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ACE SECURITIES CORP.,
Depositor
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
Seller
LITTON LOAN SERVICING LP,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 2001
2001-CB2 Trust
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2001-CB2
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Table of Contents
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms...................................................................................6
Section 1.02. Accounting.....................................................................................42
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans...................................................................42
Section 2.02. Acceptance by Trustee..........................................................................45
Section 2.03. Repurchase or Substitution of Mortgage Loans by the Seller.....................................46
Section 2.04. Representations and Warranties of the Seller with Respect to the Mortgage Loans................48
Section 2.05. Representations, Warranties and Covenants of the Servicer......................................50
Section 2.06. Representations and Warranties of the Depositor................................................51
Section 2.07. Issuance of Certificates and the Uncertificated Regular Interests..............................53
Section 2.08. Representations and Warranties of the Seller...................................................53
Section 2.09. Covenants of the Seller........................................................................55
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01. Servicer to Act as Servicer....................................................................56
Section 3.02. Collection of Mortgage Loan Payments...........................................................58
Section 3.03. Realization Upon Defaulted Mortgage Loans......................................................58
Section 3.04. Collection Account and Distribution Account....................................................59
Section 3.05. Permitted Withdrawals From the Collection Account..............................................61
Section 3.06. Establishment of Escrow Accounts; Deposits in Escrow Accounts..................................62
Section 3.07. Permitted Withdrawals From Escrow Account......................................................62
Section 3.08. Payment of Taxes, Insurance and Other Charges; Collections Thereunder..........................63
Section 3.09. Transfer of Accounts...........................................................................64
Section 3.10. Maintenance of Hazard Insurance................................................................64
Section 3.11. Maintenance of Mortgage Impairment Insurance Policy............................................65
Section 3.12. Fidelity Bond, Errors and Omissions Insurance..................................................65
Section 3.13. Title, Management and Disposition of REO Property..............................................66
Section 3.14. Due-on-Sale Clauses; Assumption and Substitution Agreements....................................68
Section 3.15. Notification of Adjustments....................................................................69
Section 3.16. Optional Purchases of Mortgage Loans by Servicer...............................................69
Section 3.17. Optional Purchase of Defaulted Loans by Seller.................................................70
Section 3.18. Trustee to Cooperate; Release of Files.........................................................70
Section 3.19. Servicing Compensation.........................................................................71
Section 3.20. Annual Statement as to Compliance..............................................................72
Section 3.21. Annual Independent Certified Public Accountants' Reports.......................................72
Section 3.22. Access to Certain Documentation and Information Regarding the Mortgage Loans...................73
i
Section 3.23. Reserved.......................................................................................73
Section 3.24. Obligations of the Servicer in Respect of Compensating Interest................................73
Section 3.25. Obligations of the Servicer in Respect of Mortgage Interest Rates and Monthly Payments.........73
Section 3.26. Investment of Funds in the Collection Account and the Distribution Account.....................74
Section 3.27. Liability of Servicer; Indemnification.........................................................75
Section 3.28. Reports of Foreclosure and Abandonment of Mortgaged Properties.................................76
Section 3.29. Claims Under the PMI Policy....................................................................76
Section 3.30. Protection of Assets...........................................................................76
ARTICLE IV
FLOW OF FUNDS
Section 4.01. Interest Distributions.........................................................................77
Section 4.02. Distributions of Principal and Monthly Excess Cashflow Amounts.................................78
Section 4.03. Allocation of Losses...........................................................................82
Section 4.04. Method of Distribution.........................................................................82
Section 4.05. Distributions on Book-Entry Certificates.......................................................82
Section 4.06. Statements.....................................................................................82
Section 4.07. Remittance Reports; Advances...................................................................85
Section 4.08. REMIC Distributions............................................................................87
Section 4.09. Reserve Fund...................................................................................88
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates...............................................................................89
Section 5.02. Registration of Transfer and Exchange of Certificates..........................................89
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates..............................................94
Section 5.04. Persons Deemed Owners..........................................................................95
Section 5.05. Appointment of Paying Agent....................................................................95
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Seller, the Servicer and the Depositor........................................95
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations of, the Seller, the
Servicer or the Depositor......................................................................96
Section 6.03. Limitation on Liability of the Servicer and Others.............................................96
Section 6.04. Servicer Not to Resign.........................................................................96
Section 6.05. Delegation of Duties...........................................................................97
ARTICLE VII
DEFAULT
Section 7.01. Servicer Events of Termination.................................................................98
Section 7.02. Trustee to Act; Appointment of Successor.......................................................99
Section 7.03. Waiver of Defaults............................................................................101
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Section 7.04. Notification to Certificateholders............................................................101
Section 7.05. Survivability of Servicer Liabilities.........................................................101
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee.............................................................................101
Section 8.02. Certain Matters Affecting the Trustee.........................................................103
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.........................................104
Section 8.04. Trustee May Own Certificates..................................................................105
Section 8.05. Seller to Pay Trustee Fees and Expenses.......................................................105
Section 8.06. Eligibility Requirements for Trustee..........................................................106
Section 8.07. Resignation or Removal of Trustee.............................................................106
Section 8.08. Successor Trustee.............................................................................107
Section 8.09. Merger or Consolidation of Trustee............................................................107
Section 8.10. Appointment of Co-Trustee or Separate Trustee.................................................107
Section 8.11. Limitation of Liability.......................................................................109
Section 8.12. Trustee May Enforce Claims Without Possession of Certificates.................................109
Section 8.13. Suits for Enforcement.........................................................................109
Section 8.14. Waiver of Bond Requirement....................................................................109
Section 8.15. Waiver of Inventory, Accounting and Appraisal Requirement.....................................110
Section 8.16. Compliance with National Housing Act of 1934..................................................110
ARTICLE IX
REMIC AND TRUST ADMINISTRATION
Section 9.01. REMIC Administration..........................................................................110
Section 9.02. Prohibited Transactions and Activities........................................................112
Section 9.03. Indemnification with Respect to Certain Taxes and Loss of REMIC Status........................112
Section 9.04. REO Property..................................................................................113
ARTICLE X
TERMINATION
Section 10.01. Termination...................................................................................113
Section 10.02. Additional Termination Requirements...........................................................115
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.....................................................................................116
Section 11.02. Recordation of Agreement; Counterparts........................................................117
Section 11.03. Limitation on Rights of Certificateholders....................................................117
Section 11.04. Governing Law; Jurisdiction...................................................................118
Section 11.05. Notices.......................................................................................118
Section 11.06. Severability of Provisions....................................................................119
Section 11.07. Article and Section References................................................................119
Section 11.08. Notice to the Rating Agencies.................................................................119
Section 11.09. Further Assurances............................................................................120
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Section 11.10. Benefits of Agreement.........................................................................120
Section 11.11. Acts of Certificateholders....................................................................120
EXHIBITS:
Exhibit A-1 Form of Class A-IO Certificate
Exhibit A-2 Form of Class A-1A Certificates
Exhibit A-3 Form of Class A-1F Certificates
Exhibit A-4 Form of Class A-2F Certificates
Exhibit A-5 Form of Class A-3F Certificates
Exhibit B-1 Form of Class M-1 Certificates
Exhibit B-2 Form of Class M-2 Certificates
Exhibit C-1 Form of Class B-1 Certificates
Exhibit C-2 Form of Class B-2 Certificates
Exhibit C-3 Form of Class X Certificates
Exhibit C-4 Form of Class N-1 Certificates
Exhibit C-5 Form of Class N-2 Certificates
Exhibit C-6 Form of Class R1-3 Certificates
Exhibit C-7 Form of Class R-4 Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E Form of Request for Release of Documents and Receipt
Exhibit F-1 Form of Trust Receipt and Initial Certification
Exhibit F-2 Form of Trust Receipt and Final Certification
Exhibit F-3 Form of Acknowledgement of Receipt of Mortgage Note
Exhibit G [Reserved]
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Form of Investment Letters
Exhibit K Form of Class R Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M Form of Liquidation Report
Exhibit N [Reserved]
Exhibit O [Reserved]
Exhibit P [Reserved]
Exhibit Q Form of Officer's Certificate with Respect to Prepayments
Exhibit R [Reserved]
Exhibit S Ineligible Foreclosure Property Loan Schedule
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This Pooling and Servicing Agreement is dated as of May 1,
2001 (the "Agreement"), among ACE SECURITIES CORP., as depositor (the
"Depositor"), CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC, as seller
(the "Seller"), LITTON LOAN SERVICING LP, as servicer (the "Servicer") and
U.S. BANK NATIONAL ASSOCIATION, as trustee (the "Trustee).
