Agreement in accordance with
Article X. As part of its servicing duties, Ocwen shall pay to the Mortgagors
interest on funds in Servicing Accounts, to the extent required by law and, to
the extent that interest earned on funds in the Servicing Accounts is
insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. Notwithstanding the foregoing, Ocwen shall not be
obligated to collect Escrow Payments if the related Ocwen Mortgage Loan does not
require such payments but Ocwen shall nevertheless be obligated to make
Servicing Advances as provided in Section 3.01 and Section 3.11. In the event
Ocwen shall deposit in the Servicing Accounts any amount not required to be
deposited therein, it may at any time withdraw such amount from the Servicing
Accounts, any provision to the contrary notwithstanding.
To the extent that a Mortgage related to a Ocwen Mortgage Loan
does not provide for Escrow Payments, Ocwen (i) shall determine whether any such
payments are made by the Mortgagor in a manner and at a time that is necessary
to avoid the loss of the Mortgaged Property due to a tax sale or the foreclosure
as a result of a tax lien and (ii) shall ensure that all insurance required to
be maintained on the Mortgaged Property pursuant to this Agreement is
maintained. If any such payment has not been made and Ocwen receives notice of a
tax lien with respect to the Ocwen Mortgage Loan being imposed, Ocwen shall,
promptly and to the extent required to avoid loss of the Mortgaged Property,
advance or cause to be advanced funds necessary to discharge such lien on the
Mortgaged Property unless Ocwen determines the advance to be nonrecoverable.
Ocwen assumes full responsibility for the payment of all such bills and shall
effect payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make Servicing Advances to effect such payments subject to its
determination of recoverability.
62
Section 3.08. Collection Account, Simple Interest Excess
Sub-Account and Distribution Account.
(a) On behalf of the Trust Fund, Ocwen shall establish
and maintain one or more "Collection Accounts", held in trust for the benefit of
the Trustee and the Certificateholders. On behalf of the Trust Fund, Ocwen shall
deposit or cause to be deposited in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after Ocwen's receipt thereof, and shall thereafter deposit in
the Collection Account, in no event later than two Business Days after the
deposit of good funds into the clearing account, as and when received or as
otherwise required hereunder, the following payments and collections received or
made by it on or subsequent to the Cut-off Date other than amounts attributable
to a Due Date on or prior to the Cut-off Date:
(i) all payments on account of principal,
including Principal Prepayments, on the Ocwen Mortgage Loans;
(ii) all payments on account of interest (net of
the related Servicing Fee and any Prepayment Interest Excess) on each
Ocwen Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation
Proceeds (other than proceeds collected in respect of any particular
REO Property and all Subsequent Recoveries with respect to the Ocwen
Mortgage Loans;
(iv) any amounts required to be deposited by
Ocwen pursuant to Section 3.10 in connection with any losses realized
on Permitted Investments with respect to funds held in the Collection
Account;
(v) any amounts required to be deposited by
Ocwen pursuant to the second paragraph of Section 3.11(a) in respect of
any blanket policy deductibles;
(vi) any Purchase Price or Substitution Shortfall
Amount delivered to Ocwen and all proceeds (net of amounts payable or
reimbursable to Ocwen, the Master Servicer, the Trustee, the Custodian
or the Securities Administrator) of Ocwen Mortgage Loans purchased in
accordance with Section 2.03, Section 3.13 or Section 10.01; and
(vii) any Prepayment Charges collected by Ocwen in
connection with the Principal Prepayment of any of the Ocwen Mortgage
Loans or amounts required to be deposited by Ocwen in connection with a
breach of its obligations under Section 2.05.
The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, assumption fees or other similar fees need not be deposited by Ocwen in
the Collection Account and may be retained by Ocwen as additional servicing
compensation. In the event Ocwen shall deposit in the Collection Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Collection Account, any provision herein to the contrary
notwithstanding.
63
(b) Except as set forth below, no later than the Closing
Date, Ocwen shall establish and maintain a sub-account of the Collection Account
titled "Ocwen Federal Bank FSB, Simple Interest Excess Sub-Account in trust for
the Holders of ACE Securities Corp., Home Equity Loan Trust, Series 2005-SN1,
Asset Backed Pass-Through Certificates". Ocwen shall, on each Determination Date
transfer from the Collection Account to the Simple Interest Excess Sub-Account
all Net Simple Interest Excess, if any, pursuant to Section 3.09(a)(xi), and
shall maintain a record of all such deposits. In lieu of establishing a Simple
Interest Excess Sub-Account, Ocwen may maintain any Net Simple Interest Excess
in the Collection Account and maintain a separate accounting therefore.
Ocwen shall withdraw amounts on deposit in the Simple Interest
Excess Sub-Account or in the Collection Account (in respect of any Net Simple
Interest Excess) on each Determination Date for deposit to the Distribution
Account in an amount equal to the lesser of (i) the amount on deposit therein,
and (ii) the Net Simple Interest Shortfall for such Distribution Date.
Ocwen shall remit to the Securities Administrator which shall
thereupon distribute to the Class CE-1 Certificateholder, based on the
information provided to it by Ocwen, the amount of any Net Simple Interest
Excess remaining in the Simple Interest Excess Sub-Account or in the Collection
Account, as applicable, on the Distribution Date in the month following the
month in which the last Simple Interest Mortgage Loan remaining in the Trust
Fund is paid in full or upon the liquidation or other disposition of the last
Simple Interest Mortgage Loan remaining in the Trust Fund. Such distributions
shall be deemed to be made on a first-in, first-out basis. In addition, Ocwen
shall clear and terminate the Simple Interest Excess Sub-Account, if any, in the
month following the month in which the last Simple Interest Mortgage Loan
remaining in the Trust Fund is paid in full, liquidated or otherwise disposed
of, and shall distribute any funds remaining therein to the Class CE-1
Certificateholder.
(c) 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,
WMMSC shall deliver funds to the Securities Administrator for deposit in the
Distribution Account as specified in the Servicing Agreement. On behalf of the
Trust Fund, Ocwen shall deliver to the Securities Administrator in immediately
available funds for deposit in the Distribution Account on or before 12:00 noon
New York time on the Servicer Remittance Date, that portion of the Available
Distribution Amount (calculated without regard to the references in clause (2)
of the definition thereof to amounts that may be withdrawn from the Distribution
Account) for the related Distribution Date then on deposit in the Collection
Account and the amount of all Prepayment Charges collected by Ocwen in
connection with the Principal Prepayment of any of the Ocwen Mortgage Loans then
on deposit in the Collection Account and the amount of any funds reimbursable to
an Advance Financing Person pursuant to Section 3.25. 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," Ocwen
shall, on or before 5:00 p.m. New York time on such Business Day, withdraw from
the Collection Account any and all amounts payable or reimbursable to the
Depositor, Ocwen, the Trustee, the Master Servicer, the Securities Administrator
or the Seller pursuant to Section 3.09 and shall pay such amounts to
64
the Persons entitled thereto or shall establish a separate Collection Account
(which shall also be an Eligible Account) and withdraw from the existing
Collection Account the amount on deposit therein in excess of $100,000 and
deposit such excess in the newly created Collection Account.
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 Ocwen. Ocwen shall pay to the Securities Administrator
interest on any such late payment by Ocwen at an annual rate equal to Prime Rate
(as defined in The Wall Street Journal) plus one percentage point, but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be paid by Ocwen to the Securities Administrator on the date such late
payment is made and shall cover the period commencing with the day following
such first Business Day and ending with the Business Day on which such payment
is made, both inclusive. The payment by Ocwen of any such interest, or the
failure of the Securities Administrator to notify Ocwen of such interest, shall
not be deemed an extension of time for payment or a waiver of any Event of
Default by Ocwen.
(d) Funds in the Collection Account in the Simple
Interest Excess Sub-Account and funds in the Distribution Account may be
invested in Permitted Investments in accordance with the provisions set forth in
Section 3.10. Ocwen shall give notice to the Trustee, the Securities
Administrator and the Master Servicer of the location of the Collection Account
maintained by it when established and prior to any change thereof. The
Securities Administrator shall give notice to the Servicers and the Depositor of
the location of the Distribution Account when established and prior to any
change thereof.
(e) Funds held in the Collection Account at any time may
be delivered by Ocwen in immediately available funds to the Securities
Administrator for deposit in the Distribution Account. In the event Ocwen shall
deliver to the Securities Administrator for deposit in the Distribution Account
any amount not required to be deposited therein, it may at any time request that
the Securities Administrator withdraw such amount from the Distribution Account
and remit to it any such amount, any provision herein to the contrary
notwithstanding. In no event shall the Securities Administrator incur liability
as a result of withdrawals from the Distribution Account at the direction of
Ocwen in accordance with the immediately preceding sentence. In addition, Ocwen
shall deliver to the Securities Administrator no later than the Servicer
Remittance Date the amounts set forth in clauses (i) through (iv) below:
(i) any P&I Advances, as required pursuant to
Section 5.03;
(ii) any amounts required to be deposited
pursuant to Section 3.21(d) or Section 3.21(f) in connection with any
REO Property related to a Ocwen Mortgage Loan;
(iii) any amounts to be paid in connection with a
purchase of Ocwen Mortgage Loans and REO Properties pursuant to Section
10.01; and
(iv) any amounts required to be deposited
pursuant to Section 3.22 in connection with any Prepayment Interest
Shortfalls with respect to a Ocwen Mortgage Loan.
65
Section 3.09. Withdrawals from the Collection Account and
Distribution Account.
(a) Ocwen 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(c)or permitted to be so remitted
pursuant to the first sentence of Section 3.08(e);
(ii) subject to Section 3.13(d), to reimburse
itself (including any successor Servicer) for P&I Advances made by it,
but only to the extent of amounts received which represent Late
Collections (net of the related Servicing Fees) of Monthly Payments on
related Ocwen Mortgage Loans with respect to which such P&I Advances
were made in accordance with the provisions of Section 5.03;
(iii) subject to Section 3.13(d), to pay itself
any unpaid Servicing Fees and reimburse itself any unreimbursed
Servicing Advances with respect to each Ocwen Mortgage Loan, but only
to the extent of any Liquidation Proceeds and Insurance Proceeds
received with respect to such related Ocwen Mortgage Loan;
(iv) to pay to itself as servicing compensation
(in addition to the Servicing Fee) on its Servicer Remittance Date any
interest or investment income earned on funds deposited in the
Collection Account;
(v) to pay to itself or the Seller, as the case
may be, with respect to each related Ocwen Mortgage Loan that has
previously been purchased or replaced pursuant to Section 2.03 or
Section 3.13(c) all amounts received thereon not included in the
Purchase Price or the Substitution Shortfall Amount;
(vi) to reimburse itself (including any successor
to Ocwen) for
(A) any P&I Advance or Servicing
Advance previously made by it which Ocwen has determined to be
a Nonrecoverable P&I Advance or a Nonrecoverable Servicing
Advance in accordance with the provisions of Section 5.03
provided however, that Ocwen shall not be entitled to
reimbursement for any Servicing Advance made prior to the
Cut-off Date if Ocwen determines that such Servicing Advance
constitutes a Nonrecoverable Servicing Advance; or
(B) any unpaid Servicing Fees to the
extent not recoverable from Liquidation Proceeds, Insurance
Proceeds or other amounts received with respect to the related
Ocwen Mortgage Loan under Section 3.06;
(vii) to reimburse itself or the Depositor for
expenses incurred by or reimbursable to itself or the Depositor, as the
case may be, pursuant to Section 3.01 or Section 7.03;
66
(viii) to reimburse itself or the Trustee, as the
case may be, for expenses reasonably incurred in respect of the breach
or defect giving rise to the purchase obligation under Section 2.03 of
this Agreement that were included in the Purchase Price of the related
Ocwen Mortgage Loan, including any expenses arising out of the
enforcement of the purchase obligation;
(ix) to pay, or to reimburse itself for advances
in respect of, expenses incurred in connection with any Ocwen Mortgage
Loan pursuant to Section 3.13(b);
(x) to pay itself any Prepayment Interest Excess
on the Ocwen Mortgage Loans to the extent not retained pursuant to
Section 3.08(a)(ii);
(xi) to deposit in the Simple Interest Excess
Sub-Account any amount required to be deposited therein pursuant to
Section 3.08(b); and
(xii) to clear and terminate the Collection
Account pursuant to Section 10.01.
Ocwen shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (vii), (viii), (ix) and (x)
above.
(b) The Securities Administrator shall, from time to
time, make withdrawals from the Distribution Account, for any of the following
purposes, without priority:
(i) to make distributions to Certificateholders
in accordance with Section 5.01;
(ii) to pay to itself, the Custodian 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;
(iv) to reimburse WMMSC for any overages paid by
WMMSC in connection with Section 4.20;
(v) to pay any amounts in respect of taxes
pursuant to Section 11.01(g)(v);
(vi) to pay the Master Servicing Fee to the
Master Servicer;
(vii) to pay the Credit Risk Management Fee to the
Credit Risk Manager; and
(viii) to clear and terminate the Distribution
Account pursuant to Section 10.01.
67
Section 3.10. Investment of Funds in the Investment Accounts.
(a) Ocwen may direct, by means of written directions
(which may be standing directions), any depository institution maintaining the
Collection Account or Simple Interest Excess Sub-Account to invest the funds in
such Collection Account or Simple Interest Excess Sub-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 Ocwen 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 or Simple Interest Excess Sub-Account
shall be for the benefit of Ocwen and shall be subject to its withdrawal in
accordance with Section 3.09. Ocwen shall deposit in the Collection Account or
Simple Interest Excess Sub-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
68
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 Ocwen, 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 Section 3.10
or otherwise payable in respect of Extraordinary Trust Fund Expenses. Such
additional compensation shall not be an expense of the Trust Fund.
Section 3.11. Maintenance of Hazard Insurance, Errors and
Omissions and Fidelity Coverage and Primary Mortgage Insurance.
(a) The terms of each Mortgage Note require the related
Mortgagor to maintain fire, flood and hazard insurance policies. To the extent
such policies are not maintained, Ocwen shall cause to be maintained for each
Mortgaged Property that is related to a Ocwen Mortgage Loan fire and hazard
insurance with extended coverage as is customary in the area where the Mortgaged
Property is located in an amount which is at least equal to the lesser of the
current principal balance of such Ocwen Mortgage Loan and the amount necessary
to compensate fully for any damage or loss to the improvements which are a part
of such property on a replacement cost basis, in each case in an amount not less
than such amount as is necessary to avoid the application of any coinsurance
clause contained in the related hazard insurance policy. Ocwen shall also cause
to be maintained fire and hazard insurance on each REO Property with extended
coverage as is customary in the area where the Mortgaged Property is located in
an amount which is at least equal to the lesser of (i) the maximum insurable
value of the improvements which are a part of such property and (ii) the
outstanding principal balance of the related Ocwen Mortgage Loan at the time it
became an REO Property. Ocwen will comply in the performance of this Agreement
with all reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by Ocwen under any such policies (other
than amounts to be applied to the restoration or repair of the property 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
Ocwen in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Ocwen Mortgage
69
Loan, notwithstanding that the terms of such Ocwen Mortgage Loan so permit. It
is understood and agreed that no earthquake or other additional insurance is to
be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, Ocwen will cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Ocwen 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 Ocwen 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 Ocwen Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations to cause fire and
hazard insurance to be maintained on the Mortgaged Properties, it being
understood and agreed that such policy may contain a deductible clause, in which
case Ocwen shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.11, and there shall have been one or more losses
which would have been covered by such policy, deposit to the 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 Ocwen Mortgage Loans, Ocwen agrees to prepare
and present, on behalf of itself, the Trustee, the Trust Fund, the
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.
(b) Ocwen shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of its respective obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of Fannie Mae or Freddie Mac if it were the purchaser of the Ocwen
Mortgage Loans, unless Ocwen has obtained a waiver of such requirements from
Fannie Mae or Freddie Mac. Ocwen shall also maintain a fidelity bond in the form
and amount that would meet the requirements of Fannie Mae or Freddie Mac, unless
Ocwen has obtained a waiver of such requirements from Fannie Mae or Freddie Mac.
Ocwen shall be deemed to have complied with this provision if an Affiliate of
Ocwen, has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to Ocwen. Any such errors and omissions policy and fidelity
bond shall by its terms not be cancelable without thirty days' prior written
notice to the Trustee.
(c) Ocwen shall not take any action that would result in
noncoverage under any applicable primary mortgage insurance policy of any loss
which, but for the actions of Ocwen would have been covered thereunder. Ocwen
shall use its best efforts to keep in force and effect any applicable primary
mortgage insurance policy and, to the extent that the related Ocwen Mortgage
Loan requires the Mortgagor to maintain such insurance, any other primary
mortgage insurance applicable to any Ocwen Mortgage Loan. Except as required by
applicable law or the related Mortgage Loan Documents, Ocwen shall not cancel or
refuse to renew any
70
such primary mortgage insurance policy that is in effect at the date of the
initial issuance of the related Mortgage Note and is required to be kept in
force hereunder.
