Exhibit 99.2
Ambac Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Certificate Guaranty Insurance Policy
Insured Obligations: Policy Number:
Equity One Mortgage Pass-Through Trust AB0550BE
Mortgage Pass-Through Certificates,
Series 2002-2, Class A
Premium:
As specified in the endorsement
attached hereto.
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by reason
of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification to Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is not
refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to make
any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such terms
in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
/s/ Robert J. Genader [CORPORATE SEAL APPEARS HERE] /s/ Anne G. Gill
President Secretary
Effective Date: April 30, 2002 /s/ Jeffrey D. Nabi
Authorized Representative
Form No.: 2B-0022 (7/97)
EXECUTED VERSION
================
CERTIFICATE GUARANTY INSURANCE POLICY ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy No. AB0550BE April 30, 2002
issued to:
JPMorgan Chase Bank, as Trustee
on behalf of, and for the benefit
of the Holders of, the Mortgage
Pass- Through Certificates, Series
2002-2, Class AF, Class A-IO and
Class AV-1 Certificates as Issued
pursuant to the Agreement
For all purposes of this Policy, the following terms shall have the
following meanings:
"Affiliated Seller" shall mean each of Equity One, Incorporated, a
Pennsylvania corporation; Equity One, Inc., a Minnesota corporation; Equity One
Consumer Loan Company, Inc., a New Hampshire corporation; and Popular Financial
Services, LLC, a Delaware limited liability company.
"Agreement" shall mean the Pooling and Servicing Agreement, dated as of
March 31, 2002, among Equity One ABS, Inc., as Depositor, Equity One, Inc., as a
Seller and the Servicer, each Affiliated Seller, as a Seller, and the Trustee,
as Trustee, without regard to any amendment or supplement thereto unless such
amendment or supplement has been approved in writing by the Insurer.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in New York City or in the city in which the
corporate trust office of the Trustee under the Agreement or the Insurer is
located are authorized or obligated by law or executive order to close.
"Deficiency Amount" shall mean, with respect to the Insured Obligations, as
of any Distribution Date any shortfall in amounts available in the Distribution
Account and, with
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respect to the Class AV-1 Certificates only, the Reserve Fund to pay (i) the
aggregate Interest Distribution Amount for the related Interest Accrual Period,
(ii) the Guaranteed Principal Distribution Amount and (iii) without duplication
of the amount specified in clause (ii), the aggregate Class Certificate Balance
of the Insured Obligations to the extent unpaid on the related Last Scheduled
Distribution Date or earlier termination of the Trust Fund pursuant to the terms
of the Agreement. For purposes of determining the Deficiency Amount, the
Interest Distribution Amount for the related Interest Accrual Period for any
Distribution Date shall be reduced by any Net Prepayment Interest Shortfalls and
any Relief Act Reduction applicable to such Interest Accrual Period. The
Deficiency Amount shall not include any Net WAC Cap Carryover.
"Due for Payment" shall mean, with respect to any Insured Amounts, such
amount that is due and payable under the Agreement on the related Distribution
Date.
"Guaranteed Principal Distribution Amount" shall mean, with respect to the
Insured Obligations and for any Distribution Date, the amount, if any, by which
the sum of the Class Certificate Balances of the Class AF Certificates exceeds
the Group Principal Balance of Group I as of that Distribution Date, plus the
amount, if any, by which the Class Certificate Balance of the Class AV-1
Certificates exceeds the Group Principal Balance of Group II as of that
Distribution Date.
"Holder" shall mean any person who is the registered owner or beneficial
owner of any of the Insured Obligations and who, on the applicable Distribution
Date, is entitled under the terms of the Insured Obligations to payment
thereunder.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time), dated as of April
30, 2002, by and among the Insurer, Equity One, Inc., as a Seller of the Loans
to the Depositor and as Servicer, the Depositor and JPMorgan Chase Bank, as
Trustee.
"Insurance Policy" or "Policy" shall mean this Certificate Guaranty
Insurance Policy together with each and every endorsement hereto.
"Insured Amounts" shall mean, with respect to any Distribution Date, the
Deficiency Amount for such Distribution Date plus any Preference Amount for such
Distribution Date.
"Insured Obligations" shall mean the Class AF Certificates, the Class A-IO
Certificates and the Class AV-1 Certificates.
"Insured Payments" shall mean, with respect to any Distribution Date, the
aggregate amount actually paid by the Insurer to the Trustee in respect of
Insured Amounts for such Distribution Date.