PRELIMINARY STATEMENT
For federal income tax purposes, the Trust Fund will consist
of four REMICs, the REMIC 1, REMIC 2, REMIC 3, and REMIC 4. In addition,
rights of the Class A-1A Certificates to receive amounts in excess of the Pool
Cap (including LIBOR Carryover Amounts) will be accounted for as contractual
rights separate from the REMICs created pursuant to this Agreement ("Rate
Payment Amounts").
The Class N-1 and Class X Certificates represent beneficial
ownership of the Class X/N Interest, subject to the obligation to pay Rate
Payment Amounts. If the Class N-1 and Class X Certificates are beneficially
owned by different Persons, they will be treated as interests in a partnership
that holds the Class X/N Interest for federal income tax purposes as described
in Section 9.01(l) and (m).
Any payment of interest to the Class A-1A Certificates of
the Rate Payment Amounts shall be accounted for by the Trustee as being
distributed to the Class X Certificate, and then paid by the Class X
Certificate to an outside reserve fund owned for U.S. federal income tax
purposes by the Class X Certificateholders. The Class A-1A Certificateholders
right to such additional amount shall be accounted for by the Trustee as
contractual rights to receive such amount separate and apart from the REMIC
Regular Interest as required by Treasury Regulation Section 1.860G-2(i).
The Class N-1 Certificate will not be a REMIC regular
interest.
REMIC 1:
REMIC 1 will consist of all of the assets constituting the
Mortgage Loans (exclusive of the Rate Payment Reserve Fund) and will be
evidenced by the REMIC 1 Regular Interests which will be uncertificated and
will represent the "regular interests" in the REMIC 1 (the "REMIC 1 Regular
Interests") and REMIC 1 Residual Interest as the single "residual interest" in
the REMIC 1 (the "REMIC 1 Residual Interest"). The Trustee will hold the REMIC
1 Regular Interests on behalf of the REMIC 2.
The following table irrevocably sets forth the class
designation, the REMIC 1 Pass-Through Rate, and the Original Class Certificate
Principal Balance for each of the REMIC 1 Regular Interests. None of the REMIC
1 Regular Interests will be certificated.
Class Original Class Certificate Tier 1 Pass-Through
Principal Amount Rate
T1-1 $ 50,000,000.00 Weighted Average Net
Mortgage Rate
T1-2 $137,840,991.05 Weighted Average Net
Mortgage Rate
R-1 N/A N/A
REMIC 2:
REMIC 2 will consist of all of the assets constituting the
REMIC 1 Regular Interests and will be evidenced by the REMIC 2 Regular
Interests which will be uncertificated and will represent the "regular
interests" in the REMIC 2 (the "REMIC 2 Regular Interests") and REMIC 2
Residual Interest as the single "residual interest" in the REMIC 2 (the "REMIC
2 Residual Interest"). The Trustee will hold the REMIC 2 Regular Interests on
behalf of the REMIC 3. The initial principal balance of each REMIC 2 regular
interest, other than the T2-Accrual is exactly one-half of the principal
balance of its corresponding class with the T2-Accrual representing the
remaining balance. The Class T2-A-IF, Class T2-A-2F, Class T2-A-3F, Class
T2-A-1A, Class T2-M-1, Class T2-M-2, Class T2-B-1, Class T2-B-2 and Class
T2-N-2 will be the REMIC 2 Accretion Directed Classes.
The following table irrevocably sets forth the class
designation, the REMIC 2 Pass-Through Rate, and the Original Class Certificate
Principal Balance or Notional Amount for each of the REMIC 2 Regular
Interests. None of the REMIC 2 Regular Interests will be certificated.
Corresponding Original Class Tier 2 Pass-
Class REMIC 3 Interest Certificate Principal Amount Through Rate
T2-A-1F T3-A-1F $ 20,674,000.00 Adjusted Net WAC
T2-A-2F T3-A-2F $ 8,384,000.00 Adjusted Net WAC
T2-A-3F T3-A-3F $ 12,397,000.00 Adjusted Net WAC
T2-A-1A T3-A-1A $ 41,665,000.00 Adjusted Net WAC
T2-M-1 T3-M-1 $ 3,287,000.00 Adjusted Net WAC
T2-M-2 T3-M-2 $ 2,442,000.00 Adjusted Net WAC
T2-B-1 T3-B-1 $ 1,878,500.00 Adjusted Net WAC
T2-B-2 T3-B-2 $ 2,254,000.00 Adjusted Net WAC
T2-N-2 T3-N-2 $ 937,500.00 Adjusted Net WAC
T2-Accrual N/A $ 93,920,455.53 Adjusted Net WAC
T2-NAS T3-A-IO $ 50,000,000.00 (2) 2.00% (1)
R-2 N/A N/A N/A
(1) Interest will accrue on the Class A-IO Certificates during each
Interest Accrual Period at a rate equal to (i) during the first
twenty Interest Accrual Periods, the Class A-IO Pass-Through Rate and
thereafter (ii) 0%. As a result, no distributions will be made on the
Class A-IO Certificate after the January 2003 Distribution Date.
2
(2) The Class T2-NAS has no principal balance but rather a notional balance.
On each Distribution Date, 50% of the increase in the
Overcollateralization Amount will be payable as a reduction of the principal
balances of the REMIC 2 Accretion Directed Classes (each such class will be
reduced by an amount equal to 50% of any increase in the Overcollateralization
Amount that is attributable to a reduction in the principal balance of its
Corresponding Class) and will be accrued and added to the principal balance of
the T2-Accrual Class. All payments of scheduled principal and prepayments of
principal generated by the Mortgage Loans shall be allocated 50% to the
T2-Accrual Class, and 50% to the REMIC 2 Accretion Directed Classes (principal
payments shall be allocated among such REMIC 2 Accretion Directed Classes in
an amount equal to 50% of the principal amounts allocated to their respective
Corresponding Classes), until paid in full. Realized Losses shall be applied
so that after all distributions have been made on each Distribution Date (i)
the principal balances of each of the REMIC 2 Accretion Directed Classes is
equal to 50% of the principal balance of their Corresponding Class, and (ii)
the REMIC 2 Accrual Class is equal to the principal balance of the Mortgage
Loans as of the Cut-off Date less the principal balance of the other REMIC 2
regular interests.
REMIC 3:
REMIC 3 will consist of all of the assets constituting the
REMIC 2 Regular Interests and will be evidenced by the REMIC 3 Regular
Interests which will be uncertificated and will represent the "regular
interests" in the REMIC 3 (the "REMIC 3 Regular Interests") and REMIC 3
Residual Interests as the single "residual interest" in the REMIC 3 (the
"REMIC 3 Residual Interest"). The Trustee will hold the REMIC 3 Regular
Interests on behalf of the REMIC 3.
The following table irrevocably sets forth the class
designation, the REMIC 3 Pass-Through Rate, and the Original Class Certificate
Principal Balance or Notional Amount for each of the REMIC 3 Regular
Interests. The T3-A-1F Regular Interest, T3-A-2F Regular Interests, T3-A-3F
Regular Interests, T3-A-1A Regular Interests, the T3-A-IO Regular Interest and
T3-A-X Regular Interests will be certificated. Such Regular Interests when
referred to in certificated form will be the Class A-1F Certificates, Class
A-2F Certificates, Class A-3F Certificates, Class A-1A Certificates, Class
A-IO Certificates, and Class X Certificates (together, the "REMIC 3
Certificates"). The T3-M-1 Regular Interest, T3-M-2 Regular Interests, T3-B-1
Regular Interests and T3-B-2 Regular Interests will be not certificated.
3
Original Class
Certificate Principal Balance Tier 3
Class Corresponding Class or Notional Amount Pass-Through Rate
A-IO A-IO $50,000,000.00(1) 2.0000% (1)
A-1F A-1F $41,348,000.00 (2)
A-2F A-2F $16,768,000.00 (3)
A-3F A-3F $24,794,000.00 (4)
A-1A A-1A $83,330,000.00 (5)
M-1 M-1 $ 6,574,000.00 (6)
M-2 M-2 $ 4,884,000.00 (7)
T3-B-1 B-1 $ 3,757,000.00 (8)
T3-B-2 B-2 $ 4,508,000.00 (9)
T3-N-2 N-2 $ 1,875,000.00 (10)
X X (11)
R-3 N/A N/A N/A
(1) The Class T3-A-IO is notional and it has no principal balance.