Ocwen agrees to present on behalf of the Trustee and the
Certificateholders claims to the applicable insurer under any primary mortgage
insurance policies and, in this regard, to take such reasonable action as shall
be necessary to permit recovery under any primary mortgage insurance policies
respecting defaulted Ocwen Mortgage Loans. Pursuant to Section 3.08, any amounts
collected by Ocwen under any primary mortgage insurance policies shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.09. Notwithstanding any provision to the contrary, Ocwen shall not have any
responsibility with respect to a primary mortgage insurance policy unless Ocwen
has been made aware of such policy, as reflected on the Mortgage Loan Schedule
or otherwise and have been provided with adequate information to administer such
policy.
Section 3.12. Enforcement of Due-on-Sale Clauses; Assumption
Agreements
Ocwen shall, to the extent it has knowledge of any conveyance
of any Mortgaged Property related to a Ocwen Mortgage Loan by any related
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Ocwen
Mortgage Loan under the "due-on-sale" clause, if any, applicable thereto;
provided, however, that Ocwen shall not exercise any such rights if prohibited
by law from doing so. If Ocwen reasonably believes 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, Ocwen 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. Ocwen is also authorized to enter into a substitution of
liability agreement with such person, pursuant to which the original Mortgagor
is released from liability and such person is substituted as the Mortgagor and
becomes liable under the Mortgage Note, provided that no such substitution shall
be effective unless such person satisfies the then current underwriting criteria
of Ocwen for mortgage loans similar to the Ocwen Mortgage Loans. In connection
with any assumption or substitution, Ocwen shall apply such underwriting
standards and follow such practices and procedures as shall be normal and usual
in its general mortgage servicing activities and as it applies to other mortgage
loans owned solely by it. Ocwen shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
Ocwen in respect of an assumption or substitution of liability agreement will be
retained by Ocwen as additional servicing compensation. In connection with any
such assumption, no material term of the Mortgage Note (including but not
limited to the related Mortgage Rate and the amount of the Monthly Payment) may
be amended or modified, except as otherwise required pursuant to the terms
thereof. Ocwen shall notify the Trustee (or the Custodian) that any such
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
71
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, Ocwen shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Ocwen Mortgage Loan by operation of law or by the terms of the Mortgage Note or
any assumption which Ocwen may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.12, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
Section 3.13. Realization Upon Defaulted Mortgage Loans.
(a) Ocwen shall use its best efforts, consistent with
Accepted Servicing Practices, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Ocwen Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 3.06. Ocwen shall
be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by Ocwen as contemplated in Section 3.09 and Section 3.21.
The foregoing is subject to the provision that, in any case in which a Mortgaged
Property shall have suffered damage from an Uninsured Cause, Ocwen shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the related Ocwen Mortgage Loan after reimbursement
to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this
Section 3.13 or any other provision of this Agreement, with respect to any Ocwen
Mortgage Loan as to which Ocwen has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, Ocwen shall not, on behalf of the Trust Fund, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trust Fund, the Trustee or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless Ocwen has also previously
determined, based on its reasonable judgment and a prudent report prepared by an
Independent Person who regularly conducts environmental audits using customary
industry standards, that:
(1) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it would be in
the best economic interest of the Trust Fund to take such
actions as are necessary to bring the Mortgaged Property into
compliance therewith; and
(2) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any
hazardous substances, hazardous
72
materials, hazardous wastes or petroleum-based materials for
which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal,
state or local law or regulation, or that if any such
materials are present for which such action could be required,
that it would be in the best economic interest of the Trust
Fund to take such actions with respect to the affected
Mortgaged Property.
The cost of the environmental audit report contemplated by
this Section 3.13 shall be advanced by Ocwen, subject to Ocwen's right to be
reimbursed therefor from the 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 Ocwen Mortgage Loan or other Ocwen Mortgage Loans.
If Ocwen determines, as described above, that it is in the
best economic interest of the Trust Fund to take such actions as are necessary
to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
Ocwen shall take such action as it deems to be in the best economic interest of
the Trust Fund. The cost of any such compliance, containment, cleanup or
remediation shall be advanced by Ocwen, subject to Ocwen's right to be
reimbursed therefor from the Collection Account as provided in Section
3.09(a)(iii) or 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 Ocwen Mortgage Loan or other Ocwen Mortgage
Loans.
(c) Ocwen shall have the right to purchase from REMIC I
any defaulted Mortgage Loan serviced by it that is 90 days or more delinquent,
which Ocwen determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee, in form and substance satisfactory to Ocwen and the
Trustee prior to purchase), at a price equal to the Purchase Price. The Purchase
Price for any Mortgage Loan purchased hereunder shall be deposited in the
Collection Account, and the Trustee, upon receipt of written certification from
Ocwen of such deposit, shall release or cause to be released to the Ocwen the
related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, representation or
warranty, as the Ocwen shall furnish and as shall be necessary to vest in Ocwen
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
Ocwen Mortgage Loan, will be applied in the following order of priority: first,
to reimburse Ocwen for any related unreimbursed Servicing Advances and P&I
Advances, pursuant to Section 3.09(a)(ii) or Section 3.09(a)(iii); second, to
accrued and unpaid interest on the Ocwen Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Ocwen
Mortgage Loan. If the amount of the recovery so allocated to interest is less
than the full amount of accrued and unpaid interest due on such Ocwen Mortgage
Loan, the amount of such
73
recovery will be allocated by Ocwen as follows: first, to unpaid Servicing Fees;
and second, to the balance of the interest then due and owing. The portion of
the recovery so allocated to unpaid Servicing Fees shall be reimbursed to Ocwen
pursuant to Section 3.09(a)(iii). The portion of the recovery allocated to
interest (net of unpaid Servicing Fees) and the portion of the recovery
allocated to principal of the Ocwen Mortgage Loan shall be applied as follows:
first, to reimburse Ocwen for any related unreimbursed Servicing or P&I Advances
in accordance with Section 3.09(a)(ii) and any other amounts reimbursable to
Ocwen pursuant to Section 3.09, and second, as part of the amounts to be
transferred to the Distribution Account in accordance with Section 3.08(c).
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 a Servicer of a notification that payment in
full has been escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the related Servicer will
promptly furnish to the Custodian, on behalf of the Trustee, two copies of a
request for release substantially in the form attached to the Custodial
Agreement signed by a Servicing Officer or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payment that are required to
be deposited in the Collection Account or Custodial Account, as applicable, have
been or will be so deposited) and shall request that the Custodian, on behalf of
the Trustee, deliver to the related Servicer the related Mortgage File. Upon
receipt of such certification and request, the Custodian, on behalf of the
Trustee, shall within five (5) Business Days release the related Mortgage File
to the related Servicer and the Trustee and Custodian shall have no further
responsibility with regard to such Mortgage File. Upon any such payment in full,
the related Servicer is authorized, to give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage without recourse) regarding the
Mortgaged Property subject to the Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Collection Account or Custodial Account, as applicable.
(b) From time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan, the Trustee shall execute such
documents as shall be prepared and furnished to the Trustee by the related
Servicer (in form reasonably acceptable to the Trustee), and as are necessary to
the prosecution of any such proceedings. The Custodian, on behalf of the
Trustee, shall, upon the request of the related Servicer and delivery to the
Custodian 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 related Servicer.
Such trust receipt shall obligate the related Servicer to return the Mortgage
File to the Custodian on behalf of the Trustee, when the need therefor by such
Servicer no longer exists unless the Mortgage Loan shall be liquidated, in which
case, upon receipt of a certificate of a Servicing Officer
74
similar to that hereinabove specified, the Mortgage File shall be released by
the Custodian, on behalf of the Trustee, to the related Servicer.
Notwithstanding the foregoing, in connection with a Principal
Prepayment in full of any Mortgage Loan, the Master Servicer may request release
of the related Mortgage File from the Custodian, in accordance with the
provisions of the Custodial Agreement, in the event the related Servicer fails
to do so.
Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the related Servicer, any court pleadings, requests
for trustee's sale or other documents prepared and delivered to the Trustee and
reasonably acceptable to it and necessary to the foreclosure or trustee's sale
in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale. So long as no Servicer Event of Default shall have occurred and
be continuing, the related Servicer shall have the right to execute any and all
such court pleadings, requests and other documents as attorney-in-fact for, and
on behalf of the Trustee.
Section 3.15. Servicing Compensation.
As compensation for the activities of Ocwen hereunder, Ocwen
shall be entitled to the Servicing Fee with respect to each Ocwen Mortgage Loan
payable solely from payments of interest in respect of such Ocwen Mortgage Loan,
subject to Section 3.22. In addition, Ocwen shall be entitled to recover unpaid
Servicing Fees out of Insurance Proceeds or Liquidation Proceeds to the extent
permitted by Section 3.09(a)(iii) and out of amounts derived from the operation
and sale of an REO Property to the extent permitted by Section 3.21. Subject to
Section 3.25, 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 Ocwen'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 Ocwen
only to the extent such fees or charges are received by Ocwen. Ocwen shall also
be entitled pursuant to Section 3.09(a)(iv) to withdraw from the Collection
Account and pursuant to Section 3.21(b) to withdraw from any REO Account, as
additional servicing compensation, interest or other income earned on deposits
therein, subject to Section 3.10. In addition, Ocwen shall be entitled to retain
or withdraw from the Collection Account, pursuant to Section 3.09(a)(x), any
Prepayment Interest Excess with respect to the Mortgage Loans serviced by it as
additional servicing compensation. Ocwen shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement therefor except as specifically provided
herein.
75
Section 3.16. Collection Account Statements.
Upon request, not later than fifteen days after each
Distribution Date, Ocwen shall forward to the Master Servicer, the Securities
Administrator, the Trustee and the Depositor a statement prepared by the
institution at which the 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 and any similar
statements provided by the Servicers shall be provided by the Securities
Administrator to any Certificateholder and to any Person identified to the
Securities Administrator as a prospective transferee of a Certificate, upon
request at the expense of the requesting party, provided such statement is
delivered by Ocwen to the Securities Administrator.
Section 3.17. Statement as to Compliance.
Not later than March 15th of each calendar year commencing in
2006, Ocwen 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 Ocwen during the preceding year and of performance under this
Agreement has been made under such officers' supervision and (ii) to the best of
such officer's knowledge, based on such review, Ocwen has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof. Copies of any such
statement shall be provided by the Trustee to any Certificateholder, upon
request at the expense of the requesting party, provided such statement is
delivered by Ocwen to the Trustee.
Section 3.18. Independent Public Accountants' Servicing
Report.
Not later than March 15th of each calendar year commencing in
2006, Ocwen, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to Ocwen a report in a form
acceptable for filing with the Securities and Exchange Commission as an exhibit
to Form 10-K or other required form stating that (i) it has obtained a letter of
representation regarding certain matters from the management of Ocwen which
includes an assertion that Ocwen has complied with certain minimum residential
mortgage loan servicing standards, identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the servicing of residential mortgage loans during the
most recently completed fiscal year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
and such firm has determined that Ocwen has complied in all material respects,
subject to such exceptions and other qualifications that may be appropriate.
Immediately upon receipt of such report, Ocwen shall furnish a copy of such
report to the Master Servicer, the Trustee and each Rating Agency. Copies of
such statement shall be provided by the Trustee to any Certificateholder upon
76
request at the expense of requesting party, provided that such statement is
delivered by Ocwen to the Trustee.
Section 3.19. Annual Certification.
(a) Ocwen shall deliver to the Master Servicer, on or
before March 15th of each calendar year beginning in 2006 (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
Ocwen. In addition, Ocwen shall provide such other information with respect to
the Ocwen Mortgage Loans and the servicing and administration thereof within the
control of Ocwen which shall be required to enable the Master Servicer to comply
with the reporting requirements of the Securities and Exchange Act of 1934, as
amended, pursuant to Section 5.06 hereof.
(b) Ocwen shall indemnify and hold harmless the Master
Servicer, the Securities Administrator, the Trustee, the Depositor and their
respective officers, directors, agents and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by Ocwen or any of its officers, directors, agents or affiliates
of its obligations under this Section 3.19 or Ocwen's negligence, bad faith or
willful misconduct in connection therewith. Such indemnity shall survive the
termination or resignation of the parties hereto or the termination of this
Agreement. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Master Servicer, the Securities Administrator,
the Trustee and the Depositor, then Ocwen agrees that it shall contribute to the
amount paid or payable by the Master Servicer, the Securities Administrator, the
Trustee and the Depositor as a result of the losses, claims, damages or
liabilities of the Master Servicer, the Securities Administrator, the Trustee
and the Depositor in such proportion as is appropriate to reflect the relative
fault of the Master Servicer, the Securities Administrator, the Trustee and the
Depositor on the one hand and Ocwen on the other in connection with a breach of
Ocwen's obligations under this Section 3.19.
Section 3.20. Access to Certain Documentation.
Ocwen shall provide to the Office of Thrift Supervision, the
FDIC, and any other federal or state banking or insurance regulatory authority
that may exercise authority over any Certificate Owner, access to the
documentation regarding the Ocwen Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of Ocwen
designated by it. Nothing in this Section 3.20 shall limit the obligation of
Ocwen to comply with any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of Ocwen to provide access as provided
in this Section as a result of such obligation shall not constitute a breach of
this Section. Nothing in this Section 3.20 shall require Ocwen to collect,
create, collate or otherwise generate any information that it does not generate
in its usual course of business.
77
Ocwen shall not be required to make copies of or ship documents to any Person
unless provisions have been made for the reimbursement of the costs thereof.
Section 3.21. Title, Management and Disposition of REO
Property.
(a) The deed or certificate of sale of any REO Property
related to a Ocwen Mortgage Loan shall be taken in the name of the Trustee, or
its nominee, on behalf of the Trust Fund and for the benefit of the
Certificateholders. Ocwen, on behalf of REMIC I, shall either sell any REO
Property by the close of the third calendar year following the calendar year in
which REMIC I acquires ownership of such REO Property for purposes of Section
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 Ocwen had delivered
to the Trustee an Opinion of Counsel, addressed to the Trustee and the
Depositor, to the effect that the holding by REMIC I of such REO Property
subsequent to three years after its acquisition will not result in the
imposition on any Trust REMIC created hereunder of taxes on "prohibited
transactions" thereof, as defined in Section 860F of the Code, or cause any
Trust REMIC hereunder to fail to qualify as a REMIC under Federal law at any
time that any Certificates are outstanding. Ocwen shall manage, conserve,
protect and operate each REO Property for the Certificateholders solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by any Trust REMIC
created hereunder of any "income from non-permitted assets" within the meaning
of Section 860F(a)(2)(B) of the Code, or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions.
(b) Ocwen shall segregate and hold all funds collected
and received in connection with the operation of any REO Property related to a
Ocwen Mortgage Loan separate and apart from its own funds and general assets and
shall establish and maintain with respect to REO Properties an account held in
trust for the Trustee, on behalf of the Trust Fund and for the benefit of the
Certificateholders (the "REO Account"), which shall be an Eligible Account.
Ocwen shall be permitted to allow the Collection Account to serve as the REO
Account, subject to the maintenance of separate ledgers for each REO Property.
Ocwen shall be entitled to retain or withdraw any interest income paid on funds
deposited in the REO Account.
(c) Ocwen shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property related to a Ocwen Mortgage
Loan as are consistent with the manner in which Ocwen manages and operates
similar property owned by it or any of its Affiliates, all on such terms and for
such period as Ocwen deems to be in the best interests of Certificateholders. In
connection therewith, Ocwen shall deposit, or cause to be deposited in the
clearing account in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after Ocwen's receipt
thereof, and shall thereafter deposit in the REO Account, in no event more than
two Business Days after the deposit of good funds into the clearing account, all
revenues received by it with respect to an REO Property related to an Ocwen
Mortgage Loan and shall withdraw therefrom funds necessary for the proper
operation, management and maintenance of such REO Property including, without
limitation:
78
(i) all insurance premiums due and payable in
respect of such REO Property;
(ii) all real estate taxes and assessments in
respect of such REO Property that may result in the imposition of a
lien thereon; and
(iii) all costs and expenses necessary to maintain
such REO Property.
To the extent that amounts on deposit in the REO Account with
respect to an REO Property are insufficient for the purposes set forth in
clauses (i) through (iii) above with respect to such REO Property, Ocwen shall
advance from its own funds such amount as is necessary for such purposes if, but
only if, Ocwen would make such advances if Ocwen owned the REO Property and if
in Ocwen's judgment, the payment of such amounts will be recoverable from the
rental or sale of the REO Property.
Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding the foregoing, Ocwen, on
behalf of the Trust Fund, shall not:
(i) enter into, renew or extend any New Lease
with respect to any REO Property, if the New Lease by its terms will
give rise to any income that does not constitute Rents from Real
Property;
(ii) permit any amount to be received or accrued
under any New Lease other than amounts that will constitute Rents from
Real Property;
(iii) authorize or permit any construction on any
REO Property, other than the completion of a building or other
improvement thereon, and then only if more than ten percent of the
construction of such building or other improvement was completed before
default on the related Ocwen Mortgage Loan became imminent, all within
the meaning of Section 856(e)(4)(B) of the Code; or
(iv) allow any Person to Directly Operate any REO
Property on any date more than 90 days after its date of acquisition by
the Trust Fund;
unless, in any such case, Ocwen has obtained an Opinion of Counsel, provided to
Ocwen and the Trustee, to the effect that such action will not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by REMIC I, in which
case Ocwen may take such actions as are specified in such Opinion of Counsel.
Ocwen may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such
contract shall not be inconsistent herewith;
(ii) any such contract shall require, or shall be
administered to require, that the Independent Contractor pay all costs
and expenses incurred in connection with
79
the operation and management of such REO Property, including those
listed above and remit all related revenues (net of such costs and
expenses) to Ocwen as soon as practicable, but in no event later than
thirty days following the receipt thereof by such Independent
Contractor;
(iii) none of the provisions of this Section
3.21(b) relating to any such contract or to actions taken through any
such Independent Contractor shall be deemed to relieve Ocwen of any of
its duties and obligations to the Trustee on behalf of the Trust Fund
and for the benefit of the Certificateholders with respect to the
operation and management of any such REO Property; and
(iv) Ocwen shall be obligated with respect
thereto to the same extent as if it alone were performing all duties
and obligations in connection with the operation and management of such
REO Property.
Ocwen shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of Ocwen by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. Ocwen shall be solely liable for all fees owed by it to
any such Independent Contractor, irrespective of whether Ocwen's compensation
pursuant to Section 3.15 is sufficient to pay such fees. Any such agreement
shall include a provision that such agreement may be immediately terminated by
the Trustee (as successor Servicer) or any other successor Servicer (including
the Master Servicer) without fee, in the event Ocwen shall for any reason, no
longer be the Servicer of the Ocwen Mortgage Loans (including termination due to
a Servicer Event of Default).
(d) In addition to the withdrawals permitted under
Section 3.21(b), Ocwen may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself unpaid Servicing Fees in respect
of the related Ocwen Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and Advances made in respect of
such REO Property or the related Ocwen Mortgage Loan. On the related Servicer
Remittance Date, Ocwen shall withdraw from each REO Account maintained by it and
deposit into the Distribution Account in accordance with Section 3.08(e)(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(b) or this
Section 3.21(d).
(e) Subject to the time constraints set forth in Section
3.21(a), each REO Disposition shall be carried out by Ocwen at such price and
upon such terms and conditions as Ocwen shall deem necessary or advisable, as
shall be normal and usual in accordance with Accepted Servicing Practices.
(f) The proceeds from the REO Disposition, net of any
amount required by law to be remitted to the Mortgagor under the related Ocwen
Mortgage Loan and net of any payment or reimbursement to Ocwen as provided
above, shall be deposited in the Distribution Account in accordance with Section
3.08(e)(ii) on the Servicer Remittance Date in the month following the receipt
thereof for distribution on the related Distribution Date in accordance with
80
Section 5.01. Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
(g) Ocwen shall file information returns (and shall
provide a certification of a Servicing Officer to the Master Servicer that such
filings have been made) with respect to the receipt of mortgage interest
received in a trade or business, reports of foreclosures and abandonments of any
Mortgaged Property and cancellation of indebtedness income with respect to any
Mortgaged Property as required by Sections 6050H, 6050J and 6050P of the Code,
respectively. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code.
Section 3.22. Obligations of Ocwen in Respect of Prepayment
Interest Shortfalls; Relief Act Interest Shortfalls.
Ocwen shall deliver to the Securities Administrator for
deposit into the Distribution Account on or before 12:00 noon New York time on
the related 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 Ocwen Mortgage Loans for
the related Distribution Date resulting solely from voluntary Principal
Prepayments received by Ocwen during the related Prepayment Period and (ii) the
aggregate amount of the Servicing Fees payable to Ocwen on such Distribution
Date with respect to the Ocwen Mortgage Loans. Ocwen shall not have the right to
reimbursement for any amounts remitted to the Securities Administrator in
respect of this Section 3.22. Ocwen shall not be obligated to pay the amounts
set forth in this Section 3.22 with respect to shortfalls resulting from the
application of the Relief Act.
Section 3.23. Obligations of Ocwen in Respect of Mortgage
Rates and Monthly Payments.
In the event that a shortfall in any collection on or
liability with respect to any Ocwen Mortgage Loan results from or is
attributable to adjustments to Mortgage Rates, Monthly Payments or Stated
Principal Balances that were made by Ocwen in a manner not consistent with the
terms of the related Mortgage Note and this Agreement, Ocwen, upon discovery or
receipt of notice thereof, immediately shall deliver to the Securities
Administrator for deposit in the Distribution Account from its own funds the
amount of any such shortfall and shall indemnify and hold harmless the Trust
Fund, the Trustee, the Securities Administrator, the Master Servicer, the
Depositor and any successor Servicer in respect of any such liability. Such
indemnities shall survive the termination or discharge of this Agreement.
Notwithstanding the foregoing, this Section 3.23 shall not limit the ability of
Ocwen to seek recovery of any such amounts from the related Mortgagor under the
terms of the related Mortgage Note and Mortgage, to the extent permitted by
applicable law.
Section 3.24. Reserve Fund.
(a) No later than the Closing Date, the Securities
Administrator shall establish and maintain a separate, segregated trust account
entitled, "Reserve Fund, Wells Fargo Bank, N.A., in trust for the registered
holders of ACE Securities Corp. Home Equity Loan Trust,
81
Series 2005-SN1, Asset Backed Pass-Through Certificates." On the Closing Date,
the Depositor will deposit, or cause to be deposited, into the Reserve Fund
$1,000.
(b) On each Distribution Date, the Securities
Administrator shall deposit into the Reserve Fund the amounts described in
Section 5.01. (a)(5)(vi), rather than distributing such amounts to the Class
CE-1 Certificateholders, and Section 5.01. (a)(5)(vii). On each such
Distribution Date, the Securities Administrator shall hold all such amounts for
the benefit of the Holders of the Class A Certificates and the Mezzanine
Certificates and will distribute such amounts to the Holders of the Class A
Certificates and the Mezzanine Certificates in the amounts and priorities set
forth in Section 5.01(a). If no Net WAC Rate Carryover Amounts are payable on a
Distribution Date, the Securities Administrator shall deposit, into the Reserve
Fund on behalf of the Class CE-1 Certificateholders, from amounts otherwise
distributable to the Class CE-1 Certificateholders, an amount such that when
added to other amounts already on deposit in the Reserve Fund, the aggregate
amount on deposit therein is equal to $1,000.
(c) For federal and state income tax purposes, the Class
CE-1 Certificateholders will be deemed to be the owners of the Reserve Fund and
all amounts deposited into the Reserve Fund (other than the initial deposit
therein of $1,000 shall be treated as amounts distributed by REMIC II to the
Holders of the Class CE-1 Certificates. Upon the termination of the Trust Fund,
or the payment in full of the Class A Certificates and the Mezzanine
Certificates all amounts remaining on deposit in the Reserve Fund will be
released by the Trust Fund and distributed to the Class CE-1 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 or the
Mezzanine 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-1 Certificate, each Class
CE-1 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-1 Certificateholders.
By accepting a Class CE-1 Certificate, each Class CE-1 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-1 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-1
82
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 and the Mezzanine Certificateholders to
receive payments from the Reserve Fund in respect of any Net WAC Rate Carryover
Amount shall be assigned a value of zero.
Section 3.25. Advance Facility.
(a) Notwithstanding anything to the contrary contained
herein, (i) Ocwen is hereby authorized to enter into an advance facility
("Advance Facility") but no more than two Advance Facilities without the prior
written consent of the Trustee, which consent shall not be unreasonably
withheld, under which (A) Ocwen sells, assigns or pledges to an advancing person
(an "Advance Financing Person") its rights under this Agreement to be reimbursed
for any P&I Advances or Servicing Advances and/or (B) an Advance Financing
Person agrees to finance some or all P&I Advances or Servicing Advances required
to be made by Ocwen pursuant to this Agreement and (ii) Ocwen is hereby
authorized to assign its rights to the Servicing Fee (which rights shall
terminate upon the resignation, termination or removal of Ocwen pursuant to the
terms of this Agreement); it being understood that neither the Trust Fund nor
any party hereto shall have a right or claim (including without limitation any
right of offset) to any amounts for reimbursement of P&I Advances or Servicing
Advances so assigned or to the portion of the Servicing Fee so assigned. Subject
to the provisions of the first sentence of this Section 3.25(a), no consent of
the Depositor, Trustee, Master Servicer, Certificateholders or any other party
is required before Ocwen may enter into an Advance Facility, but Ocwen shall
provide notice to the Depositor, Master Servicer and the Trustee of the
existence of any such Advance Facility promptly upon the consummation thereof
stating (a) the identity of the Advance Financing Person and (b) the identity of
any Person ("Servicer's Assignee") who has the right to receive amounts in
reimbursement of previously unreimbursed P&I Advances or Servicing Advances.
Notwithstanding the existence of any Advance Facility under which an advancing
person agrees to finance P&I Advances and/or Servicing Advances on Ocwen's
behalf, Ocwen shall remain obligated pursuant to this Agreement to make P&I
Advances and Servicing Advances pursuant to and as required by this Agreement,
and shall not be relieved of such obligations by virtue of such Advance
Facility.
(b) Reimbursement amounts ("Advance Reimbursement
Amounts") shall consist solely of amounts in respect of P&I Advances and/or
Servicing Advances made with respect to the related Mortgage Loans for which
Ocwen would be permitted to reimburse itself in accordance with this Agreement,
assuming Ocwen had made the related P&I Advance(s) and/or Servicing Advance(s).
(c) Ocwen shall maintain and provide to any successor
Servicer (with, upon request, a copy to the Trustee) a detailed accounting on a
loan-by-loan basis as to amounts advanced by, pledged or assigned to, and
reimbursed to any advancing person. The successor Servicer shall be entitled to
rely on any such information provided by the predecessor Servicer, and the
successor Servicer shall not be liable for any errors in such information.
83
(d) Reimbursement amounts distributed with respect to
each Mortgage Loan shall be allocated to outstanding unreimbursed P&I Advances
or Servicing Advances (as the case may be) made with respect to that Mortgage
Loan on a "first-in, first out" (FIFO) basis. The documentation establishing any
Advance Facility shall require Ocwen to provide to the related advancing person
or its designee loan-by-loan information with respect to each such reimbursement
amount distributed to such advancing person or Advance Facility trustee on each
Distribution Date, to enable the advancing person or Advance Facility trustee to
make the FIFO allocation of each such reimbursement amount with respect to each
Mortgage Loan. Ocwen shall remain entitled to be reimbursed by the advancing
person or Advance Facility trustee for all P&I Advances and Servicing Advances
funded by Ocwen to the extent the related rights to be reimbursed therefor have
not been sold, assigned or pledged to an advancing person.
(e) Any amendment to this Section 3.25 or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 3.25,
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee, the Depositor, and Ocwen without the consent of any
Certificateholder, notwithstanding anything to the contrary in this Agreement,
provided, that the Trustee has been provided an Opinion of Counsel that such
amendment is authorized hereunder and has no material adverse effect on the
Certificateholders, which opinion shall be an expense of the party requesting
such opinion but in any case shall not be an expense of the Trustee or the Trust
Fund; provided, further, that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders if the
Person requesting the amendment obtains a letter from each Rating Agency
(instead of obtaining an Opinion of Counsel to such effect) stating that the
amendment would not result in the downgrading or withdrawal of the respective
ratings then assigned to the Certificates; it being understood and agreed that
any such rating letter in and of itself will not represent a determination as to
the materiality of any such amendment and will represent a determination only as
to the credit issues affecting any such rating. Prior to entering into an
Advance Facility, Ocwen shall notify the lender under such facility in writing
that: (a) the P&I Advances and/or Servicing Advances financed by and/or pledged
to the lender are obligations owed to Ocwen on a non-recourse basis payable only
from the cash flows and proceeds received under this Agreement for reimbursement
of P&I Advances and/or Servicing Advances only to the extent provided herein,
and neither the Master Servicer, the Securities Administrator, the Trustee nor
the Trust are otherwise obligated or liable to repay any P&I Advances and/or
Servicing Advances financed by the lender; (b) Ocwen will be responsible for
remitting to the lender the applicable amounts collected by it as Servicing Fees
and as reimbursement for P&I Advances and/or Servicing Advances funded by the
lender, as applicable, subject to the restrictions and priorities created in
this Agreement; and (c) neither the Master Servicer, the Securities
Administrator nor the Trustee shall have any responsibility to calculate any
amount payable under an Advance Facility or to track or monitor the
administration of the financing arrangement between Ocwen and the lender or the
payment of any amount under an Advance Facility.
(f) Ocwen shall indemnify the Master Servicer, the
Securities Administrator, the Trustee and the Trust Fund for any cost, liability
or expense relating to the Advance Facility including, without limitation, a
claim, pending or threatened, by an Advance Financing Person.
84
Section 3.26. Ocwen's Indemnification Obligation.
Ocwen agrees to indemnify the Trustee, Master Servicer and the
Securities Administrator, from, and hold the Trustee, Master Servicer and the
Securities Administrator harmless against, any loss, liability or expense
(including reasonable attorney's fees and expenses) incurred by any such Person
by reason of Ocwen's willful misfeasance, bad faith or gross negligence in the
performance of its duties under this Agreement or by reason of Ocwen's reckless
disregard of its obligations and duties under this Agreement. Such indemnity
shall survive the termination or discharge of this Agreement and the resignation
or removal of Ocwen, the Trustee, the Master Servicer and the Securities
Administrator. Any payment hereunder made by Ocwen to any such Person shall be
from Ocwen's own funds, without reimbursement from REMIC I therefor.
85
ARTICLE IV
ADMINISTRATION AND MASTER SERVICING
OF THE MORTGAGE LOANS BY THE MASTER SERVICER
Section 4.01. Master Servicer.
The Master Servicer shall, from and after the Closing Date,
supervise, monitor and oversee the obligations of Ocwen under this Agreement and
WMMSC under the Servicing Agreement to service and administer the related
Mortgage Loans in accordance with the terms of this Agreement and the Servicing
Agreement and shall have full power and authority to do any and all things which
it may deem necessary or desirable in connection with such master servicing and
administration. In performing its obligations hereunder, the Master Servicer
shall act in a manner consistent with Accepted Master Servicing Practices.
Furthermore, the Master Servicer shall oversee and consult with the Servicers as
necessary from time-to-time to carry out the Master Servicer's obligations
hereunder, shall receive, review and evaluate all reports, information and other
data provided to the Master Servicer by the Servicers and shall cause the
Servicers to perform and observe the covenants, obligations and conditions to be
performed or observed by the related Servicer under this Agreement or the
Servicing Agreement. The Master Servicer shall independently and separately
monitor each Servicer's servicing activities with respect to each related
Mortgage Loan, reconcile the results of such monitoring with such information
provided in the previous sentence on a monthly basis and coordinate corrective
adjustments to each Servicer's and Master Servicer's records, and based on such
reconciled and corrected information, prepare the statements specified in
Section 5.03 and any other information and statements required to be provided by
the Master Servicer hereunder, subject, in the case of WMMSC, to the provisions
of Section 4.20 hereof. The Master Servicer shall reconcile the results of its
Mortgage Loan monitoring with the actual remittances of each Servicer to the
Distribution Account pursuant to the terms hereof based on information provided
to the Master Servicer by each Servicer.
The Trustee shall furnish the Servicers 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 Servicers and the Master
Servicer to service and administer the related Mortgage Loans and REO
Properties. The Trustee shall have no responsibility for any action of the
Master Servicer, the Servicers pursuant to any such limited power of attorney
and shall be indemnified by the Master Servicer or the related Servicer, as
applicable, for any cost, liability or expense incurred by the Trustee in
connection with such Person's misuse of any such power of attorney.
The Trustee, the Custodian and the Securities Administrator
shall provide access to the records and documentation in possession of the
Trustee, the Custodian or the Securities Administrator regarding the related
Mortgage Loans and REO Property and the servicing thereof to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC, such access being afforded only upon reasonable prior written request and
during normal business hours at the office of the Trustee, the Custodian or the
Securities Administrator; provided, however, that, unless otherwise required by
law, none of the Trustee, the Custodian or the Securities Administrator shall be
required to provide access to such records and documentation if the provision
thereof would violate the legal right to privacy of any Mortgagor. The Trustee,
the
86
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 Servicers or the
Master Servicer upon request any court pleadings, requests for trustee's sale or
other documents necessary or desirable to (i) the foreclosure or trustee's sale
with respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or any other Mortgage Loan
Document; (iii) obtain a deficiency judgment against the Mortgagor; or (iv)
enforce any other rights or remedies provided by the Mortgage Note or any other
Mortgage Loan Document or otherwise available at law or equity.