"Insurer" shall mean Ambac Assurance Corporation, or any successor thereto,
as issuer of the Insurance Policy.
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"Last Scheduled Distribution Date" shall mean the Distribution Date in
October 2032.
"Late Payment Rate" shall mean the lesser of (a) the greater of (i) the per
annum rate of interest publicly announced from time to time by Citibank, N.A. as
its prime or base lending rate (any change in such rate of interest to be
effective on the date such change is announced by Citibank, N.A.), and (ii) the
then applicable highest rate of interest on any of the Insured Obligations and
(b) the maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the
actual number of days elapsed over a year of 360 days for any Distribution Date.
"Nonpayment" shall mean, with respect to any Distribution Date, an Insured
Amount which is Due for Payment but has not been and will not be paid in respect
of such Distribution Date pursuant to the Agreement.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Amount which shall be
due and owing on the applicable Distribution Date.
"Preference Amount" shall mean any amount previously distributed to a
Holder that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the Bankruptcy Code in accordance with a
final nonappealable order of a court having competent jurisdiction.
"Premium" shall have the meaning set forth in the Insurance Agreement.
"Premium Percentage" shall have the meaning set forth in the Insurance
Agreement.
"Reimbursement Amount" shall mean, as to any Distribution Date, the sum of
(x) (i) all Insured Payments paid by the Insurer, but for which the Insurer has
not been reimbursed prior to such Distribution Date, plus (ii) interest accrued
thereon, calculated at the Late Payment Rate from the date the Trustee received
the related Insured Payments, and (y) (i) any other amounts then due and owing
to the Insurer under the Insurance Agreement, but for which the Insurer has not
been reimbursed prior to such Distribution Date, plus (ii) interest on such
amounts at the Late Payment Rate.
"Trustee" shall mean JPMorgan Chase Bank, or any successor thereto under
the Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement as of the date of execution of the
Policy, without giving effect to any subsequent amendment to or modification of
the Agreement unless such amendment or modification has been approved in writing
by the Insurer.
The Insurer hereby agrees that if, as of any Distribution Date, it has
become subrogated to the rights of Holders by virtue of a previous payment under
this Policy, no recovery of such
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payment will occur unless the full amount of the Holders' allocable
distributions for such Distribution Date can be made. In so doing, the Insurer
does not waive its rights to seek full payment of all Reimbursement Amounts owed
to it under the Agreement and the Insurance Agreement
As provided by the Policy, the Insurer will pay any amount payable
hereunder, other than Preference Amounts, no later than 12:00 noon, New York
City time, on the later of the Distribution Date on which the related Deficiency
Amount is due or the Business Day following actual receipt in New York, New York
on a Business Day by the Insurer of a Notice; provided that, if such Notice is
received after 12:00 noon, New York City time, on such Business Day, it shall be
deemed to be received on the following Business Day. If any such Notice is not
in proper form or is otherwise insufficient for the purpose of making claim
under the Policy, it shall be deemed not to have been received for purposes of
this paragraph, and the Insurer shall promptly so advise the Trustee and the
Trustee may submit an amended or corrected Notice.
The Insurer shall pay any Preference Amount when due to be paid pursuant to
the Order referred to below, but in any event on the Distribution Date next
following receipt on a Business Day by the Insurer of (i) a certified copy of a
final, non-appealable order of a court or other body exercising jurisdiction in
such insolvency proceeding to the effect that the Trustee or the Holder, as
applicable, is required to return such Preference Amount paid during the term of
this Policy because such payments were avoided as a preferential transfer or
otherwise rescinded or required to be restored by the Trustee or the Holder (the
"Order"), (ii) a certificate by or on behalf of the Trustee that the Order has
been entered and is not subject to any stay, (iii) an assignment, in form and
substance satisfactory to the Insurer, duly executed and delivered by the
Trustee or the Holder, as applicable, irrevocably assigning to the Insurer all
rights and claims of the Trustee or the Holder, as applicable, relating to or
arising under the Agreement against the estate of the Trustee or otherwise with
respect to such Preference Amount and (iv) a Notice of Nonpayment (attached
hereto as Exhibit A) appropriately completed and executed by the Trustee. Such
payment shall be disbursed to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the Order, and not to the Trustee or the Holder,
as applicable, directly, unless the Trustee or the Holder, as applicable, has
made a payment of the Preference Amount to the court or such receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order,
in which case the Insurer will pay the Trustee on behalf of the Holder, subject
to the delivery of (a) the items referred to in clauses (i), (ii), (iii) and
(iv) above to the Insurer and (b) evidence satisfactory to the Insurer that
payment has been made to such court or receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order.