Interest will accrue on the Class A-IO Certificates during each
Interest Accrual Period at a rate equal to (i) during the first
twenty Interest Accrual Periods, the Class A-IO Pass-Through Rate and
thereafter (ii) 0%. As a result, no distributions will be made on the
Class A-IO Certificate after the January 2003 Distribution Date.
(2) Interest will accrue on the Class A-1F Certificates during each
Interest Accrual Period at a rate equal to the lesser of: (i) the
Class A-1F Pass-Through Rate and (ii) the Pool Cap for such
Distribution Date.
(3) Interest will accrue on the Class A-2F Certificates at a rate
equal to the lesser of: (i) the Class A-2F Pass-Through Rate and
(ii) the Pool Cap for such Distribution Date.
(4) Interest will accrue on the Class A-3F Certificates at a rate
equal to the lesser of: (i) the Class A-3F Pass-Through Rate and
(ii) the Pool Cap for such Distribution Date.
(5) Interest will accrue on the Class A-1A Certificates at a rate
equal to the lesser of: (i) the Class A-1A Pass-Through Rate and
(ii) the Pool Cap for such Distribution Date.
(6) Interest will accrue on the Class M-1 Certificates at a rate equal
to the lesser of: (i) the Class M-1 Pass-Through Rate and
(ii) the Pool Cap for such Distribution Date.
(7) Interest will accrue on the Class M-2 Certificates at a rate equal
to the lesser of: (i) the Class M-2 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
(8) Interest will accrue on the Class B-1 Certificates at a rate equal to
the lesser of: (i) the Class B-1 Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date.
4
(9) Interest will accrue on the Class B-2 Certificates at a rate equal to
the lesser of: (i) the Class B-2 Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date.
(10) Interest will accrue on the Class N-2 Certificates at a rate equal to
the lesser of: (i) the Class N-2 Pass-Through Rate and
(ii) the Pool Cap for such Distribution Date.
(11) The Class T3-X Regular Interest will have an initial principal
balance equal to the excess of the principal balance of the Mortgage
Loans as of the Cut-off Date over the principal balance of the other
Certificates that are REMIC Regular Interests, and will not receive
interest on that principal balance. In addition, the Class T3-X
Regular Interest will have a notional balance equal to the principal
balance of the Mortgage Loans determined as of the beginning of each
Interest Accrual Period (for the Certificates other than the Class
A-1A Certificates) and, a pass through rate equal to the excess of:
(i) the Adjusted Net WAC over (ii) the product of: (A) two and (B)
the weighted average Pass-Through Rate of the Tier 2 REMIC Regular
Interests, where all Tier 2 REMIC Accrual Classes are subject to a
cap equal to zero and all other Tier 2 REMIC Regular Interests (the
"Tier 2 Accretion Directed Classes") are subject to a cap equal to
the Pass-Through-Rate on its Corresponding Class set forth in this
preliminary statement.
REMIC 4:
The REMIC 4 will consist of all of the assets constituting
the T3-N-2 Regular Interests, T3-B-1 Regular Interests, and T3-B-2 Regular
Interests and will be evidenced by the REMIC 4 Regular Interests which will be
uncertificated and will represent the "regular interests" in the REMIC 4 (the
"REMIC 4 Regular Interests") and REMIC 4 Residual Interest as the single
"residual interest" in the REMIC 4 (the "REMIC 4 Residual Interest"). The
Trustee will hold the REMIC 4 Regular Interests on behalf of the REMIC 4.
The following table irrevocably sets forth the class
designation, the REMIC 4 Pass-Through Rate, and the Original Class Certificate
Principal Balance for each of the REMIC 4 Regular Interests. All of the REMIC
4 Regular Interests will be certificated. Such Regular Interests when referred
to in certificated form will be referred to as the Class N-2 Certificate,
Class B-1 Certificate, and Class B-2 Certificate (together, the "REMIC 4
Certificates").
Original Class Certificate
Corresponding REMIC 3 Principal Balance or Notional Tier 4
Class Interest Amount Pass-Through Rate
T4-N-2 T3-M-2 $1,875,000.00 (2) (1)
T4-B-1 T3-B-1 $3,757,000.00 (1)
T4-B-2 T3-B-2 $4,508,000.00 (1)
R-4 T3-R N/A N/A
(1) The Tier 4 Pass-through Rate will equal the Tier 3 Pass-through Rate for each Corresponding Class.
(2) Notional Amount.
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ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article. Unless otherwise
specified, interest on the Class A-IO, A-1F, A-2F, A-3F, Class M-1, Class M-2,
Class B-1, Class B-2, Class N-1 and Class N-2 Certificates and on the REMIC
Regular Interests (other than the Class T2-A1A Interest) will be calculated on
the basis of a 360-day year consisting of twelve 30-day months. Interest on
the Class A-1A Certificates and on the Class T2-A1A Interest will be
calculated on the basis of the actual number of days in the related Interest
Accrual Period and a 360-day year.
Many of the defined terms listed below may apply to both
Loan Groups and are sometimes used in this Agreement to refer to a particular
Loan Group by the adjectival use of the words "Group 1" and "Group 2."
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan with respect
to which any portion of a Monthly Payment is, as of the last day of the prior
Collection Period, two months or more past due, each Mortgage Loan in
foreclosure, all REO Property and each Mortgage Loan for which the Mortgagor
has filed for bankruptcy after the Closing Date. Any Re-Performing 60+ Day
Delinquent Loan will not be considered to be a 60+ Day Delinquent Loan, unless
such Re-Performing 60+ Day Delinquent Loan constitutes the portion of
Re-Performing 60+ Day Delinquent Loans in excess of the percentage specified
in the definition of "Re-Performing 60+ Day Delinquent Loan".
"Account": Any of the Collection Account, and Distribution
Account.
"Accrued Certificate Interest": With respect to each
Distribution Date and Class of Certificates, an amount equal to the interest
accrued at the applicable rate set forth or described opposite such Class in
the table in the Preliminary Statement during the related Interest Accrual
Period on the Certificate Principal Balance (or Notional Amount) of such Class
of Certificates, reduced by such Class's Interest Percentage of Relief Act
Interest Shortfalls for such Distribution Date.
"Actuarial Mortgage Loan": Any Mortgage Loan other than a
Simple Interest Mortgage Loan.
"Adjusted Net WAC": With respect to any Distribution Date, a
per annum rate (but not less than zero) equal to the weighted average of (x)
the Tier 1 Pass-Through Rate with respect to Class T1-A Regular Interest minus
the Tier 1 Pass Through Rates with respect to the Class T2 NAS Regular
Interest for such Distribution Date and (y) the Tier 1 Pass-Through Rate with
respect to the Class T1-B Regular Interest for such Distribution Date.
"Adjustment Date": With respect to each Group 2 Mortgage
Loan, each adjustment date, on which the Mortgage Interest Rate of a Group 2
Mortgage Loan changes
6
pursuant to the related Mortgage Note. The first Adjustment Date following the
Cut-off Date as to each Group 2 Mortgage Loan is set forth in the Mortgage
Loan Schedule.
"Advance": As to any Actuarial Mortgage Loan, any advance
made by the Servicer in respect of any Distribution Date pursuant to Section
4.07.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise and "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Agency Insurance Agreements": Collectively, the FHA
Insurance Contracts and VA Guaranty Agreements.
"Agreement": This Pooling and Servicing Agreement and all
amendments and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all
federal, state and local laws, statutes, rules and regulations applicable
thereto, including with respect to each FHA Loan the FHA Regulations and the
related FHA Insurance Contract and with respect to each VA Loan the VA
Regulations and the related VA Guaranty Agreement.
"Applied Realized Loss Amount": With respect to each
Distribution Date, the excess, if any, of (a) the aggregate of the Certificate
Principal Balances of the Certificates (after giving effect to all
distributions on such Distribution Date) over (b) the Pool Balance as of the
end of the related Collection Period.