Section 4.02. REMIC-Related Covenants.
For as long as each REMIC shall exist, the Trustee and the
Securities Administrator shall act in accordance herewith to treat such REMIC as
a REMIC, and the Trustee and the Securities Administrator shall comply with any
directions of the Seller, the Servicers or the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received a REMIC
Opinion prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to the Mortgage Loan Purchase 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.
(a) The Master Servicer shall be responsible for monitoring
the compliance by Ocwen with its duties under this Agreement and WMMSC with its
duties under the Servicing Agreement. In the review of the related Servicer's
activities, the Master Servicer may rely upon an officer's certificate of the
related Servicer with regard to such Servicer's compliance with the terms of
this Agreement or the Servicing Agreement, as applicable. In the event that the
Master Servicer, in its judgment, determines that a Servicer should be
terminated in accordance with the terms hereof or the terms of the Servicing
Agreement or that a notice should be sent pursuant to the terms hereof or the of
the Servicing Agreement with respect to the occurrence of an event that, unless
cured, would constitute a Servicer Event of Default, or an event of default
under the Servicing Agreement, the Master Servicer shall notify the related
Servicer, the Seller and the Trustee thereof and the Master Servicer shall issue
such notice or take such other action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and
the Certificateholders, shall enforce the obligations of Ocwen under this
Agreement and WMMSC under the Servicing Agreement and shall, in the event that
Ocwen fails to perform its obligations in accordance with this Agreement,
subject to this Section and Article VIII, terminate the rights and obligations
of Ocwen hereunder in accordance with the provisions of Article VIII. In the
87
event that WMMSC fails to perform its obligations in accordance with the
Servicing Agreement, the Master Servicer shall terminate the rights and
obligations of WMMSC as servicer in accordance with the 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. To the extent that such costs and expenses are not indemnified by Ocwen
or WMMSC hereunder or under the Servicing Agreement, then the Trustee on behalf
of the Trust shall indemnify the Master Servicer for such costs and expenses out
of the Trust Fund.
(c) The Master Servicer shall be entitled to be reimbursed by
the related Servicer (or from amounts on deposit in the Distribution Account if
the related Servicer is unable to fulfill its obligations hereunder or under the
Servicing Agreement) for all reasonable out-of-pocket or third party costs
associated with the transfer of servicing from the predecessor Servicer (or if
the predecessor Servicer is the Master Servicer, from the related Servicer
immediately preceding the Master Servicer) including without limitation, any
reasonable out-of-pocket or third party costs or expenses associated with the
complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the Master Servicer to
correct any errors or insufficiencies in the servicing data or otherwise to
enable the Master Servicer to service the related Mortgage Loans properly and
effectively, upon presentation of reasonable documentation of such costs and
expenses.
(d) The Master Servicer shall require the Servicers to comply
with the remittance requirements and other obligations set forth in this
Agreement and the Servicing Agreement, as applicable.
(e) If the Master Servicer acts as successor to a Servicer, it
will not assume liability for the representations and warranties of the
terminated Servicer.
Section 4.04. Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect
a blanket fidelity bond and an errors and omissions insurance policy, affording
coverage with respect to all directors, officers, employees and other Persons
acting on such Master Servicer's behalf, and covering errors and omissions in
the performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.
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
88
(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 a Servicer) 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 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 Servicers 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 or the
Servicing Agreement, and the Trustee shall execute and deliver such other
documents prepared and delivered to it and reasonably acceptable to it, as the
Master Servicer or the related Servicer may request, to enable the Master
Servicer to master service and administer the related 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 Servicers and shall be
indemnified by the Master Servicer or the related Servicer, as applicable, for
any cost, liability or expense incurred by the Trustee in connection with such
Person's use or misuse of any such power of attorney). If the Master Servicer or
the Trustee has been advised that it is likely that the laws of the state in
which action is to be taken prohibit such action if taken in the name of the
Trustee or that the Trustee would be adversely affected under the "doing
business" or tax laws of such state if such action is taken in its name, the
Master Servicer shall join with the Trustee in the appointment of a co-trustee
pursuant to Section 9.10. In the performance of its duties hereunder, the Master
Servicer shall be an independent contractor and shall not, except in those
instances where it is taking action in the name of the Trustee, be deemed to be
the agent of the Trustee.
Section 4.06. Due-on-Sale Clauses; Assumption Agreements.
To the extent Mortgage Loans contain enforceable due-on-sale
clauses, the Master Servicer shall cause the Servicers to enforce such clauses
in accordance with this Agreement or the Servicing Agreement. If applicable law
prohibits the enforcement of a due-on-sale clause or such clause is otherwise
not enforced in accordance with this Agreement or the Servicing Agreement and,
as a consequence, a Mortgage Loan is assumed, the original
89
Mortgagor may be released from liability in accordance with this Agreement or
the 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 of this Agreement or, to the extent provided therein, the Servicing
Agreement, shall cause the Servicers 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 Ocwen under this Agreement or WMMSC under the Servicing Agreement
to maintain or cause to be maintained standard fire and casualty insurance and,
where applicable, flood insurance, all in accordance with the provisions of this
Agreement or the Servicing Agreement. It is understood and agreed that such
insurance shall be with insurers meeting the eligibility requirements set forth
in Section 3.11 of the Agreement or the eligibility requirements set forth in
the 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 each Servicer's obligations
under this Agreement or under the Servicing Agreement, as applicable, to prepare
and present on behalf of
90
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 a Servicer
to take (to the extent such action is prohibited by this Agreement or the
Servicing Agreement), any action that would result in noncoverage under any
primary mortgage insurance policy of any loss which, but for the actions of the
Master Servicer or the related Servicer, as applicable, would have been covered
thereunder. The Master Servicer shall use its best reasonable efforts to cause
the Servicers to keep in force and effect (to the extent that the Mortgage Loan
requires the Mortgagor to maintain such insurance), primary mortgage insurance
applicable to each Mortgage Loan in accordance with the provisions of this
Agreement or the Servicing Agreement. The Master Servicer shall not, and shall
not permit the Servicers 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 Servicing Agreement.
(b) The Master Servicer agrees to cause the Servicers 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 Custodian, as applicable, shall retain
possession and custody of the originals (to the extent available) of any primary
mortgage insurance policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer and the
Servicers have otherwise fulfilled their respective obligations under this
Agreement and the Servicing Agreement the Trustee or the Custodian shall also
retain possession and custody of each Mortgage File in accordance with and
subject to the terms and conditions of this Agreement 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.
91
Section 4.12. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall cause the Servicers 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 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.
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 Servicers to sell, any
REO Property as expeditiously as possible and in accordance with the provisions
of this Agreement or the Servicing Agreement. Further, the Master Servicer shall
cause the Servicers to sell any REO Property prior to three years after the end
of the calendar year of its acquisition by REMIC I unless (i) the Trustee shall
have been supplied by the related Servicer with an Opinion of Counsel to the
effect that the holding by the Trust Fund of such REO Property subsequent to
such three-year period will not result in the imposition of taxes on "prohibited
transactions" of any REMIC hereunder as defined in Section 860F of the Code or
cause any REMIC hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel) or (ii) the related Servicer shall have applied for, prior to the
expiration of such three-year period, an extension of such three-year period in
the manner contemplated by Section 856(e)(3) of the Code, in which case the
three-year period shall be extended by the applicable extension period. The
Master Servicer shall cause the related Servicer to protect and conserve, such
REO Property in the manner and to the extent required by this Agreement or the
Servicing Agreement in accordance with the REMIC Provisions and in a manner that
does not result in a tax on "net income from foreclosure property" or cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code.
(b) The Master Servicer shall cause the Servicers to deposit
all funds collected and received in connection with the operation of any REO
Property in the REO Account or in the account delegated for such amounts under
the Servicing Agreement.
92
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,
2006, 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, 2006
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
93
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 Servicers 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 Servicers and (ii) the
aggregate amount of the related Master Servicing Fees for such Distribution
Date, without reimbursement therefor.
Section 4.19. Prepayment Penalty Verification.
On or prior to each related Servicer Remittance Date, Ocwen
shall provide in an electronic format acceptable to the Master Servicer the data
necessary for the Master Servicer to perform its verification duties set forth
in this Section 4.19. The Master Servicer or a third party reasonably acceptable
to the Master Servicer and the Depositor (the "Verification Agent") will perform
such verification duties and will use its best efforts to issue its findings in
a report (the "Verification Report") delivered to the Master Servicer and the
Depositor within ten (10) Business Days following the related Distribution Date;
provided, however, that if the Verification Agent is unable to issue the
Verification Report within ten (10) Business Days following the Distribution
Date, the Verification Agent may issue and deliver to the Master Servicer and
the Depositor the Verification Report upon the completion of its verification
duties. The Master Servicer shall forward the Verification Report to Ocwen and
shall notify Ocwen if the Master Servicer has determined that Ocwen did not
deliver the appropriate Prepayment Charge to the Securities Administrator in
accordance with this Agreement. Such written notification from the Master
Servicer shall include the loan number, prepayment penalty code and prepayment
penalty amount as calculated by the Master Servicer or the Verification Agent,
as applicable, of each Mortgage Loan for which there is a discrepancy. If Ocwen
agrees with the verified amounts, Ocwen shall adjust the immediately succeeding
Servicer Report and the amount remitted to the Trustee with respect to
prepayments accordingly. If Ocwen disagrees with the determination of the Master
Servicer, the Ocwen shall, within five (5) Business Days of its receipt of the
Verification Report, notify the Master Servicer of such disagreement and provide
the Master Servicer with detailed information to support its position. Ocwen and
the Master Servicer shall cooperate to resolve any discrepancy on or prior to
the immediately succeeding Servicer Remittance Date, and Ocwen will indicate the
effect of such resolution on
94
the related Servicer Report and shall adjust the amount remitted with respect to
prepayments on such Servicer Remittance Date accordingly.
During such time as Ocwen and the Master Servicer are
resolving discrepancies with respect to the Prepayment Charges, no payments in
respect of any disputed Prepayment Charges will be remitted to the Securities
Administrator for deposit in the Distribution Account and the Master Servicer
shall not be obligated to deposit such payments, unless otherwise required
pursuant to Section 8.01 hereof. In connection with such duties, the Master
Servicer shall be able to rely solely on the information provided to it by Ocwen
in accordance with this Section. The Master Servicer shall not be responsible
for verifying the accuracy of any of the information provided to it by Ocwen.
Section 4.20. WMMSC Reporting.
In addition to the information required to be provided by
WMMSC pursuant to the Servicing Agreement, the Master Servicer may, but is not
obligated to, request that WMMSC provide additional information, including
supplemental documentation, if applicable, with respect to the WMMSC Mortgage
Loans, within the time frame and otherwise as set forth in the Assignment
Agreement. In the event that the Master Servicer determines that there exists a
discrepancy in the information provided by WMMSC pursuant to the Servicing
Agreement or the Assignment Agreement, the Master Servicer shall notify WMMSC of
such discrepancy and if, upon receiving such notice, WMMSC agrees with the
amount of such discrepancy, WMMSC shall adjust the next succeeding monthly
report and the amount remitted by WMMSC on the next Servicer Remittance Date. If
WMMSC does not agree with the Master Servicer's determination that such a
discrepancy exists, or disagrees with respect to the extent to which such
discrepancy exists then, following receipt of notice by the Master Servicer of
such disagreement, the Master Servicer shall cooperate with WMMSC in resolving
such discrepancy on or prior to the immediately succeeding Servicer Remittance
Date, and WMMSC will indicate the effect of such resolution on the related
servicer report and shall adjust the amount remitted on the next Servicer
Remittance Date.
95
ARTICLE V
PAYMENTS TO CERTIFICATEHOLDERS
Section 5.01. Distributions.
(a) (1) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates, in respect
of the Class R-I Interest, as the case may be:
(i) to Holders of REMIC I Regular Interest I-LTAA,
REMIC I Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC
I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3 and REMIC I Regular Interest I-LTM4 and REMIC I
Regular Interest I-LTZZ, PRO RATA, in an amount equal to (A) the
Uncertificated Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution
Dates. Amounts payable as Uncertificated Interest in respect of REMIC I
Regular Interest I-LTZZ shall be reduced when the REMIC I
Overcollateralization Amount is less than the REMIC I Required
Overcollateralization Amount, by the lesser of (x) the amount of such
difference and (y) the Maximum I-LTZZ Uncertificated Interest Deferral
Amount and such amount will be payable to the Holders of REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I
Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3 and REMIC I Regular Interest I-LTM4 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 the Holders of REMIC I Regular Interests, in
an amount equal to the remainder of the Available Distribution Amount
funds for such Distribution Date after the distributions made pursuant
to clause (i) above, allocated as follows:
(A) 98.00% of such remainder and all
Prepayment Charges on the Ocwen Mortgage Loans 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;
(B) 2.00% of such remainder, first, to the
Holders of REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3 and
REMIC I Regular Interest I-LTM4, 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; then
96
(C) 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.
(iii) 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(a)(2) through
(5) 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 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 Interest Remittance
Amount remaining for such Distribution Date:
FIRST, concurrently, to the Holders of the Class A-1
Certificates and Class A-2 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, sequentially, to the Holders of the Class M-1, Class
M-2, Class M-3 and Class M-4 Certificates, in that order, the
Interest Distribution Amount allocable to each such Class; and
THIRD, for application as Net Monthly Excess Cashflow in
accordance with clause (5) below.
(3) 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 Principal Distribution
Amount and distribute to the Certificateholders the following amounts,
in the following order of priority:
FIRST, sequentially, to the Holders of the Class A-1
Certificates and Class A-2 Certificates, in that order, until
the Certificate Principal Balance of each such Class has been
reduced to zero; and
SECOND, sequentially, to the Holders of the Class M-1, Class
M-2, Class M-3 and Class M-4 Certificates, in that order,
until the Certificate Principal Balance of each such Class has
been reduced to zero.
97
(4) 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 Principal Distribution
Amount and distribute to the Certificateholders the following amounts,
in the following order of priority:
FIRST, sequentially, to the Holders of the Class A-1
Certificates and Class A-2 Certificates, in that order, the
Class A Principal Distribution Amount, until the Certificate
Principal Balance of each such Class has been reduced to zero;
SECOND, to the Holders of the Class M-1 Certificates, the
lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amount distributed to the
Holders of the Class A Certificates under clause FIRST above
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;
THIRD, to the Holders of the Class M-2 Certificates, 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 under clause FIRST above
and to the Holders of the Class M-1 Certificates under clause
SECOND 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;
FOURTH, to the Holders of the Class M-3 Certificates, 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 under clause FIRST above,
to the Holders of the Class M-1 Certificates pursuant to
clause SECOND above and to the Holders of the Class M-2
Certificates pursuant to clause THIRD 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; and
FIFTH, to the Holders of the Class M-4 Certificates, 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 under clause FIRST above,
to the Holders of the Class M-1 Certificates pursuant to
clause SECOND above, to the Holders of the Class M-2
Certificates pursuant to clause THIRD above and to the Holders
of the Class M-3 Certificates pursuant to clause FOURTH 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.
(5) 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
98
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 and Class M-4 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 and Class M-4 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-1
Certificates and Class A-2 Certificates, in an amount equal to such
Certificates' allocated share of any Prepayment Interest Shortfalls on
the Mortgage Loans to the extent not covered by payments pursuant to
Section 3.22 or Section 4.18 of this Agreement or pursuant to the
Servicing Agreement 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 Section 1.02;
(v) sequentially, to the Holders of the Class M-1,
Class M-2, Class M-3 and Class M-4 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 Section 3.22 or Section 4.18 of this Agreement or pursuant
to the Servicing Agreement 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-1 Certificates, and then from the Reserve Fund
first, concurrently, to the Class A-1 Certificates and Class A-2
Certificates, and then sequentially to the Class M-1, Class M-2, Class
M-3 and Class M-4 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);
(viii) to the Holders of the Class CE-1 Certificates
the sum of (a) the Interest Distribution Amount and (b) any
Overcollateralization Reduction Amount for such Distribution Date; and
(ix) to the Holders of the Class R Certificates, in
respect of the Class R-II Interest, any remaining amounts.
The Class CE-1 Certificates are intended to 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 on any Distribution
99
Date other than the final Distribution Date, 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
prepare and request that the other parties hereto enter into an amendment to the
Pooling and Servicing Agreement pursuant to Section 12.01, 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-1 Certificates and second, withdraw from the Reserve
Fund to pay Net WAC Rate Carryover Amounts for such Distribution Date to the
Certificates accordance with the priorities set forth in clause (5)(ix) above.
(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 sequentially to the Holders of the
Class A-1, Class A-2, Class M-1, Class M-2, Class M-3 and Class M-4
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 Principal Distribution Amount
and (y) the Class A Principal Distribution Amount, shall be
distributed sequentially to the Holders of the Class A-1
Certificates and Class A-2 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
100
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; and
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.