Notwithstanding the foregoing two sentences, the Insurer shall not be obligated
to pay any Preference Amount in respect to principal (other than principal paid
in connection with Loan Losses) except on the Final Distribution Date or earlier
termination of the Trust Fund pursuant to the terms of the Agreement.
The terms and provisions of the Agreement constitute the instrument of
assignment referred to in the second paragraph of the face of this Policy.
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A Premium will be payable on this Policy as provided in Section 4.02(a) of
the Agreement, on the Closing Date and on each Distribution Date, in an amount
equal to 1/12th of the product of (i) the Premium Percentage and (ii) the
aggregate Class Certificate Balance of the Insured Obligations on each
Distribution Date (prior to giving effect to any distributions of principal to
be made on such Distribution Date); provided that the initial premium will be
$42,493.80 and will be paid on the Closing Date.
THE INSURANCE PROVIDED BY THE POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
The Policy to which this Endorsement is attached and of which it forms a
part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Insurer. This Policy does not cover shortfalls, if any, attributable to the
liability of the Trust Fund, any REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such liability).
Nothing herein contained shall be held to vary, alter, waive or extend any
of the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated. Notwithstanding the foregoing
sentence, if there is any conflict or inconsistency between the Policy and this
Endorsement, the terms of this Endorsement shall control.
No waiver of any rights or powers of the Insurer, the Holders or the
Trustee or consent by any of them shall be valid unless signed by an authorized
officer or agent thereof.
This Policy is issued under and pursuant to, and shall be construed under,
the laws of the State of New York (without giving effect to the conflict of laws
provisions thereof).
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IN WITNESS WHEREOF, the Insurer has caused this Endorsement to the Policy
to be signed by its duly authorized officers.
First Vice President Assistant Secretary
/s/ Jeffrey D. Nabi /s/ Melissa L. Velie
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Form No. 2B-0022-56-ENDNY
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EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
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Policy No. AB0550BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
AMBAC ASSURANCE CORPORATION
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No. AB0550BE
(the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Pooling and Servicing Agreement, dated as of March 31,
2002, among Equity One ABS, Inc., as Depositor, Equity One, Inc., as a Seller
and the Servicer, each Affiliated Seller, as a Seller, and JPMorgan Chase Bank,
as Trustee (without regard to any amendment or supplement thereto unless such
amendment or supplement has been approved in writing by the Insurer) (the
"Agreement"), as the case may be, unless the context otherwise requires.
The Trustee hereby certifies as follows:
1. The Trustee is the Trustee under the Agreement for the Insured
Obligations.
2. The relevant Distribution Date or Last Scheduled Distribution Date is
[date].
3. Payment on the Insured Obligations in respect of the Distribution Date
is due to be received on ____________________________ under the
Agreement, in an amount equal to $_____________________.
[3. The amount to be paid to the Holders of the Insured Obligations on the
Last Scheduled Distribution Date is $____________.]
4. There is a Deficiency Amount and/or Preference Amount of
$________________ in respect of the Insured Obligations, which amount
is an Insured Amount pursuant to the terms of the Agreement.
5. The sum of $__________________ is the Insured Amount that is Due for
Payment.
6. The Trustee has not heretofore made a demand for the Insured Amount in
respect of the Distribution Date.
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7. The Trustee hereby requests the payment of the Insured Amount that is
Due for Payment be made by Ambac under the Policy and directs that
payment under the Policy be made to the following account by bank wire
transfer of federal or other immediately available funds in accordance
with the terms of the Policy to:
[Name and account information for Trustee.]
8. The Trustee hereby agrees that, following receipt of the Insured
Amount from Ambac, it shall (a) hold such amounts in trust and apply
the same directly to the distribution of payment on the Insured
Obligations when due; (b) not apply such funds for any other purpose;
(c) deposit such funds to the Distribution Account and not commingle
such funds with other funds held by the Trustee and (d) maintain an
accurate record of such payments with respect to the Insured
Obligations and the corresponding claim on the Policy and proceeds
thereof.
Any Person Who Knowingly And With Intent To Defraud Any Insurance Company
Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information; Or Conceals For The Purpose Of
Misleading, Information Concerning Any Fact Material Thereto, Commits A
Fraudulent Insurance Act, Which Is And Shall Also Be Subject To A Civil Penalty
Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim For Each
Such Violation.
[Name of Trustee]
By:
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Title:
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(Officer)
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