"Arrearage": With respect to a Delinquent Mortgage Loan, the
total amount of scheduled monthly payments due thereon on or before the
Cut-off Date that were not received prior to the Cut-off Date but for which
advances of principal and interest were made, plus any unreimbursed Servicing
Advances as of the Cut-off Date.
"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.
"Assumed Final Maturity Date": As to each Class of
Certificates, the date set forth as such in the Preliminary Statement.
"Available Funds": As to any Distribution Date, an amount
equal to the excess of (i) the sum of (a) the aggregate of the Monthly
Payments due during the related Collection Period and received by the Trustee
one Business Day prior to the related Distribution Date, (b) Liquidation
Proceeds, Insurance Proceeds, Principal Prepayments, Substitution Adjustment
Amounts, the Purchase Price for any repurchased Mortgage Loan, the Termination
Price with respect to the termination of the Trust pursuant to Section 10.01
hereof and other unscheduled recoveries of principal and interest (excluding
prepayment penalties and amounts received in respect of Arrearages) in respect
of the Mortgage Loans during the related Prepayment Period,
7
(c) the aggregate of any amounts received in respect of an REO Property
withdrawn from any REO Account and deposited in the Collection Account for
such Distribution Date, (d) any Compensating Interest for such Distribution
Date, and (e) the aggregate of any Advances made by the Servicer for such
Distribution Date over (ii) the sum of (a) amounts reimbursable or payable to
the Servicer pursuant to Section 3.05, (b) Stayed Funds, (c) the PMI Premium,
(d) the Servicing Fee and (e) amounts deposited in the Collection Account or
the Distribution Account, as the case may be, in error.
"Balloon Mortgage Loan": A Mortgage Loan that provides for
the payment of the unamortized principal balance of such Mortgage Loan in a
single payment at the maturity of such Mortgage Loan that is substantially
greater than the preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal
balance of a Mortgage Loan in a single payment at the maturity of such
Mortgage Loan that is substantially greater than the preceding Monthly
Payment.
"Bankruptcy Code": Title 11 of the United States Code, as
amended.
"Book-Entry Certificates": Any of the Certificates that
shall be registered in the name of the Depository or its nominee, the
ownership of which is reflected on the books of the Depository or on the books
of a Person maintaining an account with the Depository (directly, as a
"Depository Participant", or indirectly, as an indirect participant in
accordance with the rules of the Depository and as described in Section 5.02
hereof). On the Closing Date, the Class A-IO, Class A-1F, Class A-2F, Class
A-3F, Class A-1A, Class M-1, Class M-2 and Class B-1 Certificates shall be
Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of Delaware, the State of New
York, the State of Texas 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.
"Certificate": Any Regular Certificate or Residual
Certificate.
"Certificate Custodian": Initially, U.S. Bank National
Association; thereafter any other Certificate Custodian acceptable to the
Depository and selected by the Trustee.
"Certificate Owner": With respect to each Book-Entry
Certificate, any beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class
of Certificates (other than the Class A-IO, Class N-1, Class X and Residual
Certificates) and any Distribution Date, will be equal to the Original Class
Certificate Principal Balance reduced by the sum of (i) all amounts actually
distributed in respect of principal of such Class on all prior Distribution
Dates and (ii) Applied Realized Loss Amounts allocated thereto. The Class
A-IO, Class N-1, Class X and Residual Certificates do not have a Certificate
Principal Balance.
"Certificate Register" and "Certificate Registrar": The
register maintained and registrar appointed pursuant to Section 5.02 hereof.
8
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a
Residual Certificate for any purpose hereof.
"Class": Collectively, Certificates or REMIC Regular
Interests which have the same priority of payment and bear the same class
designation and the form of which is identical except for variation in the
Percentage Interest evidenced thereby.
"Class A-1A Cap": For any Distribution Date will equal the
sum of (i) the Pool Cap and (ii) a fraction (expressed as a percentage) (A)
the numerator of which is the lesser of (1) the product of the excess, if any,
of the Weighted Average Group 2 Net Mortgage Rate over the Pool Cap and the
Certificate Principal Balance of the Class A-1A Certificates (prior to the
distribution of any principal on such Distribution Date) and (2) the product
of the excess, if any, of the Pool Cap over the weighted average of the
Pass-Through Rates of the Certificates (other than the Class A-1A, Class X and
Class N-2 Certificates) (weighted on the basis of Certificate Principal
Balance prior to the distribution of any principal on such Distribution Date)
and the aggregate Certificate Principal Balance of the Certificates (other
than the Class A-1A, Class X and Class N-2 Certificates) (adjusted to account
for the actual number of days in the Interest Accrual Period) and (B) the
denominator of which is the Certificate Principal Balance of the Class A-1A
Certificates.
"Class A-1A Certificate Margin": For each Distribution Date
(i) on or prior to the Optional Termination Date, 0.29% per annum, and (ii)
following the Optional Termination Date, 0.58% per annum.
"Class A-1A Pass-Through Rate": For each Distribution Date,
LIBOR as of the related LIBOR Determination Date, plus the Class A-1A
Certificate Margin.
"Class A-1F Pass-Through Rate": For each Distribution Date,
5.102% per annum.
"Class A-2F Pass-Through Rate": For each Distribution Date
(i) on or prior to the Optional Termination Date, 5.974% per annum, and (ii)
following the Optional Termination Date, 6.474% per annum.
"Class A-3F Pass-Through Rate": For each Distribution Date
(i) on or prior to the Optional Termination Date, 7.122% per annum, and (ii)
following the Optional Termination Date, 7.622% per annum.
"Class A Certificate": Any one of the Certificates with an
"A" designated on the face thereof substantially in the form annexed hereto as
Exhibits A-1, A-2, A-3, A-4 and A-5, executed by the Trustee on behalf of the
Trust and authenticated and delivered by the Certificate Registrar,
representing the right to distributions as set forth herein and therein.
"Class A Certificateholders": Collectively, the Holders of
the Class A Certificates.
"Class A Interest Carry Forward Amount": For any
Distribution Date, the sum of the Interest Carry Forward Amounts for the Class
A-IO, Class A-1F, Class A-2F, Class A-3F and Class A-1A Certificates for such
Distribution Date.
9
"Class A-IO Pass-Through Rate": For each Distribution Date
through the Distribution Date occurring in January 2003, 2.00% per annum, and
thereafter, 0% per annum.
"Class A-IO Notional Amount"; The notional amount for the
Class A-IO Certificates set forth in the Preliminary Statement.
"Class A Principal Distribution Amount": As of any
Distribution Date (a) on or after the Stepdown Date and as long as a Trigger
Event is not in effect, the excess of (x) the sum of the Certificate Principal
Balances of the Class A Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 77% and (ii) the Pool
Balance as of the last day of the related Collection Period and (B) the Pool
Balance as of the last day of the related Collection Period minus the product
of (i) 0.50% and (ii) the Pool Balance on the Cut-off Date.
"Class B Certificate": Any one of the Certificates with a
"B" designated on the face thereof substantially in the form annexed hereto as
Exhibit C-1 and Exhibit C-2, executed by the Trustee on behalf of the Trust
and authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class B Certificateholders": Collectively, the Holders of
the Class B Certificates.
"Class B-1 Applied Realized Loss Amount": As to the Class
B-1 Certificates and as of any Distribution Date, the lesser of (x) the
Certificate Principal Balance thereof (after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date,
but prior to the application of the Class B-1 Applied Realized Loss Amount, if
any, on such Distribution Date) and (y) the excess of (i) the related Applied
Realized Loss Amount as of such Distribution Date over (ii) the Class B-2
Applied Realized Loss Amount as of such Distribution Date.
"Class B-1 Pass-Through Rate": For each Distribution Date,
8.509%, per annum.
"Class B-1 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the sum of the Certificate
Principal Balances 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 B-1 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 93.20%
and (ii) the Pool Balance as of the last day of the related Collection Period
and (B) the Pool Balance as of the last day of the related Collection Period
minus the product of 0.50% and the Pool Balance on the Cut-off Date.
"Class B-1 Realized Loss Amortization Amount": As to the
Class B-1 Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid Realized Loss Amount for the Class B-1 Certificates as of such
Distribution Date and (y) the excess of (i) the Monthly
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Excess Cashflow Amount over (ii) the sum of the amounts described in Section
4.02(b)(i) through (xi) hereof, in each case for such Distribution Date.