(c) On each Distribution Date, for so long as Ocwen is the
Servicer of the Ocwen Mortgage Loans, the Securities Administrator shall
distribute to the Holders of the Class CE-2 Certificates, with respect to each
Ocwen Mortgage Loan, one-twelfth of the product of (i) the excess of the
Servicing Fee Rate over the Ocwen Servicing Fee Rate multiplied by (ii) the
Scheduled Principal Balance of such Ocwen Mortgage Loan as of the Due Date in
the preceding calendar month. On each Distribution Date for so long as WMMSC is
the Servicer of the WMMSC Mortgage Loans, the Securities Administrator shall
distribute to the Holders of the Class CE-2 Certificates, with respect to each
WMMSC Mortgage Loan, one-twelfth of the product of (i) the excess of the
Servicing Fee Rate over the WMMSC Servicing Fee Rate multiplied by (ii) the
Scheduled Principal Balance of such WMMSC Mortgage Loan as of the Due Date in
the preceding calendar month.
(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(f) 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 Certificateholders 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
101
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 Servicers, the Securities
Administrator or the Master Servicer shall have any responsibility therefor
except as otherwise provided by this Agreement or applicable law.
(e) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trustee, the
Servicers, the Securities Administrator or the Master Servicer shall in any way
be responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.
(f) Except as otherwise provided in Section 10.01, whenever
the Securities Administrator expects that the final distribution with respect to
any Class of Certificates will be made on the next Distribution Date, the
Securities Administrator shall, no later than three (3) days before the related
Distribution Date, mail to each Holder on such date of such Class of
Certificates a notice to the effect that:
(i) the Securities Administrator expects that the
final distribution with respect to such Class of Certificates will be
made on such Distribution Date but only upon presentation and surrender
of such Certificates at the office of the Securities Administrator
therein specified, and
(ii) no interest shall accrue on such Certificates
from and after the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Securities Administrator and credited to the
account of the appropriate non-tendering Holder or Holders. If any Certificates
as to which notice has been given pursuant to this Section 5.01(f) shall not
have been surrendered for cancellation within six months after the time
specified in such notice, the Securities Administrator shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Securities
Administrator shall, directly or through an agent, mail a final notice to the
remaining non-tendering Certificateholders concerning surrender of their
Certificates but shall continue to hold any remaining funds for the benefit of
non-tendering Certificateholders. The costs and expenses of maintaining the
funds in trust and of contacting such Certificateholders shall be paid out of
the assets remaining in such trust fund. If within one year after the final
notice any such Certificates shall not have been surrendered for cancellation,
the Securities Administrator shall pay to the Depositor all such amounts, and
all rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue
102
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 or a
Mezzanine 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 Reports for such Distribution Date)
shall make available to each Holder of the Certificates and each Servicer, 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 CE-1 Certificates
allocable to Prepayment Charges;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of the Certificates of each Class
allocable to interest;
(iii) the aggregate Servicing Fee received by the
Servicers and Master Servicing Fee received by the Master Servicer
during the related Due Period;
(iv) the aggregate amount of P&I Advances for such
Distribution Date;
(v) Reserved;
(vi) the number, aggregate principal balance,
weighted average remaining term to maturity and weighted average
Mortgage Rate of the Mortgage Loans as of the related Due Date;
(vii) the number and aggregate unpaid principal
balance of Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent
60 to 89 days, (c) delinquent 90 or more days, in each case, as of the
last day of the preceding calendar month, (d) as to which foreclosure
proceedings have been commenced and (e) with respect to which the
103
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 of the Ocwen Mortgage Loans;
(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 and the Class CE-1
Certificates for such Distribution Date and the Interest Carry Forward
Amount, if any, with respect to the Class A Certificates and the
Mezzanine Certificates on such Distribution Date, and in the case of
the Class A Certificates and the Mezzanine 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 Ocwen pursuant to Section 3.22 of this Agreement or the
Master Servicer pursuant to Section 4.18 of this Agreement or WMMSC
pursuant to the Servicing Agreement;
(xvii) the aggregate amount of Relief Act Interest
Shortfalls for such Distribution Date;
104
(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;
(xxiii) the respective Pass-Through Rates applicable
to the Class A Certificates, the Mezzanine Certificates and the Class
CE-1 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)(5)(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.
105
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 or before 12:00 noon New York time on the 18th calendar
day of each month, and if the 18th calendar day is not a Business Day, the
immediately following Business Day, Ocwen shall deliver to the Master Servicer
and the Securities Administrator by telecopy or electronic mail (or by such
other means as Ocwen, the Master Servicer and the Securities Administrator may
agree from time to time) a remittance report containing such information with
respect to the related Mortgage Loans and the related Distribution Date as is
reasonably available to Ocwen as the Master Servicer or the Securities
Administrator may reasonably require so as to enable the Master Servicer to
master service the related Mortgage Loans and oversee the servicing by Ocwen and
the Securities Administrator to fulfill its obligations hereunder with respect
to securities and tax reporting.
(b) The amount of P&I Advances to be made by Ocwen on any
Distribution Date shall equal, subject to Section 5.03(d), (i) with respect to
the Ocwen Mortgage Loans other than the Simple Interest Mortgage Loans, the
aggregate amount of Monthly Payments (net of the related Servicing Fees), due
during the related Due Period in respect of the Ocwen Mortgage
106
Loans, which Monthly Payments were delinquent as of the close of business on the
related Determination Date, (ii) with respect to the Simple Interest Mortgage
Loans, thirty (30) days' interest (net of the related Servicing Fees) on each
such Simple Interest Mortgage Loan serviced by Ocwen for which the Monthly
Payment was due during the related Due Period which Monthly Payments were
delinquent as of the close of business on the related Determination Date and
(iii) 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 or Custodial Account pursuant to Section 3.21 of this
Agreement for distribution on such Distribution Date; provided, however, Ocwen
shall not be required to make P&I Advances with respect to Relief Act Interest
Shortfalls, or with respect to Prepayment Interest Shortfalls in excess of its
obligations under Section 3.22. For purposes of the preceding sentence, the
Monthly Payment on each Balloon Mortgage Loan with a delinquent Balloon Payment
is equal to the assumed monthly payment that would have been due on the related
Due Date based on the original principal amortization schedule for such Balloon
Mortgage Loan.
(c) By 12:00 noon New York time on the related Servicer
Remittance Date, Ocwen shall remit in immediately available funds to the
Securities Administrator for deposit in the Distribution Account an amount equal
to the aggregate amount of P&I Advances, if any, to be made in respect of the
related 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
Ocwen in discharge of any such P&I Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of P&I Advances to be
made by Ocwen with respect to the related Mortgage Loans. In addition, Ocwen
shall have the right to reimburse itself for any outstanding P&I Advance made
from its own funds from Amounts Held for Future Distribution. Any Amounts Held
For Future Distribution used by Ocwen to make P&I Advances or to reimburse
itself for outstanding P&I Advances shall be appropriately reflected in Ocwen's
records and replaced by Ocwen by deposit in the Collection Account no later than
the close of business on the related Servicer Remittance Date immediately
following the Due Period or Prepayment Period for which such amounts relate. The
Securities Administrator will notify Ocwen and the Master Servicer by the close
of business on the Business Day prior to the Distribution Date in the event that
the amount remitted by Ocwen to the Securities Administrator on such date is
less than the P&I Advances required to be made by Ocwen for the related
Distribution Date.
(d) The obligation of Ocwen to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Ocwen Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.
(e) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by Ocwen if
such P&I Advance or
107
Servicing Advance would, if made, constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively. The determination by Ocwen that
it has made a Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance
or that any proposed P&I Advance or Servicing Advance, if made, would constitute
a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively,
shall be evidenced by a certification of a Servicing Officer delivered to the
Master Servicer.
(f) Subject to and in accordance with the provisions of
Article VIII, in the event Ocwen 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 Ocwen was required to make such Advance, subject to
its determination of recoverability. In addition, in the event that WMMSC fails
to make a required P&I Advance under the Servicing Agreement, the Master
Servicer (in its capacity as successor Servicer) will be required to make such
P&I Advance, subject to its determination of recoverability.
Section 5.04. Allocation of Realized Losses.
(a) Prior to the Determination Date, the related Servicer
shall determine as to each Mortgage Loan serviced by such Servicer and any
related 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), or in the additional information provided by WMMSC at the
request of the Master Servicer in accordance with Section 4.20 hereto, such
information as is reasonably available to the related 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 related 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 Servicers 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-1
Certificates; third, to the Class M-4 Certificates, until the Certificate
Principal Balance of the Class M-4 Certificates has been reduced to zero;
fourth, to the Class M-3 Certificates, until the Certificate Principal Balance
of the Class M-3 Certificates has been reduced to zero; fifth, to the Class M-2
Certificates, until the Certificate Principal Balance of the Class M-2
Certificates has been reduced to zero; and sixth, to the Class M-1 Certificates,
until the Certificate Principal Balance of 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
108
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
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-1 Certificate shall be made by reducing the amount otherwise payable
in respect thereof pursuant to Section 5.01(a)(5)(viii). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A 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 Ocwen receives any Subsequent
Recoveries with respect to a Ocwen Mortgage Loan, Ocwen shall deposit such funds
into the Collection Account pursuant to Section 3.08. If, after taking into
account such Subsequent Recoveries and any Subsequent Recoveries received by
WMMSC, 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)(5).
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)(5)(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) 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
109
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-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; fourth, 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; fifth, 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 sixth,
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.
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, 2006, 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, 2006 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 Servicers to be delivered pursuant to this
Agreement or the 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 Section 4.15 and Section 4.16. Prior to (i)
March 31, 2006 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
110
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.
111
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-4. 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 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
Servicers and, if
112
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) Reserved.
(d) The Class CE-1 Certificates and Class CE-2 Certificates
offered and sold to Qualified Institutional Buyers ("QIBs") in reliance on Rule
144A under the Securities Act ("Rule 144A") will be issued in the form of
Definitive Certificates.
(e) The Trustee, the Servicers, 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 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
113
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 Servicers, 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 CE-1 Certificate, Class CE-2
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-1 Certificate, Class CE-2 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; and (iii) 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 Servicers), 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
114
Servicer, the Securities Administrator and the Servicers 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.
(c) No transfer of a Class CE-1 Certificate, Class CE-2
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 the Securities Administrator is provided with an Opinion of Counsel on
which the Depositor, the Master Servicers, 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 Servicers, the Trustee, the Master Servicer, the
Securities Administrator, the Trust Fund. An Opinion of Counsel will not be
required in connection with the initial transfer of any such Certificate by the
Depositor to an affiliate of the Depositor (in which case, the Depositor or any
affiliate thereof shall have deemed to have represented that such affiliate is
not a Plan or a Person investing Plan Assets) and the Securities Administrator
shall be entitled to conclusively rely upon a representation (which, upon the
request of the Securities Administrator, shall be a written representation) from
the Depositor of the status of such transferee as an affiliate of the Depositor.
Each Transferee of a Mezzanine Certificate will be deemed to
have represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets or (b) 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 Servicers 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
115
(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-3) 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."
116
(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
117
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; 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.
118
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 Servicers, 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 5.01
and for all other purposes whatsoever, and none of the Depositor, the Servicers,
the Trustee, the Master Servicer, the Securities Administrator or any agent of
any of them shall be affected by notice to the contrary.
Section 6.05. Certain Available Information.
On or prior to the date of the first sale of any Class CE-1
Certificate, Class CE-2 Certificate or Residual Certificate to an Independent
third party, the Depositor shall provide to the Securities Administrator ten
copies of any private placement memorandum or other disclosure document used by
the Depositor in connection with the offer and sale of such Certificate. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Securities Administrator, the Depositor promptly shall inform the Securities
Administrator of such event and shall deliver to the Securities Administrator
ten copies of the private placement memorandum or disclosure document, as
revised, amended or supplemented. The Securities Administrator shall maintain at
its office as set forth in Section 12.05 hereof and shall make available free of
charge during normal business hours for review by any Holder of a Certificate or
any Person identified to the Securities Administrator as a prospective
transferee of a Certificate, originals or copies of the following items: (i) in
the case of a Holder or prospective transferee of a Class CE-1 Certificate,
Class CE-2 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 12.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class
119
pursuant to Section 5.02 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.
120
ARTICLE VII
THE DEPOSITOR, OCWEN AND THE MASTER SERVICER
Section 7.01. Liability of the Depositor, Ocwen and the Master
Servicer.
The Depositor, Ocwen and the Master Servicer each shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed by this Agreement upon them in their respective capacities as Depositor,
Servicer and Master Servicer and undertaken hereunder by the Depositor, Ocwen
and the Master Servicer herein.
Section 7.02. Merger or Consolidation of the Depositor, Ocwen
or the Master Servicer.
Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
Ocwen will keep in full effect its existence, rights and franchises as a
federally chartered savings bank. Subject to the following paragraph, the Master
Servicer will keep in full effect its existence, rights and franchises as a
national banking association. 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, Ocwen or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor, 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 to 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, Ocwen,
the Master Servicer and Others.
None of the Depositor, Ocwen, the Securities Administrator,
the Master Servicer or any of the directors, officers, employees or agents of
the Depositor, Ocwen or the Master Servicer shall be under any liability to the
Trust Fund or the Certificateholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Depositor, Ocwen, the Securities Administrator, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein or against any specific liability imposed on any such Person pursuant
hereto or against any liability which would otherwise be imposed
121
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, Ocwen, the Securities Administrator, the Master
Servicer and any director, officer, employee or agent of the Depositor, Ocwen,
the Securities Administrator and the Master Servicer may rely in good faith on
any document of any kind which, prima facie, is properly executed and submitted
by any Person respecting any matters arising hereunder. The Depositor, Ocwen,
the Securities Administrator, the Master Servicer and any director, officer,
employee or agent of the Depositor, Ocwen, the Securities Administrator or the
Master Servicer shall be indemnified and held harmless by the Trust Fund against
any loss, liability or expense incurred in connection with any legal action
relating to this Agreement, the Servicing Agreement, the Certificates or any
Credit Risk Management Agreement or any loss, liability or expense incurred
other than by reason of willful misfeasance, bad faith or gross negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, Ocwen, the Securities
Administrator or the Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action unless such action is related to its
respective duties under this Agreement and, in its opinion, does not involve it
in any expense or liability; provided, however, that each of the Depositor,
Ocwen, the Securities Administrator and the Master Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom (except
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder) shall be expenses, costs
and liabilities of the Trust Fund, and the Depositor, Ocwen, the Securities
Administrator and the Master Servicer shall be entitled to be reimbursed
therefor from the 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,
Ocwen shall not be liable for any actions or inactions prior to the Cut-off Date
of any prior servicer of the Ocwen Mortgage Loans and the Master Servicer shall
not be liable for any action or inaction of either Servicer, except to the
extent expressly provided herein.
Section 7.04. Limitation on Resignation of Ocwen.
(a) Except as expressly provided herein, Ocwen shall not
assign all or substantially all of its rights under this Agreement or the
servicing hereunder nor delegate all or substantially all of its duties
hereunder nor sell or otherwise dispose of all or substantially all of its
property or assets without, in each case, the prior written consent of the
Master Servicer, which consent shall not be unreasonably withheld; provided,
that in each case, there must be delivered to the Trustee and the Master
Servicer a letter from each Rating Agency to the effect that such transfer of
servicing or sale or disposition of assets will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Certificates.
Notwithstanding the foregoing, Ocwen, without the consent of the Trustee or the
Master Servicer, may retain third-party contractors to perform certain servicing
and loan administration functions, including without limitation hazard insurance
administration, tax payment and administration, flood
122
certification and administration, collection services and similar functions,
provided, however, that the retention of such contractors by Ocwen shall not
limit the obligation of Ocwen to service the Ocwen Mortgage Loans pursuant to
the terms and conditions of this Agreement. Ocwen shall not resign from the
obligations and duties hereby imposed on it except by consent of the Master
Servicer or upon determination that its duties hereunder are no longer
permissible under applicable law or as provided in Section 7.04(c). Any such
determination pursuant to the preceding sentence permitting the resignation
(other than pursuant to Section 7.04(c)) of Ocwen shall be evidenced by an
Opinion of Counsel to such effect obtained at the expense of Ocwen and delivered
to the Trustee and the Rating Agencies. Ocwen's resignation shall not become
effective until the Master Servicer or a successor Servicer shall have assumed
Ocwen's responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.
(b) Except as expressly provided herein, Ocwen shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by Ocwen hereunder. The foregoing prohibition on assignment shall not
prohibit Ocwen from designating a Sub-Servicer as payee of any indemnification
amount payable to Ocwen hereunder; provided, however, that as provided in
Section 3.02, no Sub-Servicer shall be a third-party beneficiary hereunder and
the parties hereto shall not be required to recognize any Sub-Servicer as an
indemnitee under this Agreement.
(c) Notwithstanding anything to the contrary herein, Ocwen may
pledge or assign as collateral all its rights, title and interest under this
Agreement to a lender (the "Lender"), provided, that:
(1) upon a Servicer Event of Default and receipt of a
notice of termination by Ocwen, the Lender may direct Ocwen or
its designee to appoint a successor Servicer pursuant to the
provisions, and subject to the conditions, set forth in
Section 8.02 regarding Ocwen's appointment of a successor
Servicer;
(2) the Lender's rights are subject to this
Agreement; and
(3) Ocwen shall remain subject to termination as
servicer under this Agreement pursuant to the terms hereof.
Section 7.05. Limitation on Resignation of the Master
Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that its duties hereunder
are no longer permissible under applicable law. Any such determination pursuant
to the preceding sentence permitting the resignation of the Master Servicer
shall be evidenced by an Opinion of Counsel to such effect obtained at the
expense of the Master Servicer and delivered to the Trustee and the Rating
Agencies. No resignation of the Master Servicer shall become effective until the
Trustee or a successor Master Servicer 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.
123
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
Servicers and the Master Servicer.
Each of the Master Servicer and Ocwen shall afford (and any
Sub-Servicing Agreement shall provide that each Sub-Servicer shall afford) the
Depositor and the Trustee, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer or Ocwen (and any such
Sub-Servicer) in respect of Ocwen's rights and obligations hereunder and access
to officers of the Master Servicer or Ocwen (and those of any such Sub-Servicer)
responsible for such obligations, and the Master Servicer shall have access to
all such records maintained by Ocwen and any Sub-Servicers. Upon request, each
of the Master Servicer and Ocwen shall furnish to the Depositor and the Trustee
its (and any such Sub-Servicer's) most recent financial statements and such
other information relating to the Master Servicer's or Ocwen's capacity to
perform its obligations under this Agreement as it possesses (and that any such
Sub-Servicer possesses). To the extent such information is not otherwise
available to the public, the Depositor and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Master
Servicer's or the related 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 related Servicer or the
Master Servicer, (iv) disclosure
124
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 related
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 Servicers to comply with any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicers 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 Servicers to collect,
create, collate or otherwise generate any information that it does not generate
in its usual course of business. The Servicers shall not be required to make
copies of or ship documents to any party unless provisions have been made for
the reimbursement of the costs thereof. The Depositor may, but is not obligated
to, enforce the obligations of the Master Servicer and Ocwen under this
Agreement and WMMSC under the Servicing Agreement and may, but is not obligated
to, perform, or cause a designee to perform, any defaulted obligation of the
Master Servicer or Ocwen under this Agreement or WMMSC under the Servicing
Agreement or exercise the rights of the Master Servicer or Ocwen under this
Agreement or of WMMSC under the Servicing Agreement; provided that neither the
Master Servicer nor the related Servicer shall be relieved of any of its
obligations under this Agreement or the Servicing Agreement, as applicable, 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 Servicers and is not obligated to supervise the
performance of the Master Servicer or the Servicers under this Agreement, the
Servicing Agreement or otherwise.
Section 7.08. Duties of the Credit Risk Manager.
For and on behalf of the Depositor, the Credit Risk Manager
will provide reports and recommendations concerning certain delinquent and
defaulted Mortgage Loans, and as to the collection of any Prepayment Charges
with respect to the Mortgage Loans. Such reports and recommendations will be
based upon information provided to the Credit Risk Manager pursuant to the
Credit Risk Management Agreements, and the Credit Risk Manager shall look solely
to the related Servicer and/or Master Servicer for all information and data
(including loss and delinquency information and data) relating to the servicing
of the related Mortgage Loans.
Section 7.09. Limitation Upon Liability of the Credit Risk
Manager.
Neither the Credit Risk Manager, nor any of its directors,
officers, employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by a Servicer and/or Master Servicer under
the related Credit Risk Management Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Credit Risk Manager
or any such person against liability that would otherwise be imposed by reason
of willful malfeasance or bad faith in its performance of its duties. The Credit
Risk Manager and any director, officer, employee, or agent of the Credit Risk
Manager may rely in good faith on any document of any kind prima facie properly
executed
125
and submitted by any Person respecting any matters arising hereunder or under
the related Credit Risk Management Agreement, and may rely in good faith upon
the accuracy of information furnished by a Servicer and/or Master Servicer
pursuant to the related Credit Risk Management Agreement in the performance of
its duties thereunder and hereunder. The Credit Risk Manager shall be held
harmless and indemnified by the Trust Fund for any claims, costs or liability
(each a "Claim") arising out of or related in any way to the performance of its
duties hereunder absent bad faith, willful misfeasance or gross negligence on
the part of the Credit Risk Manager with respect to the applicable Claim and the
legal expenses for any applicable Claim shall be expenses, costs and liabilities
of the Trust Fund.
Section 7.10. Removal of the Credit Risk Manager.
So long as Deutsche Bank Securities Inc. is the Holder of the
Class CE-1 Certificate it may, at its option, terminate the Credit Risk Manager
if the Credit Risk Manager breaches its obligations under the Credit Risk
Management Agreements in any material respect and has not cured such breach as
promptly as practicable but in no event later than 30 days after receiving
written notice of such breach. In the event that a party other than Deutsche
Bank Securities Inc. is the Holder of the Class CE-1 Certificate, the Holder of
the Class CE-1 Certificate shall not have such termination right. In addition,
the Credit Risk Manager may be removed as Credit Risk Manager under both Credit
Risk Management Agreements by Certificateholders holding not less than 66 2/3%
of the Voting Rights in the Trust Fund, in the exercise of its or their sole
discretion. Upon the termination of the Credit Risk Manager by the
Certificateholders or Deutsche Bank Securities Inc. as provided above, the
Certificateholders or Deutsche Bank Securities Inc., as applicable, shall
provide written notice of the Credit Risk Manager's removal to the Trustee and
the Servicers. Upon receipt of such notice, the Trustee shall provide written
notice to the Credit Risk Manager of its removal, which shall be effective upon
receipt of such notice by the Credit Risk Manager with a copy to the Securities
Administrator and the Master Servicer.
Upon the termination of the Credit Risk Manager by the Holder
of the Class CE-1 Certificate as provided above, the Holder of the Class CE-1
Certificate may, at its option, appoint a successor Credit Risk Manager. If the
Holder of the Class CE-1 Certificate fails to appoint a successor Credit Risk
Manager, the Depositor may appoint a successor Credit Risk Manager. Upon the
termination of the Credit Risk Manager by the Certificateholders as provided
above, the Depositor shall appoint a successor Credit Risk Manager.
Notwithstanding the foregoing, the termination of the Credit Risk Manager
pursuant to this Section shall not become effective until the appointment of a
successor Credit Risk Manager.
126
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Events of Default.
(a) "Servicer Event of Default," wherever used herein, means
any one of the following events:
(i) any failure by Ocwen to remit to the Securities
Administrator for distribution to the Certificateholders any payment
(other than a P&I Advance required to be made from its own funds on any
Servicer Remittance Date pursuant to Section 5.03) required to be made
by Ocwen under the terms of the Certificates and this Agreement which
continues unremedied for a period of one Business Day after the date
upon which written notice of such failure, requiring the same to be
remedied, shall have been given to Ocwen by the Depositor or the
Trustee (in which case notice shall be provided by telecopy), or to
Ocwen, the Depositor, the Trustee and by the Holders of Certificates
entitled to at least 25% of the Voting Rights; or
(ii) any failure on the part of Ocwen duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of Ocwen contained in this Agreement, or the
material breach by Ocwen of any representation and warranty contained
in Section 2.05, which continues unremedied for a period of 30 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to Ocwen by the Depositor or
the Trustee or to Ocwen, the Depositor and the Trustee by the Holders
of Certificates entitled to at least 25% of the Voting Rights;
provided, however, that in the case of a failure that cannot be cured
within thirty (30) days, the cure period may be extended for an
additional thirty (30) days if Ocwen can demonstrate to the reasonable
satisfaction of the Trustee that Ocwen is diligently pursuing remedial
action; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceeding,
or for the winding-up or liquidation of its affairs, shall have been
entered against Ocwen and such decree or order shall have remained in
force undischarged or unstayed for a period of 90 days; or
(iv) Ocwen shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to it or of or relating to all or substantially all of
its property; or
(v) Ocwen shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or
127
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) failure by Ocwen to duly perform, within the
required time period, its obligations under Section 3.17, Section 3.18
or Section 3.19 which failure continues unremedied for a period of ten
(10) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to Ocwen by
any party to this Agreement; or
(vii) any failure of Ocwen to make any P&I Advance on
any Servicer Remittance Date required to be made from its own funds
pursuant to Section 5.03 which continues unremedied until 3:00 p.m. New
York time on the Business Day immediately following the related
Servicer Remittance Date; or
(viii) failure of Ocwen to maintain at least an
"average" rating from the Rating Agencies; or
If a Servicer Event of Default described in clauses (i)
through (vi) or (viii) of this Section shall occur, then, and in each and every
such case, so long as such Servicer Event of Default shall not have been
remedied, the Depositor or the Trustee may, and at the written direction of the
Holders of Certificates entitled to at least 51% of Voting Rights, the Trustee
shall, by notice in writing to Ocwen (and to the Depositor if given by the
Trustee or to the Trustee if given by the Depositor) with a copy to the Master
Servicer and each Rating Agency, terminate all of the rights and obligations of
Ocwen in its capacity as a Servicer under this Agreement, to the extent
permitted by law, and in and to the Ocwen Mortgage Loans and the proceeds
thereof. If a Servicer Event of Default described in clause (vii) hereof shall
occur, the Trustee shall, by notice in writing to Ocwen, the Depositor and the
Master Servicer, terminate all of the rights and obligations of Ocwen in its
capacity as a Servicer under this Agreement and in and to the Ocwen Mortgage
Loans and the proceeds thereof. Subject to Section 8.02, on or after the receipt
by Ocwen of such written notice, all authority and power of Ocwen under this
Agreement, whether with respect to the Certificates (other than as a Holder of
any Certificate) or the Ocwen Mortgage Loans or otherwise, shall pass to and be
vested in the Master Servicer pursuant to and under this Section, and, without
limitation, the Master Servicer is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the
expense of Ocwen, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Ocwen Mortgage Loans and related documents, or
otherwise. Ocwen agrees promptly (and in any event no later than ten Business
Days subsequent to such notice) to provide the Master Servicer with all
documents and records requested by it to enable it to assume Ocwen's functions
under this Agreement, and to cooperate with the Master Servicer in effecting the
termination of Ocwen's responsibilities and rights under this Agreement,
including, without limitation, the transfer within one Business Day to the
Master Servicer for administration by it of all cash amounts which at the time
shall be or should have been credited by Ocwen to the Collection Account held by
or on behalf of Ocwen or thereafter be received with respect to the Ocwen
Mortgage Loans or any related REO Property (provided, however, that Ocwen shall
continue to be entitled to receive all amounts accrued or owing to it under this
Agreement on or prior to the date of such termination,
128
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). Reimbursement of unreimbursed P&I
Advances, Servicing Advances and accrued and unpaid Servicing Fees shall be made
on a first in, first out ("FIFO") basis no later than the related Servicer
Remittance Date. 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
Ocwen (or from amounts on deposit in the Distribution Account if Ocwen is unable
to fulfill its obligations hereunder) for all reasonable out-of-pocket or third
party costs associated with the transfer of servicing from Ocwen, 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 Ocwen Mortgage
Loans properly and effectively, upon presentation of reasonable documentation of
such costs and expenses.
(b) "Master Servicer Event of Default," wherever used herein,
means any one of the following events:
(i) any failure on the part of the Master Servicer
duly to observe or perform in any material respect any other of the
covenants or agreements on the part of the Master Servicer contained in
this Agreement, or the breach by the Master Servicer of any
representation and warranty contained in Section 2.04, which continues
unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Depositor or the Trustee or to
the Master Servicer, the Depositor and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights; or
(ii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceeding,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 90 days; or
(iii) the Master Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to it or of or relating to all or
substantially all of its property; or
129
(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
130
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 a Servicer receives a notice of
termination, the Master Servicer shall be the successor in all respects to such
Servicer in its capacity as a Servicer under this Agreement or the Servicing
Agreement, as applicable, and the transactions set forth or provided for herein
or therein, 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 related Servicer under this
Agreement or the Servicing Agreement, as applicable, 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 related Servicer's
obligations to make P&I Advances pursuant to Section 5.03 of this Agreement or
pursuant to the Servicing Agreement; 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 of this Agreement or
pursuant to the Servicing Agreement; and provided further, that any failure to
perform such duties or responsibilities caused by the related Servicer's failure
to provide information required by Section 8.01 or under the Servicing Agreement
shall not be considered a default by the Master Servicer as successor to such
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 120 days) before the actual servicing functions can be fully
transferred to the Master Servicer or any successor Servicer appointed in
accordance with the following provisions and (2) any failure to perform such
duties or responsibilities caused by the related Servicer's failure to provide
information required by Section 8.01 of this Agreement or under the Servicing
Agreement shall not be considered a default by the Master Servicer as successor
to such Servicer. As compensation therefor, the Master Servicer shall be
entitled to the Servicing Fee and all funds relating to the Mortgage Loans to
which the related Servicer would have been entitled if it had continued to act
hereunder or under the Servicing Agreement. 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
related Servicer under this Agreement or under the Servicing Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
the related Servicer under this Agreement or under the Servicing Agreement.
Notwithstanding any provision in this Agreement to the
contrary, for a period of 30 days following the date on which Ocwen shall have
received a notice of termination pursuant to Section 8.01 of this Agreement,
Ocwen or its designee may appoint a successor Servicer that satisfies the
eligibility criteria of a successor Servicer set forth below, which appointment
shall be subject to the consent of the Depositor, the Seller, the Master
Servicer, and the Trustee, which consent shall not be unreasonably withheld or
delayed; provided that such successor Servicer agrees to fully effect the
servicing transfer within 120 days following the termination of Ocwen and to
make all P&I Advances that would otherwise be made by the Master Servicer under
131
Section 8.01 as of the date of such appointment, and to reimburse the Master
Servicer for any unreimbursed P&I Advances it has made and any reimbursable
expenses that it may have incurred in connection with this Section 8.02. Any
proceeds received in connection with the appointment of such successor Servicer
shall be the property of Ocwen or its designee. This 30-day period shall
terminate immediately (i) at the close of business on the second Business Day of
such 30-day period if (A) Ocwen was terminated because of an Event of Default
described in Section 8.01(a)(vii) for failing to make a required P&I Advance,
and (B) Ocwen shall have failed to make (or cause to be made) such P&I Advance,
or shall fail to reimburse (or cause to be reimbursed) the Master Servicer for a
P&I Advance made by the Master Servicer, by the close of business on such second
Business Day, or (ii) at the close of business on the second Business Day
following the date (if any) during such 30-day period on which a P&I Advance is
due to be made, if Ocwen shall have failed to make (or caused to be made) such
P&I Advance, or Ocwen shall have failed to reimburse (or cause to be reimbursed)
the Master Servicer for such P&I Advance, by the close of business on such
second Business Day.
Notwithstanding anything herein to the contrary, in no event
shall the Trustee or the Master Servicer be liable for any Servicing Fee or for
any differential in the amount of the Servicing Fee paid hereunder or under the
Servicing Agreement and the amount necessary to induce any successor Servicer to
act as successor Servicer under this Agreement or the Servicing 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 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) in connection with the termination of a Servicer
shall be paid by the related 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 a Servicer under this
Agreement shall be effective until the assumption by the successor of all of
such 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
related Servicer as such hereunder or under the Servicing Agreement. The
Depositor, the Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
132
Pending appointment of a successor to a Servicer under this Agreement, the
Master Servicer shall act in such capacity as hereinabove provided.
Section 8.03. Notification to Certificateholders.
(a) Upon any termination of a Servicer or the Master Servicer
pursuant to the Servicing Agreement or Section 8.01(a), as applicable, or (b) or
any appointment of a successor to a Servicer or the Master Servicer pursuant to
the Servicing Agreement or Section 8.02, as applicable, 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.
133
ARTICLE IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 9.01. Duties of Trustee and Securities Administrator.
The Trustee, prior to the occurrence of a Master Servicer
Event of Default and after the curing or waiver of all Master Servicer Events of
Default which may have occurred, and the Securities Administrator each undertake
to perform such duties and only such duties as are specifically set forth in
this Agreement as duties of the Trustee and the Securities Administrator,
respectively. During the continuance of a Master Servicer Event of Default, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
Each of the Trustee and the Securities Administrator, upon
receipt of all resolutions, certificates, statements, opinions, reports,
documents, orders or other instruments furnished to it, which are specifically
required to be furnished pursuant to any provision of this Agreement, shall
examine them to determine whether they conform to the requirements of this
Agreement. If any such instrument is found not to conform to the requirements of
this Agreement in a material manner, the Trustee or the Securities
Administrator, as the case may be, shall take such action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to its satisfaction, the Securities Administrator will provide notice
to the Trustee thereof and the Trustee will provide notice to the
Certificateholders.