"Class B-2 Applied Realized Loss Amount": As to the Class
B-2 Certificates and as of any Distribution Date, the lesser of (x) the
Certificate Principal Balance thereof (after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date,
but prior to the application of the Class B-2 Applied Realized Loss Amount, if
any, on such Distribution Date) and (y) the Applied Realized Loss Amount as of
such Distribution Date.
"Class B-2 Pass-Through Rate": For each Distribution Date,
9.000%, per annum.
"Class B-2 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the sum of the Certificate
Principal Balances 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 B-1 Certificates (after taking into
account the payment of the Class B-1 Principal Distribution Amount on such
Distribution Date) and (v) the Certificate Principal Balance of the Class B-2
Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 98.00% and (ii) the Pool Balance as of the last day
of the related Collection Period and (B) the Pool Balance as of the last day
of the related Collection Period minus the product of 0.50% and the Pool
Balance on the Cut-off Date.
"Class B-2 Realized Loss Amortization Amount": As to the
Class B-2 Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid Realized Loss Amount for the Class B-2 Certificates as of such
Distribution Date and (y) the excess of (i) the Monthly Excess Cashflow Amount
over (ii) the sum of the amounts described in Section 4.02(b)(i) through (xiv)
hereof, in each case for such Distribution Date.
"Class M Certificate": Any one of the Certificates with a
"M" designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1 and Exhibit B-2, executed by the Trustee on behalf of the Trust
and authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class M Certificateholders": Collectively, the Holders of
the Class M Certificates.
"Class M-1 Applied Realized Loss Amount": As to the Class
M-1 Certificates and as of any Distribution Date, the lesser of (x) the
Certificate Principal Balance thereof (after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date,
but prior to the application of the Class M-1 Applied Realized Loss Amount, if
any, on such Distribution Date) and (y) the excess of (i) the Applied Realized
Loss Amount as of such Distribution Date over (ii) the sum of the Class M-2
Applied Realized Loss Amount, the Class B-1 Applied Realized Loss Amount and
the Class B-2 Applied Realized Loss Amount, in each case as of such
Distribution Date.
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"Class M-1 Pass-Through Rate": For each Distribution Date,
7.479% per annum.
"Class M-1 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the sum of the Certificate
Principal Balances 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) 84.00% and (ii) the Pool Balance as of the last day of the
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of 0.50% and the Pool Balance on
the Cut-off Date.
"Class M-1 Realized Loss Amortization Amount": As to the
Class M-1 Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid Realized Loss Amount for the Class M-1 Certificates as of such
Distribution Date and (y) the excess of (i) the Monthly Excess Cashflow Amount
over (ii) the sum of the amounts described in Section 4.02(b)(i) through (v)
hereof, in each case for such Distribution Date.
"Class M-2 Applied Realized Loss Amount": As to the Class
M-2 Certificates and as of any Distribution Date, the lesser of (x) the
Certificate Principal Balance thereof (after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date,
but prior to the application of the Class M-2 Applied Realized Loss Amount, if
any, on such Distribution Date) and (y) the excess of (i) the related Applied
Realized Loss Amount as of such Distribution Date over (ii) the sum of the
Class B-1 Applied Realized Loss Amount and the Class B-2 Applied Realized Loss
Amount as of such Distribution Date.
"Class M-2 Pass-Through Rate": For each Distribution Date,
7.897% per annum.
"Class M-2 Principal Distribution Amount": As of any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
is not in effect, the excess of (x) the sum of (i) the sum of the Certificate
Principal Balances 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) 89.20% and (ii) the Pool Balance as
of the last day of the related Collection Period and (B) the Pool Balance as
of the last day of the related Collection Period minus the product of 0.50%
and the Pool Balance on the Cut-off Date.
"Class M-2 Realized Loss Amortization Amount": As to the
Class M-2 Certificates and as of any Distribution Date, the lesser of (x) the
Unpaid Realized Loss Amount for the Class M-2 Certificates as of such
Distribution Date and (y) the excess of (i) the Monthly Excess Cashflow Amount
over (ii) the sum of the amounts described in Section 4.02(b)(i) through
(viii) hereof, in each case for such Distribution Date.
"Class N-1 Pass-Through Rate": For each Distribution Date,
8.000% per annum.
"Class N-2 Pass-Through Rate": For each Distribution Date,
8.000% per annum.
"Class N Certificate": Either or both of the Class N-1 and
Class N-2 Certificates as the context requires substantially in the form
annexed hereto as Exhibit C-4 or Exhibit C-5,
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executed by the Trustee on behalf of the Trust and authenticated and delivered
by the Certificate Registrar, representing the right to distributions as set
forth herein and therein.
"Class N-1 Notional Amount": On any Distribution Date, with
respect to the Class N-1 Certificates, an amount equal to the Original Class
N-1 Notional Amount reduced by the aggregate distributions made to the Class
N-1 Certificates pursuant to Section 4.02(b)(xix).
"Class N-2 Principal Amount": On any Distribution Date, with
respect to the Class N-2 Certificates, an amount equal to the Original Class
N-2 Principal Amount reduced by the aggregate distributions made to the Class
N-2 Certificates pursuant to Section 4.02(b)(xx).
"Class R1-3 Certificate": The Class R1-3 Certificate
executed by the Trustee on behalf of the Trust, and authenticated and
delivered by the Certificate Registrar, substantially in the form annexed
hereto as Exhibit C-6 and evidencing the ownership of the Residual Interest in
each of REMIC 1, REMIC 2 and REMIC 3. The Class R1-3 Certificate represents
the ownership of the Class R-1 Interest, Class R-2 Interest and Class R-3
Interest.
"Class R Certificate": Either or both of the Class R1-3 or
Class R-4 Certificates as the context requires.
"Class R-1 Interest": The uncertificated residual interest
in REMIC 1.
"Class R-2 Interest": The uncertificated residual interest
in REMIC 2.
"Class R-3 Interest": The uncertificated residual interest
in REMIC 3.
"Class R-4 Certificate": The Class R-4 Certificate executed
by the Trustee on behalf of the Trust, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit C-7
and evidencing the ownership of the Residual Interest in each of REMIC 4. The
Class R-4 Certificate represents the ownership of the Class R-4 Interest.
"Class R-4 Interest": The uncertificated residual interest
in REMIC 4.
"Class X": Any one of the Class X Certificates as designated
on the face thereof substantially in the form annexed hereto as Exhibit C-3,
executed by the Trustee on behalf of the Trust and authenticated and delivered
by the Certificate Registrar, representing the right to distributions as set
forth herein and therein.
"Class X/N Interest": An uncertificated interest in the
Trust held by the Trustee on behalf of the holders of the Class X and Class
N-1 Certificates, less the amount of any LIBOR Carryover Amounts pursuant to
Section 4.02(b)(xvi) and 4.02(e) or Rate Payments pursuant to Section 4.08(a).
Class X Distributable Amount": With respect to any
Distribution Date, the excess of (i) the aggregate of amounts distributable on
the Class X/N Interest for such Distribution Date, over (ii) the aggregate of
amounts distributable to the Class N-1 and Class N-2 Certificates pursuant to
Section 4.02(b).
"Closing Date": June 14, 2001.
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"Code": The Internal Revenue Code of 1986, as it may be
amended from time to time.
"Collection Account": The account or accounts created and
maintained by the Servicer pursuant to Section 3.04, which shall be entitled
"Collection Account, Litton Loan Servicing LP, as Servicer for the Trust under
the Pooling and Servicing Agreement dated as of May 1, 2001 among ACE
Securities Corp., as Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller, Litton Loan Servicing LP, as Servicer and U.S.
Bank National Association, as Trustee in trust for registered Holders of
2001-CB2 Trust, C-BASS Mortgage Loan Asset-Backed Certificates, Series
2001-CB2", and which must be an Eligible Account.
"Collection Period": With respect to any Distribution Date,
the period from the second day of the calendar month preceding the month in
which such Distribution Date occurs through the first day of the month in
which such Distribution Date occurs.
"Combined Loan-to-Value Ratio": As of any date and Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the
Principal Balance of the Mortgage Loan at origination plus the principal
balance of any related senior mortgage loan, if any, at origination and the
denominator of which is the Value of the related Mortgaged Property at
origination.