The Trustee shall promptly remit to the related Servicer any
complaint, claim, demand, notice or other document (collectively, the "Notices")
delivered to the Trustee as a consequence of the assignment of any Mortgage Loan
hereunder and relating to the servicing of the Mortgage Loans; provided than any
such notice (i) is delivered to the Trustee at its Corporate Trust Office, (ii)
contains information sufficient to permit the Trustee to make a determination
that the real property to which such document relates is a Mortgaged Property.
The Trustee shall have no duty hereunder with respect to any Notice it may
receive or which may be alleged to have been delivered to or served upon it
unless such Notice is delivered to it or served upon it at its Corporate Trust
Office and such Notice contains the information required pursuant to clause (ii)
of the preceding sentence.
No provision of this Agreement shall be construed to relieve
the Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own misconduct; provided,
however, that:
(i) Prior to the occurrence of a Master Servicer
Event of Default, and after the curing or waiver of all such Master
Servicer Events of Default which may have occurred with respect to the
Trustee and at all times with respect to the Securities Administrator,
the duties and obligations of the Trustee shall be 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
134
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
135
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,
136
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) Reserved.
(d) None of the Securities Administrator, the Master Servicer,
the Servicers, 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 Ocwen, 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 Section
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
137
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 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.
138
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 9.08.
139
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 9.06 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 9.06, without the
execution or filing of any paper
140
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 9.08 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.
141
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, Ocwen and the Depositor as applicable,
as of the Closing Date, that:
(i) It is a banking association duly organized,
validly existing and in good standing under the laws of the United
States.
(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.
142
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, Ocwen and the Trustee (other than the obligations of
the Master Servicer to the Trustee pursuant to Section 9.05 and of Ocwen to make
remittances to the Securities Administrator and the Securities Administrator to
make payments in respect of the REMIC I Regular Interests, REMIC I Regular
Interests or the Classes of Certificates as hereinafter set forth) shall
terminate upon payment to the Certificateholders and the deposit of all amounts
held by or on behalf of the Trustee and required hereunder to be so paid or
deposited on the Distribution Date coinciding with or following the earlier to
occur of (i) the purchase by the Terminator (defined below) of all Mortgage
Loans and each REO Property remaining in REMIC I and (ii) the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in REMIC I; provided, however, that in no event
shall the trust created hereby continue beyond the earlier of (i) 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 and (ii) the Last Scheduled Distribution Date. The
purchase by the Terminator of all Mortgage Loans and each REO Property remaining
in REMIC I shall be at a price (the "Termination Price") equal to the sum of (i)
the greater of (A) the aggregate Purchase Price of all the Mortgage Loans
included in REMIC I, plus the appraised value of each REO Property, if any,
included in REMIC I, such appraisal to be conducted by an appraiser mutually
agreed upon by the Terminator and the Trustee in their reasonable discretion and
(B) the aggregate fair market value of all of the assets of REMIC I (as
determined by the Terminator and the Trustee, as of the close of business on the
third Business Day next preceding the date upon which notice of any such
termination is furnished to Certificateholders pursuant to the third paragraph
of this Section 10.01) plus (ii) any amounts due the Servicers and the Master
Servicer in respect of unpaid Servicing Fees, Master Servicing Fees and
outstanding P&I Advances and Servicing Advances.
(b) The Master Servicer or, if the Master Servicer fails to
exercise such optional termination right, the first of either Ocwen or WMMSC to
fulfill the requirements set forth in this paragraph (either the Master
Servicer, Ocwen or WMMSC, the "Terminator") shall have the right to purchase all
of the Mortgage Loans and each REO Property remaining in REMIC I pursuant to
clause (i) of the preceding paragraph no later than the Determination Date in
the month immediately preceding the Distribution Date on which the Certificates
will be retired; provided, however, that the Terminator may elect to purchase
all of the Mortgage Loans and each REO Property remaining in REMIC I pursuant to
clause (i) above only if the aggregate Stated Principal Balance of the Mortgage
Loans and each REO Property remaining in the Trust Fund at the time of such
election is reduced to less than or equal to 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
143
extent received in respect of such termination, to pay any such amounts to the
Holders of the Class CE-1 Certificates. Notwithstanding the foregoing, the
optional termination right may only be exercised by a Servicer if (1) such
Servicer receives written notification from the Master Servicer that the Master
Servicer will not exercise such optional termination right or (2) such Servicer
does not receive such written notification from the Master Servicer, and the
Master Servicer fails to exercise its optional termination right by the third
Distribution Date following the date such right became exercisable; provided,
however, in no event shall a Servicer exercise its optional termination right
under (1) or (2) above unless it first provides written notice to the Authorized
Officers of the Seller that it intends to exercise such optional termination
right and such notice is received by the Seller prior to the Seller's receipt of
such notice from the other Servicer.
(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 theTerminator,
not earlier than the 15th day and not later than the 25th day of the month next
preceding the month of the final distribution on the Certificates or (b)
otherwise during the month of such final distribution on or before the
Determination Date in such month, in each case specifying (i) the Distribution
Date upon which the Trust Fund will terminate and the final payment in respect
of the REMIC I Regular Interests, REMIC I Regular Interests or the Certificates
will be made upon presentation and surrender of the related Certificates at the
office of the Securities Administrator therein designated, (ii) the amount of
any such final payment, (iii) that no interest shall accrue in respect of the
REMIC I Regular Interests, REMIC I Regular Interests or Certificates from and
after the Interest Accrual Period relating to the final Distribution Date
therefor and (iv) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Securities Administrator. In the event
such notice is given in connection with the purchase of all of the Mortgage
Loans and each REO Property remaining in REMIC I by the Terminator, the
Terminator shall deliver to the Securities Administrator for deposit in the
Distribution Account not later than the Business Day prior to the Distribution
Date on which the final distribution on the Certificates an amount in
immediately available funds equal to the above-described Termination Price. The
Securities Administrator shall remit to the related Servicer, the Master
Servicer, the Trustee and the Custodian from such funds deposited in the
Distribution Account (i) any amounts which the related Servicer would be
permitted to withdraw and retain from the Custodial Account pursuant to the
Servicing Agreement or from the Collection Account pursuant to Section 3.09 of
this Agreement, as applicable, 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 Servicers from amounts on deposit in the Distribution Account pursuant to
the terms of this Agreement or the Servicing Agreement prior to making any final
distributions pursuant to Section 10.01(d) below. Upon certification to the
Trustee by the Securities Administrator of the making of such final deposit, the
Trustee shall promptly release or cause to be released to the Terminator the
Mortgage Files for the remaining Mortgage Loans, and Trustee shall execute all
assignments, endorsements and other instruments delivered to it and necessary to
effectuate such transfer.
144
(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 Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:
(i) The Trustee shall specify the first day in the
90-day liquidation period in a statement attached to each Trust REMIC's
final Tax Return pursuant to Treasury regulation Section 1.860F-1 and
shall satisfy all requirements of a qualified liquidation under Section
860F of the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained by and at the expense of the Terminator;
(ii) During such 90-day liquidation period and, at or
prior to the time of making of the final payment on the Certificates,
the Trustee shall sell all of the assets of REMIC I to the Terminator
for cash; and
(iii) At the time of the making of the final payment
on the Certificates, the Securities Administrator shall distribute or
credit, or cause to be distributed or credited, to the Holders of the
Residual Certificates all cash on hand in the Trust Fund (other than
cash retained to meet claims), and the Trust Fund shall terminate at
that time.
145
(b) At the expense of the Terminator (or, if the Trust Fund is
being terminated as a result of the occurrence of the event described in clause
(ii) of the first paragraph of Section 10.01, at the expense of the Trust Fund),
the Terminator shall prepare or cause to be prepared the documentation required
in connection with the adoption of a plan of liquidation of each Trust REMIC
pursuant to this Section 10.02.
(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.
146
ARTICLE XI
REMIC PROVISIONS
Section 11.01. REMIC Administration.
(a) The Trustee shall elect to treat each Trust REMIC as a
REMIC under the Code and, if necessary, under applicable state law. Each such
election will be made by the Securities Administrator on Form 1066 or other
appropriate federal tax or information return or any appropriate state return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Interest shall be designated as the
Residual Interests in REMIC I. The Class A Certificates, the Mezzanine
Certificates, the Class CE-1 Certificates and the Class CE-2 Certificates
(exclusive of any right to receive payments from the Reserve Fund) 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
147
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
148
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 Ocwen pursuant to Section 11.03, if such tax arises out of or results
from a breach by Ocwen of any of its obligations under Article III or under this
Article XI, or (v) in all other cases, against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.
(h) The Securities Administrator shall, for federal income tax
purposes, maintain books and records with respect to each Trust REMIC on a
calendar year and on an accrual basis.
(i) Following the Startup Day, neither the Securities
Administrator nor the Trustee shall accept any contributions of assets to any
Trust REMIC other than in connection with any Qualified Substitute Mortgage Loan
delivered in accordance with Section 2.03 unless it shall have received an
Opinion of Counsel to the effect that the inclusion of such assets in the Trust
Fund will not cause the related REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
(j) Neither the Trustee nor the Securities Administrator shall
knowingly enter into any arrangement by which any Trust REMIC will receive a fee
or other compensation for services nor permit either REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.
(k) The Securities Administrator shall apply for an employer
identification number with the Internal Revenue Service via a Form SS-4 or other
comparable method for each REMIC. In connection with the foregoing, the
Securities Administrator shall provide the name and address of the person who
can be contacted to obtain information required to be reported to the holders of
Regular Interests in each REMIC as required by IRS Form 8811.
Section 11.02. Prohibited Transactions and Activities.
None of the Depositor, Ocwen, the Securities Administrator,
the Master Servicer or the Trustee shall sell, dispose of or substitute for any
of the Mortgage Loans (except in connection with (i) the foreclosure of a
Mortgage Loan, including but not limited to, the acquisition or sale of a
Mortgaged Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy
of REMIC I, (iii) the termination of REMIC I pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
purchase of Mortgage Loans pursuant to Article II of this Agreement), nor
acquire any assets for any Trust REMIC (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or
149
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 Ocwen including, without limitation, any reasonable attorneys
fees imposed on or incurred by the Trust Fund, the Depositor, the Master
Servicer, the Securities Administrator or Ocwen as a result of the Trustee's
failure to perform its covenants set forth in this Article XI in accordance with
the standard of care of the Trustee set forth in this Agreement.
(b) Ocwen agrees to indemnify the Trust Fund, the Depositor,
the Master Servicer, the Securities Administrator and the Trustee for any taxes
and costs including any reasonable attorneys' fees imposed on or incurred by the
Trust Fund, the Depositor, the Master Servicer, the Securities Administrator or
the Trustee, as a result of Ocwen's failure to perform its covenants set forth
in Article III in accordance with the standard of care of Ocwen set forth in
this Agreement.
(c) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor, Ocwen and the Trustee for any taxes and costs including any
reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor, Ocwen or the Trustee, as a result of the Master Servicer's failure to
perform its covenants set forth in Article IV in accordance with the standard of
care of the Master Servicer set forth in this Agreement.
(d) The Securities Administrator agrees to be liable for any
taxes and costs incurred by the Trust Fund, the Depositor, Ocwen or the Trustee
including any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor, Ocwen or the Trustee as a result of the Securities
Administrator's failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Securities Administrator set forth
in this Agreement.
150
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Amendment.
This Agreement may be amended from time to time by the
Depositor, Ocwen, the Master Servicer, the Securities Administrator and the
Trustee, but without the consent of any of the Certificateholders, (i) to cure
any ambiguity or defect, (ii) to correct, modify or supplement any provisions
herein (including to give effect to the expectations of Certificateholders), or
(iii) to make any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement, and that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee, adversely affect in any material respect the interests
of any Certificateholder; provided that any such amendment shall be deemed not
to adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates. No amendment shall be
deemed to adversely affect in any material respect the interests of any
Certificateholder who shall have consented thereto, and no Opinion of Counsel
shall be required to address the effect of any such amendment on any such
consenting Certificateholder.
This Agreement may also be amended from time to time by the
Depositor, Ocwen, the Master Servicer, the Securities Administrator and the
Trustee with the consent of the Holders of Certificates entitled to at least 66%
of the Voting Rights for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner, other than as described in
(i), without the consent of the Holders of Certificates of such Class evidencing
at least 66% of the Voting Rights allocated to such Class, or (iii) modify the
consents required by the immediately preceding clauses (i) and (ii) without the
consent of the Holders of all Certificates then outstanding. Notwithstanding any
other provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 12.01, Certificates registered in the name of
the Depositor or a Servicer or any Affiliate thereof shall be entitled to Voting
Rights with respect to matters affecting such Certificates. Without limiting the
generality of the foregoing, any amendment to this Agreement required in
connection with the compliance with or the clarification of any reporting
obligations described in Section 5.06 hereof shall not require the consent of
any Certificateholder and without the need for any Opinion of Counsel or Rating
Agency confirmation.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment is
permitted hereunder and will not result in the imposition of any tax on any
Trust REMIC pursuant to the REMIC Provisions or cause any Trust
151
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
152
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 Servicers, the Master Servicer, the Securities Administrator
and the Trustee in writing by the Depositor, (b) in the case of Ocwen, Ocwen
Federal Bank FSB, 1675 Palm Beach Lakes Boulevard, Suite 10A, West Palm Beach,
Florida 33401, Attention: Secretary (telecopy number: (561) 682-8177), or such
other address or telecopy number as may hereafter be furnished to the Trustee,
the Master Servicer, the Securities Administrator and the Depositor in writing
by Ocwen, Attention: _______ (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
Ocwen, (c) in the case of the Master Servicer and the Securities Administrator,
P.O. Box 98, Columbia, Maryland 21046 and for overnight delivery to 9062 Old
Annapolis Road,
153
Columbia, Maryland 21045, Attention: Ace Securities Corp., 2005-SN1 (telecopy
number: (410) 715-2380), or such other address or telecopy number as may
hereafter be furnished to the Trustee, the Depositor and the Servicers in
writing by the Master Servicer or the Securities Administrator and (d) in the
case of the Trustee, at the Corporate Trust Office or such other address or
telecopy number as the Trustee may hereafter be furnish to the Servicers, the
Master 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 a Servicer, the Master
Servicer or the Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant
to or as contemplated by Section 2.03;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of the Distribution Account; and
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.
154
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; and to Fitch Ratings, 1 State Street Plaza,
New York, New York 10004 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,
155
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. Servicing Agreements.
With respect to the WMMSC Mortgage Loans and WMMSC Mortgage
Loans, in the event of any conflict between the provisions of this Agreement and
the provisions of the Servicing Agreement, the provisions of the Servicing
Agreement shall control.
156
IN WITNESS WHEREOF, the Depositor, Ocwen, the Master Servicer,
the Securities Administrator and the Trustee have caused their names to be
signed hereto by their respective officers thereunto duly authorized, in each
case as of the day and year first above written.
ACE SECURITIES CORP.,
as Depositor
By: __________________________________________________
Name:
Title:
By:___________________________________________________
Name:
Title:
OCWEN FEDERAL BANK FSB
as Servicer
By: __________________________________________________
Name:
Title:
HSBC BANK USA, 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
SECTIONS 7.08, 7.09 AND 7.10:
RISK MANAGEMENT GROUP, LLC
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 March 2005, before me, a notary public in
and for said State, personally appeared _____________________ known to me to be
a _____________________ of ACE Securities Corp., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]___ My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March 2005, before me, a notary public in
and for said State, personally appeared _____________________ known to me to be
a _____________________ of ACE Securities Corp., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]___ My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March 2005, before me, a notary public in
and for said State, personally appeared _____________________ known to me to be
a _____________________ of Ocwen Federal Bank FSB, one of the federal chartered
savings banks that executed the within instrument, and also known to me to be
the person who executed it on behalf of said federally chartered savings bank,
and acknowledged to me that such federally chartered savings bank executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]___ My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March 2005, before me, a notary public in
and for said State, personally appeared _____________________ known to me to be
a _____________________ of Wells Fargo Bank, N.A., a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said national banking association, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]___ My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March 2005, before me, a notary public in
and for said State, personally appeared _____________________ known to me to be
a _____________________ of HSBC Bank USA, National Association, a national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said national banking association,
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________
Notary Public
[Notarial Seal]___ My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of March 2005, before me, a notary public in
and for said State, personally appeared _____________________ known to me to be
a _____________________ of Risk Management Group, LLC, a New York limited
liability company that executed the within instrument, and also known to me to
be the person who executed it on behalf of said company, 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
EXHIBIT A-1
-----------
FORM OF CLASS A 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 2005-SN1, Class A-[1][2] Aggregate Certificate Principal
Balance of the Class A-[1][2]
Certificates as of the Issue Date:
$
Pass-Through Rate: Variable Denomination: $
Date of Pooling and Servicing Agreement Master Servicer: Wells Fargo Bank,
and Cut-off Date: March 1, 2005 N.A.
First Distribution Date: April 25, 2005 Trustee: HSBC Bank USA,
National Association
No.__ Issue Date: March 30, 2005
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 2005-SN1
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 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 SERVICERS, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ________________ is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-[1][2]
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-[1][2] Certificates in REMIC II created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp., as depositor (hereinafter called the "Depositor",
which term includes any successor entity under the Agreement), Wells Fargo Bank,
N.A. as master servicer (the "Master Servicer") and securities administrator
(the "Securities Administrator"), Ocwen Federal Bank FSB, as a 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-[1][2] Certificates on such
Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
A-[1][2] Certificates the aggregate initial Certificate Principal Balance of
which is in excess of the lesser
A-1-3
of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A-[1][2] 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
or equal to 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, 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 Servicers 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 Servicers 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
A-1-4
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 Servicers and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicers 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 Servicers 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
or equal to 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assumes
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-1-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
WELLS FARGO BANK, N.A.
as Securities Administrator
By:___________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A-[1][2] 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 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 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 2005-SN1, Class M-[1][2][3][4] Aggregate Certificate Principal
Balance of the Class M-[1][2][3][4]
Certificates as of the Issue Date:
$______________
Pass-Through Rate: Variable Denomination: $______________
Date of Pooling and Servicing Agreement Master Servicer: Wells Fargo
and Cut-off Date: March 1, 2005 Bank, N.A.
First Distribution Date: April 25, 2005 Trustee: HSBC Bank USA, National
Association
No.___ Issue Date: March 30, 2005
CUSIP:_________________
A-2-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-SN1
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 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 SERVICERS, 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] Certificates as of the Issue Date) in that certain beneficial
ownership interest evidenced by all the Class M-[1][2][3][4] Certificates in
REMIC II created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among ACE Securities Corp., as depositor
(hereinafter called the "Depositor", which term includes any successor entity
under the Agreement), Wells Fargo Bank, N.A. as master servicer (the "Master
Servicer") and securities administrator (the "Securities Administrator"), Ocwen
Federal Bank FSB as a 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] Certificates
on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Securities Administrator by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Securities
Administrator in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
M-[1][2][3][4]
A-2-3
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] 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 or equal to 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, 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 Servicers 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 Servicers 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
A-2-4
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 Servicers and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicers 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 Servicers 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
or equal to 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.
A-2-5
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 Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-[1][2][3][4] 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-3
-----------
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 2005-SN1, Class CE-[1][2] Aggregate Certificate Principal
Balance of the Class CE-[1][2]
Certificates as of the Issue
Date: $_____________
Pass-Through Rate: Variable Denomination: $_________________
Cut-off Date and date of Pooling and
Servicing Agreement: March 1, 2005 Master Servicer: Wells Fargo
Bank, N.A.
First Distribution Date: April 25, 2005 Trustee: HSBC Bank USA,
National Association
No. __ Issue Date: March 30, 2005
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-SN1
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 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 SERVICERS, 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-[1][2] Certificates as of the Issue Date) in that certain beneficial
ownership interest evidenced by all the Class CE-[1][2] Certificates in REMIC II
created pursuant to a Pooling and Servicing Agreement, dated as specified above
(the "Agreement"), among ACE Securities Corp., as depositor (hereinafter called
the "Depositor," which term includes any successor entity under the Agreement),
Wells Fargo Bank, N.A., as master servicer (the "Master Servicer") and
securities administrator (the "Securities Administrator"), Ocwen Federal Bank
FSB, as a 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
A-3-2
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-[1][2] Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by 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-[1][2] 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-[1][2]
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 Servicers 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 Servicers 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
A-3-3
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 "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 6.02(c) of the Agreement.
A-3-4
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 Servicers and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicers 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 Servicers 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
or equal to 10% of the aggregate principal balance of the Mortgage Loans as of
the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the Securities Administrator assume
any responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Securities Administrator, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-3-5
IN WITNESS WHEREOF, the Securities Administrator has caused
this Certificate to be duly executed.
Dated:
WELLS FARGO BANK, N.A.
as Securities Administrator
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class CE-[1][2] 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 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-4
-----------
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 2005-SN1, 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,
and Cut-off Date: March 1, 2005 N.A.
First Distribution Date: April 25, 2005 Trustee: HSBC Bank USA, National
No _ Association _ Issue Date: March 30,
2005
A-4-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-SN1
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 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 SERVICERS, 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-4-3
This certifies that _______________ is the registered owner of
a Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class R Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), Wells Fargo Bank, N.A., as master
servicer (the "Master Servicer") and securities administrator (the "Securities
Administrator"), Ocwen Federal Bank FSB, as a 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-4-4
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 Servicers 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 Servicers 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-4-5
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 Servicers and any agent of the Depositor, the
Master Servicer, the Trustee, the Securities Administrator or the Servicers 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-4-6
the Securities Administrator, the Servicers 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
or equal to 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-4-7
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 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.
B-1-2
EXHIBIT B-1
FORM OF TRANSFEROR REPRESENTATION LETTER [144A]
[Date]
Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2005-SN1
Re: ACE Securities Corp. Home Equity Loan Trust, Series 2005-SN1
Asset Backed Pass-Through Certificates
Class Ce-1, Class Ce-2 and Class R Certificates
-------------------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ______________________ (the
"Transferor") to ___________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
March 1, 2005, among ACE Securities Corp. as Depositor, Ocwen Federal Bank FSB
as a Servicer, Wells Fargo Bank, N.A. as Master Servicer and Securities
Administrator and HSBC Bank USA, National Association as trustee (the "Pooling
and Servicing Agreement"), pursuant to which Pooling and Servicing Agreement the
Certificates were issued.
Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
[Transferor]
By:_________________________________
Name:
Title:
B-1-2
FORM OF TRANSFEREE REPRESENTATION LETTER [144A]
[Date]
Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust ACE 2005-SN1
Re: ACE Securities Corp. Home Equity Loan Trust, Series 2005-SN1
Asset Backed Pass-Through Certificates
Class Ce-1, Class Ce-2 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 (the "Code") (each, a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan within the meaning of the Department of Labor ("DOL")
regulation at 29 C.F.R. ss.2510.3-101 or (b) has provided the Securities
Administrator with an opinion of counsel on which the Trustee, the Depositor,
the Master Servicer, the Securities Administrator and the Servicers 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
B-1-3
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
Servicers to any obligation or liability (including obligations or liabilities
under ERISA or Section 4975 of the Code) in addition to those undertaken in the
Pooling and Servicing Agreement.
In addition, the Transferee hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee, the Securities
Administrator, the Master Servicer and the Servicers that the Transferee will
not transfer such Certificates to any Plan or person unless such Plan or person
meets the requirements set forth in paragraph 3 above.
All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of March 1, 2005, among ACE Securities Corp. as Depositor,
Wells Fargo Bank, N.A. as Master Servicer and Securities Administrator, Ocwen
Federal Bank FSB as a Servicer and HSBC Bank USA, National Association as
Trustee, pursuant to which the Certificates were issued.
[TRANSFEREE]
By:_________________________________
Name:
Title:
B-1-4
ANNEX 1 TO EXHIBIT B-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Wells Fargo Bank, N.A., as Securities
Administrator, with respect to the asset backed pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $________________1 in securities
(except for the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Transferee satisfies the criteria in the category
marked below.
___ CORPORATION, ETC. The Transferee is a corporation (other than
a bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ BANK. The Transferee (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, A COPY OF WHICH IS
ATTACHED HERETO.
___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, A COPY OF WHICH IS
ATTACHED HERETO.
- -----------------------
1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that
case, Transferee must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
B-1-5
___ BROKER-DEALER. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Transferee is an insurance company
whose primary and predominant business activity is the writing
of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a
State, territory or the District of Columbia.
___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA PLAN. The Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ INVESTMENT ADVISOR The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only
B-1-6
purchase for the account of a third party that at the time is a "qualified
institutional buyer" within the meaning of Rule 144A. In addition, the
Transferee agrees that the Transferee will not purchase securities for a third
party unless the Transferee has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
Dated:
____________________________________
Print Name of Transferee
By:_________________________________
Name:
Title:
B-1-7
ANNEX 2 TO EXHIBIT B-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Wells Fargo Bank, N.A., as Securities
Administrator, with respect to the asset backed pass-through certificates (the
"Certificates") described in the Transferee Certificate to which this
certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.
___ The Transferee owned $________________________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
___ The Transferee is part of a Family of Investment Companies
which owned in the aggregate $_______________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
B-1-8
5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
Dated:
________________________________________
Print Name of Transferee or Advisor
By:_____________________________________
Name:
Title:
IF AN ADVISER:
________________________________________
Print Name of Transferee
B-1-9
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer", as
defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933,
as amended.
3. As of the date specified below (which is not earlier than
the last day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on
a discretionary basis by the Purchaser was in excess of $100,000,000.
Name of Purchaser ______________________________________________________________
By: (Signature) ________________________________________________________________
Name of Signatory ______________________________________________________________
Title __________________________________________________________________________
Date of this certificate _______________________________________________________
Date of information provided in paragraph 3 ____________________________________
B-1-10
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 2005-SN1
Re: ACE Securities Corp. Home Equity Loan Trust, Series 2005-SN1
Asset Backed Pass-Through Certificates,
Class Ce-1. Class Ce-2 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 2005-SN1
Re: ACE Securities Corp. Home Equity Loan Trust, Series 2005-SN1
Asset Backed Pass-Through Certificates,
Class Ce-1, Class Ce-2 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 (the
"Code") (each, a "Plan"), or any other person (including an investment
manager, a named fiduciary or a trustee of any Plan) acting, directly
or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan within the meaning of the Department of Labor
("DOL") regulation at 29 C.F.R. ss.2510.3-101 or (b) has provided the
Trustee with an opinion of counsel on which the Depositor, the Master
Servicer, the Securities Administrator, the Trustee and the Servicers
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 Servicers to any
obligation or liability (including obligations or liabilities under
ERISA or Section 4975 of the Code) in addition to those undertaken in
the Pooling and Servicing Agreement.
In addition, the Transferee hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee, the Securities
Administrator, the Master Servicer and the Servicers that the Transferee will
not transfer such Certificates to any Plan or person unless such Plan or person
meets the requirements set forth in paragraph 6 above.
Very truly yours,
By:___________________________________
Name:
Title:
B-2-3
EXHIBIT B-3
TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
___________________________ being duly sworn, deposes, represents and
warrants as follows:
1. I am a _____________________ of
_______________________________ (the "Owner") a corporation
duly organized and existing under the laws of
_________________________, the record owner of ACE Securities
Corp. Home Equity Loan Trust, Series 2005-SN1 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) that each of the Class R
Certificates may be a "noneconomic residual interest" within
the meaning of proposed Treasury regulations promulgated under
the Code
B-2-4
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 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 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: __________ (the "Trust")
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-SN1
---------------------------------------------------
I, [identify the certifying individual], certify to ACE Securities Corp. (the
"Depositor"), HSBC Bank USA, National Association (the "Trustee") and Wells
Fargo Bank, National Association (the "Master Servicer"), and their respective
officers, directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:
1. Based on my knowledge, the information in the Annual Statement
of Compliance, the Annual Independent Public Accountant's
Servicing Report and all servicing reports, officer's
certificates and other information relating to the servicing
of the Mortgage Loans submitted to the Master Servicer taken
as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact (constituting
information required to be provided by Ocwen Federal Bank FSB
(the "Servicer") under the 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 Master Servicer by the Servicer under the
Agreement has been provided to the Master Servicer.
3. I am responsible for reviewing the activities performed by the
Servicer under the Agreement and based upon my knowledge and
the review required by the 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 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.
Capitalized terms used and not otherwise defined herein have the meanings
assigned thereto in the Pooling and Servicing Agreement, dated as of March 1,
2005, among ACE Securities Corp., Ocwen Federal Bank FSB, Wells Fargo Bank, N.A.
and HSBC Bank USA, National Association.
Date:_______________________________________
____________________________________________
[Signature]
_____________________________________________
[Title]
C-2
EXHIBIT D
FORM OF POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
Ocwen Federal Bank FSB
1675 Palm Lakes Boulevard, Suite 10A
West Palm Beach, Florida 33401
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"), Ocwen Federal Bank FSB as a servicer, Wells Fargo Bank,
National Association as master servicer and securities administrator and the
Trustee, dated as of March 1, 2005 (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
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.
D-2
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, Ocwen Federal Bank FSB, and the
Trustee, dated as of 1, 200__ (___________________ 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 _____ 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 ___________ 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 ________________________
D-3
SCHEDULE 1
MORTGAGE LOAN SCHEDULE
SCHEDULE 2
PREPAYMENT CHARGE SCHEDULE
SCHEDULE 3
[RESERVED]
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 MM/DD/YYYY
servicer at 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 MM/DD/YYYY
by 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 MM/DD/YYYY
instructions to 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 MM/DD/YYYY
Action
- -----------------------------------------------------------------------------------------------------------------------------
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
MM/DD/YYYY from the borrower.
- -----------------------------------------------------------------------------------------------------------------------------
LIST_PRICE The price at which an REO property is marketed. 2 No commas(,)
or dollar
signs ($)
- -----------------------------------------------------------------------------------------------------------------------------
LIST_DATE The date an REO property is listed at a particular price. MM/DD/YYYY
- -----------------------------------------------------------------------------------------------------------------------------
OFFER_AMT The dollar value of an offer for an REO property. 2 No commas(,)
or dollar
signs ($)
- -----------------------------------------------------------------------------------------------------------------------------
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 2
price opinion or appraisal.
- -----------------------------------------------------------------------------------------------------------------------------
REPAIRED_PROP_VAL The amount the property would be
worth if repairs are 2 completed
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 MM/DD/YYYY
Insurance 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 ($)
- -----------------------------------------------------------------------------------------------------------------------------
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING
The LOSS MIT TYPE field should show the approved Loss Mitigation Code
as follows:
o ASUM- Approved Assumption
o BAP- Borrower Assistance Program
o CO- Charge Off
o DIL- Deed-in-Lieu
o FFA- Formal Forbearance Agreement
o MOD- Loan Modification
o PRE- Pre-Sale
o SS- Short Sale
o 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:
o Mortgagor
o Tenant
o Unknown
o Vacant
The PROPERTY CONDITION field should show the last reported condition of the
property as follows:
o Damaged
o Excellent
o Fair
o Gone
o Good
o Poor
o Special Hazard
o Unknown
EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED
The FNMA DELINQUENT REASON CODE field should show the Reason for Delinquency as
follows:
--------------------------------------------------------------------
DELINQUENCY CODE DELINQUENCY DESCRIPTION
--------------------------------------------------------------------
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
--------------------------------------------------------------------
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
-----------------------------------------------------------------
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 ( ).
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)
(21) Other (itemize) ______________ (21)
_________________________________________ ______________
_________________________________________ ______________
TOTAL CREDITS $ ______________ (22)
TOTAL REALIZED LOSS (OR AMOUNT OF GAIN) $ ______________ (23)
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
- -------------------------------------------------------------------------------------------------------------------------------
SCHED_PMT_AMT P&I constant 2 No commas(,) or dollar signs ($)
- -------------------------------------------------------------------------------------------------------------------------------
NOTE_INT_RATE Gross Interest Rate 4 Max length of 6
- -------------------------------------------------------------------------------------------------------------------------------
NET_RATE Gross Interest Rate less the Service Fee Rate 4 Max length of 6
- -------------------------------------------------------------------------------------------------------------------------------
SERV_FEE_RATE Service Fee Rate 4 Max length of 6
- -------------------------------------------------------------------------------------------------------------------------------
NEW_PAY_AMT ARM loan's forecasted P&I constant 2 No commas(,) or dollar signs ($)
- -------------------------------------------------------------------------------------------------------------------------------
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 ($)
- -------------------------------------------------------------------------------------------------------------------------------
PIF_DATE Liquidation Date MM/DD/YYYY
- -------------------------------------------------------------------------------------------------------------------------------
ACTION_CODE Either 60 for liquidation or 65 for Repurchase Max length of 2
- -------------------------------------------------------------------------------------------------------------------------------
PRIN_ADJ_AMT Principal Adjustments made to loan, if applicable 2 No commas(,) or dollar signs ($)
- -------------------------------------------------------------------------------------------------------------------------------
INT_ADJ_AMT Interest Adjustment made to loan, if applicable 2 No commas(,) or dollar signs ($)
- -------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT PENALTY AMT Prepayment penalty amount, if applicable 2 No commas(,) or dollar signs ($)
- -------------------------------------------------------------------------------------------------------------------------------
Soldier and Sailor Adjustment amount, if
SOILDER_SAILOR ADJ AMT applicable 2 No commas(,) or dollar signs ($)
- -------------------------------------------------------------------------------------------------------------------------------
NON ADV LOAN AMT Non Recoverable Loan Amount, if applicable 2 No commas(,) or dollar signs ($)
- -------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 6
SERVICING ADVANCES INCURRED PRIOR TO CUT-OFF DATE
NONE