"Compensating Interest": As defined in Section 3.23 hereof.
"Condemnation Proceeds": All awards or settlements in
respect of a taking of a Mortgaged Property by exercise of the power of
eminent domain or condemnation.
"Conventional Mortgage Loan": Any Mortgage Loan that is
neither an FHA Loan nor a VA Loan.
"Corporate Trust Office": The principal corporate trust
office of the Trustee at which at any particular time its corporate trust
business in connection with this Agreement shall be administered, which office
at the date of the execution of this instrument is located at 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Structured Finance, C-BASS
2001-CB2, or at such other address as the Trustee may designate from time to
time by notice to the Certificateholders, the Depositor, the Servicer and the
Seller
"Custodial Agreement": The Custodial Agreement, dated as of
May 1, 2001, among the Trustee, the Servicer and the Custodian, as the same
may be amended or supplemented pursuant to the terms thereof.
"Custodian": Bank One Trust Company, N.A., a national
banking association, or any successor custodian appointed pursuant to the
terms of the Custodial Agreement.
"Cut-off Date": May 1, 2001.
"Cut-off Date Aggregate Principal Balance": The aggregate of
the Cut-off Date Principal Balances of the Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any
Mortgage Loan, the unpaid principal balance thereof as of the Cut-off Date
after application of funds received
14
or advanced on or before such date (or as of the applicable date of
substitution with respect to an Eligible Substitute Mortgage Loan).
"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.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Eligible Substitute Mortgage Loans.
"Deferred Interest": With respect to any Mortgage Loan
identified on the Mortgage Loan Schedule as having the possibility of negative
amortization, the current portion of interest not currently paid by the
Mortgagor that is added to the principal balance of such Mortgage Loan.
"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 5.02(c)
hereof.
"Delinquent": Any Mortgage Loan, the Monthly Payment due on
a Due Date with respect to which such monthly payment is not made by the close
of business on the next scheduled Due Date for such Mortgage Loan.
"Depositor": ACE Securities Corp., a Delaware corporation,
or any successor in interest.
"Depository": The initial depository shall be The Depository
Trust Company, whose nominee is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the
Uniform Commercial Code of the State of New York.
"Depository Agreement": With respect to any Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, to be dated on or about the Closing Date.
"Depository Participant": A broker, dealer, bank or other
financial institution or other person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date": With respect to any Distribution Date,
the 10th day of the calendar month in which such Distribution Date occurs or,
if such 10th day is not a Business Day, the Business Day immediately preceding
such 10th day.
15
"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 the Trust other than
through an Independent Contractor; provided, however, that the Trustee (or the
Servicer under this Agreement) shall not be considered to Directly Operate an
REO Property solely because the Trustee (or the Servicer under this Agreement)
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": A "disqualified organization"
under Section 860E of the Code, which as of the Closing Date is any of: (i)
the United States, any state or political subdivision thereof, any possession
of the United States, any foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (ii) any
organization (other than a cooperative described in Section 521 of the Code)
which 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, (iii)
any organization described in Section 1381(a)(2)(C) of the Code, or (iv) any
other Person so designated by the Trustee based upon an Opinion of Counsel
provided by nationally recognized counsel to the Trustee that the holding of
an ownership interest in a Residual Certificate by such Person may cause the
Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur 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. A
corporation will not be treated as an instrumentality of the United States or
of any state or political subdivision thereof if all of its activities are
subject to tax and a majority of its board of directors is not selected by a
governmental unit. The term "United States", "state" and "international
organization" shall have the meanings set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts
created and maintained by the Trustee pursuant to Section 3.04(b) which shall
be entitled "Distribution Account, U.S. Bank National Association, as Trustee,
in trust for the registered Holders of 2001-CB2 Trust, C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2001-CB2" and which must be an Eligible
Account.
"Distribution Date": The 25th day of any calendar month, or
if such 25th day is not a Business Day, the Business Day immediately following
such 25th day, commencing in June 2001.
"Due Date": With respect to each Mortgage Loan and any
Distribution Date, the day of the calendar month in which such Distribution
Date occurs on which the Monthly Payment for such Mortgage Loan was due,
exclusive of any grace period.
"Eligible Account": Any of (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company the short-term unsecured debt obligations of which (or, in the case of
a depository institution or trust company that is the principal subsidiary of
a holding company, the short-term unsecured debt obligations of such holding
company) are rated "A-1" (or the equivalent) by each of the Rating Agencies at
the time any amounts are held on deposit therein, (ii) an account or accounts
the deposits in which are fully insured by the FDIC (to the limits established
by such corporation), the uninsured deposits
16
in which account are otherwise secured such that, as evidenced by an Opinion
of Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders will have a claim with respect to the funds in such account
or a perfected first priority security interest against such collateral (which
shall be limited to Permitted Investments) securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution with which such account is maintained, (iii) a trust account or
accounts maintained with the trust department of a federal or state chartered
depository institution, national banking association or trust company acting
in its fiduciary capacity or (iv) an account otherwise acceptable to each
Rating Agency without reduction or withdrawal of their then current ratings of
the Certificates as evidenced by a letter from each Rating Agency to the
Trustee. Eligible Accounts may bear interest.
"Eligible Substitute Mortgage Loan": A mortgage loan
substituted for a Defective Mortgage Loan pursuant to the terms of this
Agreement which must, on the date of such substitution, (i) have an
outstanding principal balance, after application of all scheduled payments of
principal and interest due during or prior to the month of substitution, not
in excess of, and not more than 5% less than, the outstanding principal
balance of the Defective Mortgage Loan as of the Due Date in the calendar
month during which the substitution occurs, (ii) have a Mortgage Interest
Rate, with respect to a Group 1 Mortgage Loan, not less than the Mortgage
Interest Rate of the Defective Mortgage Loan and not more than 1% in excess of
the Mortgage Interest Rate of such Defective Mortgage Loan, (iii) if a Group 2
Mortgage Loan, have a Maximum Loan Rate not less than the Maximum Loan Rate
for the Defective Mortgage Loan, (iv) if a Group 2 Mortgage Loan, have a
Minimum Loan Rate not less than the Minimum Loan Rate of the Defective
Mortgage Loan, (v) if a Group 2 Mortgage Loan, have a Gross Margin equal to or
greater than the Gross Margin of the Defective Mortgage Loan, (vi) if a Group
2 Mortgage Loan, have a next Adjustment Date not more than two months later
than the next Adjustment Date on the Defective Mortgage Loan, except in the
case of any Mortgage Loan which has an Arrearage due to the application of any
related forbearance plan with respect to such Mortgage Loan, an Eligible
Substitute Mortgage Loan must have all Adjustment Dates occurring during the
same Interest Accrual Period during which Adjustment Dates occur with respect
to the substituted Mortgage Loan, (vii) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Defective
Mortgage Loan, (viii) be current as of the date of substitution, (ix) have a
Combined Loan-to-Value Ratio as of the date of substitution equal to or lower
than the Combined Loan-to-Value Ratio of the Defective Mortgage Loan as of
such date, (x) have a risk grading determined by the Seller at least equal to
the risk grading assigned on the Defective Mortgage Loan, (xi) have been
reunderwritten by the Seller in accordance with the same underwriting criteria
and guidelines as the Defective Mortgage Loan and (xii) conform to each
representation and warranty set forth in Section 2.04 hereof applicable to the
Defective Mortgage Loan. In the event that one or more mortgage loans are
substituted for one or more Defective Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on the basis of aggregate principal
balances, the Mortgage Interest Rates described in clause (ii) hereof shall be
determined on the basis of weighted average Mortgage Interest Rates, the risk
gradings described in clause (x) hereof shall be satisfied as to each such
mortgage loan, the terms described in clause (vii) hereof shall be determined
on the basis of weighted average remaining term to maturity, the Combined
Loan-to-Value Ratios described in clause (ix) hereof shall be satisfied as to
each such mortgage loan and, except to the extent otherwise provided in this
sentence, the representations and warranties described in clause (xii) hereof
must be satisfied as to each Eligible Substitute Mortgage Loan or in the
aggregate, as the case may be.
"ERISA": The Employee Retirement Income Security Act of
1974, as amended.
17
"ERISA-Qualifying Underwriting": A best efforts or firm
commitment underwriting or private placement that meets the requirements
(without regard to the ratings requirements) of Prohibited Transaction
Exemption 2000-58, 65 Fed. Reg. 67765 (2000), as amended (or any successor
thereto), or any substantially similar administrative exemption granted by the
U.S. Department of Labor.
"ERISA-Restricted Certificates": Any of the Class M-1, Class
M-2, Class B-1, Class B-2, Class N-1, Class N-2, Class X, Class R1-3, Class
R-4 Certificates.
"Escrow Account": The account or accounts created and
maintained pursuant to Section 3.06.
"Escrow Payments": The amounts constituting ground rents,
taxes, assessments, water rates, mortgage insurance premiums, fire and hazard
insurance premiums and other payments required to be escrowed by the Mortgagor
with the mortgagee pursuant to any Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel
of real property.
"Expense Fee Rate": The sum of (i) the Trustee Fee Rate and
(ii) the Servicing Fee Rate.
"Extended Period": As defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any
Distribution Date, the lesser of (x) the Monthly Excess Interest Amount for
such Distribution Date and (y) the Overcollateralization Deficiency for such
Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any
successor thereto.
"FHA": The Federal Housing Administration, an agency within
HUD.
"FHA Approved Mortgagee": Those institutions which are
approved by FHA to act as servicer and mortgagee of record pursuant to FHA
Regulations.
"FHA Insurance Contract" or "FHA Insurance": The contractual
obligation of FHA respecting the insurance of an FHA Loan pursuant to the
National Housing Act, as amended.
"FHA Loan": A Mortgage Loan which is the subject of an FHA
Insurance Contract as evidenced by a Mortgage Insurance Certificate.
"FHA Regulations": Regulations promulgated by HUD under the
National Housing Act, codified in 24 Code of Federal Regulations, and other
HUD issuances relating to FHA Loans, including the related handbooks,
circulars, notices and mortgagee letters.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor thereto.
"Fidelity Bond": Shall have the meaning assigned thereto in
Section 3.12.
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"Final Recovery Determination": With respect to any
defaulted Mortgage Loan or any REO Property (other than a Mortgage Loan or REO
Property purchased by the Seller or the Servicer pursuant to or as
contemplated by Section 2.03 or 10.01), a determination made by the Servicer
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Servicer, in its reasonable good faith judgment, expects
to be finally recoverable in respect thereof have been so recovered. The
Servicer shall maintain records, prepared by a Servicing Officer, of each
Final Recovery Determination made thereby.
"Fitch": "Fitch, Inc. and its successors, and if such
company shall for any reason no longer perform the functions of a securities
rating agency, "Fitch" shall be deemed to refer to any other "nationally
recognized statistical rating organization" as set forth on the most current
list of such organizations released by the Securities and Exchange Commission.
"FNMA": Fannie Mae or any successor thereto.
"Foreclosure Price": The amount reasonably expected to be
received from the sale of the related Mortgaged Property net of any expenses
associated with foreclosure proceedings.
"Grantor Trust": That portion of the Trust exclusive of
REMIC 1, REMIC 2, REMIC 3, and REMIC 4, which holds the right to receive Rate
Payment Amounts, and the LIBOR Carryover Amounts and the obligation of the
Class N-2 and Class X Certificates to pay such Rate Payments and LIBOR
Carryover Amounts. The Class N-1 Certificates shall be treated as a debt
obligation of the Trust but not an obligation or interest in any REMIC created
under this Agreement.
"Gross Margin": With respect to each Group 2 Mortgage Loan,
the fixed percentage set forth in the related Mortgage Note that is added to
the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Interest Rate for such Mortgage
Loan.
"Group 1 Loan Balance": As of any date, the aggregate of the
Principal Balances of all Mortgage Loans in Loan Group 1 as of such date.
"Group 1 Mortgage Loan": A Mortgage Loan in Loan Group 1.
"Group 1 Principal Percentage": With respect to any
Distribution Date and the Class A-1F, Class A-2F and Class A-3F Certificates,
the percentage equivalent of a fraction, the numerator of which is the amount
of principal collections (including any principal advanced by the Servicer)
allocable to Loan Group 1 for the related Collection Period or Prepayment
Period, as applicable, and the denominator of which is the amount of principal
collections (including any principal advanced by the Servicer) allocable to
Loan Group 1 and Loan Group 2 for the related Collection Period or Prepayment
Period, as applicable.
"Group 2 Loan Balance": As of any date, the aggregate of the
Principal Balances of all Mortgage Loans in Loan Group 2 as of such date.
"Group 2 Mortgage Loan": A Mortgage Loan in Loan Group 2.
19
"Group 2 Principal Percentage": With respect to any
Distribution Date and the Class A-1A Certificates, the percentage equivalent
of a fraction, the numerator of which is the amount of principal collections
(including any principal advanced by the Servicer) allocable to Loan Group 2
for the related Collection Period or Prepayment Period, as applicable, and the
denominator of which is the amount of principal collections (including any
principal advanced by the Servicer) allocable to Loan Group 1 and Loan Group 2
for the related Collection Period or Prepayment Period, as applicable.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto and including the Federal Housing
Commissioner and the Secretary of Housing and Urban Development where
appropriate under the FHA Regulations.
"Independent": When used with respect to any specified
Person, any such Person who (i) is in fact independent of the Depositor, the
Servicer and their respective Affiliates, (ii) does not have any direct
financial interest in or any material indirect financial interest in the
Depositor or the Servicer or any Affiliate thereof, and (iii) is not connected
with the Depositor or the Servicer 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 or the Servicer 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 or the Servicer or any Affiliate
thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent contractor" with respect to the
Trust Fund within the meaning of Section 856(d)(3) of the Code if the Trust
Fund 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 percent or more of any Class of Certificates), so
long as the Trust Fund does not receive or derive any income from such Person
and provided that the relationship between such Person and the Trust Fund is
at arm's length, all within the meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person (including the Servicer) if the
Trustee has received an Opinion of Counsel, which Opinion of Counsel shall be
an expense of the Trust Fund, to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code
(determined without regard to the exception applicable for purposes of Section
860D(a) of the Code), or cause any income realized in respect of such REO
Property to fail to qualify as Rents from Real Property.
"Index": With respect to each Group 2 Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.
"Ineligible Foreclosure Property Loan": Any Mortgage Loan
listed on the Ineligible Foreclosure Property Loan Schedule as of the Closing
Date and for which there is no written agreement modifying such Mortgagor's
obligation to make payments under the Mortgage Loan. The Schedule shall
contain all Mortgage Loans that are at least three payments past due as of the
Closing Date for which there is no written modification addressing such past
due payments.
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"Ineligible Foreclosure Property Loan Schedule": The
schedule, attached hereto as Exhibit S, of Ineligible Foreclosure Property
Loans to be prepared by the Seller.
"Initial Certificate Principal Balance": With respect to any
Certificate of a Class other than a Class A-IO, Class N-1, Class X or Residual
Certificate, the amount designated "Initial Certificate Principal Balance" on
the face thereof.
"Initial Class A-IO Notional Amount": With respect to any
Class A-IO Certificate, the amount designated "Initial Class A-IO Notional
Amount" on the face thereof.
"Initial Class N-1 Notional Amount": With respect to any
Class N-1 Certificate, the amount designated "Initial Class N-1 Notional
Amount" on the face thereof.
"Initial Class N-2 Principal Amount": With respect to any
Class N-2 Certificate, the amount designated "Initial Class N-2 Principal
Amount" on the face thereof.
"Initial Notional Amount": Any of the Initial Class A-IO
Notional Amount, or Initial Class N-1 Notional Amount as the context may
require.
"Initial Overcollateralization Amount": $1,877,911.05.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that
the Servicer would follow in servicing mortgage loans held for its own
account, subject to the terms and conditions of the related Mortgage Note and
Mortgage.
"Interest Accrual Period": With respect to any Distribution
Date and (i) with respect to the Class A-IO, Class A-1F, Class A-2F, Class
A-3F, Class M-1, Class M-2, Class B-1, Class B-2, Class N-1 and Class N-2
Certificates and any Class of REMIC Regular Interests (other than the Class
T2-A1A Interest), the calendar month immediately preceding the month in which
such Distribution Date occurs, and (ii) with respect to the Class A-1A
Certificates and the Class T2-A1A Interest, the period from the preceding
Distribution Date to the day prior to the current Distribution Date (or, in
the case of the first Distribution Date, the period from the Closing Date
through June 25, 2001).
"Interest Carry Forward Amount": For any Class of
Certificates (other than the Class X and Residual Certificates) and any
Distribution Date, the sum of (a) the excess, if any, of the Accrued
Certificate Interest and any Interest Carry Forward Amount for the prior
Distribution Date, over the amount in respect of interest actually distributed
on such Class on such prior Distribution Date and (b) interest on such excess
at the applicable Pass-Through Rate (x) with respect to the Class A-IO, Class
A-1F, Class A-2F, Class A-3F, Class M-1, Class M-2, Class B, Class N-1 and
Class N-2 Certificates, on the basis of a 360-day year consisting of twelve
30-day months, and (y) with respect to the Class A-1A Certificates, for the
actual number of days elapsed on the basis of a 360-day year since the prior
Distribution Date.
"Interest Percentage": With respect to any Class of
Certificates and any Distribution Date, the ratio (expressed as a decimal
carried to six places) of the Accrued Certificate Interest for such Class to
the sum of the Accrued Certificate Interest for all Classes, in each case with
respect to such Distribution Date.
21
"Interest Remittance Amount": As of any Determination Date,
the sum, without duplication, of (i) all interest due and collected or
advanced with respect to the related Collection Period on the Mortgage Loans
(less the Servicing Fee and the PMI Premium, amounts available for
reimbursement of Advances and Servicing Advances pursuant to Section 3.05 and
expenses reimbursable pursuant to Section 6.03), (ii) all Compensating
Interest paid by the Servicer on such Determination Date with respect to the
Mortgage Loans and (iii) the portion of any payment in connection with any
substitution, Purchase Price, Termination Price, Net Liquidation Proceeds or
Insurance Proceeds relating to interest with respect to the Mortgage Loans
received during the related Prepayment Period.
"Late Collections": With respect to any Mortgage Loan, all
amounts received subsequent to the Determination Date immediately following
any related Collection Period, 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 on a contractual basis for such Collection Period and not
previously recovered.
"Latest Possible Maturity Date": Means the Distribution Date
following the third anniversary of the scheduled maturity as of the Closing
Date of the mortgage loan with the latest maturity. Such date shall be
determined as of the Closing Date and shall not change irrespective of whether
the mortgage loan used to set such date remains in the pool or whether its
maturity date changes.
"LIBOR": With respect to each Interest Accrual Period, the
rate determined by the Trustee on the related LIBOR Determination Date on the
basis of the offered rate for one-month United States dollar deposits, as such
rate appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such
LIBOR Determination Date. If no such quotations are available on an LIBOR
Determination Date, LIBOR for the related Interest Accrual Period will be
established by the Trustee as follows:
(i) If on such LIBOR Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole
multiple of 0.001%);
(ii) If on such LIBOR Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the
related Interest Accrual Period shall be the arithmetic mean of the
rates quoted by one or more major banks in New York City, selected
by the Trustee after consultation with the Servicer, as of 11:00
A.M., New York City time, on such date for loans in U.S. Dollars to
leading European banks for a period of one month in amounts
approximately equal to the aggregate Certificate Principal Balance
of the Class A-1A Certificates; and
(iii) If no such quotations can be obtained, LIBOR for the
related Interest Accrual Period shall be LIBOR for the prior
Distribution Date.
"LIBOR Business Day": Any day on which banks in London,
England and The City of New York are open and conducting transactions in
foreign currency and exchange.
22
"LIBOR Carryover Amount": If on any Distribution Date, the
Accrued Certificate Interest for the Class A-1A Certificates is based upon the
Class A-1A Cap, the excess of (i) the amount of interest the Class A-1A
Certificates would have been entitled to receive on such Distribution Date
based on the Class A-1A Pass-Through Rate, over (ii) the amount of interest
the Class A-1A Certificates received on such Distribution Date based on such
Class A-1A Cap, together with the unpaid portion of any such excess from prior
Distribution Dates (and interest accrued thereon at the then applicable Class
A-1A Pass-Through Rate).
"LIBOR Determination Date": With respect to the Class A-1A
Certificates, (i) for the first Distribution Date, the second LIBOR Business
Day preceding the Closing Date and (ii) for each subsequent Distribution Date,
the second LIBOR Business Day prior to the immediately preceding Distribution
Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the Servicer has determined, in accordance
with the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds and Insurance Proceeds which
it expects to recover with respect to the liquidation of the Mortgage Loan or
disposition of the related REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any
of the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is removed from the Trust Fund by reason of its being purchased,
sold or replaced pursuant to or as contemplated by Section 2.03 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 the Trust Fund by reason of its being sold or
purchased pursuant to Section 3.13 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts
received in respect of the rental of any REO Property prior to REO
Disposition) received by the Servicer, including payments received under the
PMI Policy, 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 or (ii)
the liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise.
"Liquidation Report": The report with respect to a
Liquidated Mortgage Loan in such form and containing such information as is
agreed to by the Servicer and the Trustee.
"Loan Group": Either Loan Group 1 or Loan Group 2, as the
context requires.
"Loan Group Balance": Either the Group 1 Loan Balance or the
Group 2 Loan Balance, as applicable.
"Loan Group 1": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group 1 and comprised
of Loan Sub-Group 1A and Loan Sub-Group 1B.
"Loan Group 2": The pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having been assigned to Loan Group 2.
23
"Loan Guaranty Certificate": The certificate evidencing a VA
Guaranty Agreement. "Loan Sub-Group": Either Loan Sub-Group 1A or Loan
Sub-Group 1B, as the context requires.
"Loan Sub-Group 1A": The Sub-Group of Mortgage Loans from
Loan Group 1 identified in the Mortgage Loan Schedule as having been assigned
to Loan Sub-Group 1A.
"Loan Sub-Group 1B": The Sub-Group of Mortgage Loans from
Loan Group 1 identified in the Mortgage Loan Schedule as having been assigned
to Loan Sub-Group 1B.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as
to which the original Mortgage Note has been permanently lost or destroyed and
has not been replaced, an affidavit from the Seller certifying that the
original Mortgage Note has been lost, misplaced or destroyed (together with a
copy of the related Mortgage Note and indemnifying the Trust against any loss,
cost or liability resulting from the failure to deliver the original Mortgage
Note) in the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting Rights.
"Majority Class R Certificateholders": The Holders of Class
R1-3 Certificates evidencing at least a 51% Percentage Interest in the Class
R1-3 Certificates.
"Maximum Loan Rate": With respect to each Group 2 Mortgage
Loan, the percentage set forth in the related Mortgage Note as the maximum
Mortgage Interest Rate thereunder.
"Minimum Loan Rate": With respect to each Group 2 Mortgage
Loan, the percentage set forth in the related Mortgage Note as the minimum
Mortgage Interest Rate thereunder.
"Monthly Excess Cashflow Amount": The sum of the Monthly
Excess Interest Amount, the Overcollateralization Release Amount and (without
duplication) any portion of the Principal Distribution Amount remaining after
principal distributions on the Offered Certificates and the Class B-2
Certificates.
"Monthly Excess Interest Amount": With respect to each
Distribution Date, the amount, if any, by which the Interest Remittance Amount
for such Distribution Date exceeds the aggregate amount distributed on such
Distribution Date pursuant to paragraphs (i) through (vi) under Section 4.01.
"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
24
Mortgagor pursuant to the Relief Act; (b) without giving effect to any
extension granted or agreed to by the Servicer pursuant to Section 3.01; 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. and its
successors, and if such company shall for any reason no longer perform the
functions of a securities rating agency, "Moody's" shall be deemed to refer to
any other "nationally recognized statistical rating organization" as set forth
on the most current list of such organizations released by the Securities and
Exchange Commission.
"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 documents listed in Section
2.01 pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Insurance Certificate": The certificate evidencing
an FHA Insurance Contract.
"Mortgage Interest Rate": With respect to each Mortgage
Loan, the annual rate at which interest accrues on such Mortgage Loan from
time to time in accordance with the provisions of the related Mortgage Note,
which rate (i) in the case of each Group 1 Mortgage Loan shall remain constant
at the rate set forth in the Mortgage Loan Schedule as the Mortgage Interest
Rate in effect immediately following the Cut-off Date and (ii) in the case of
each Group 2 Mortgage Loan (A) as of any date of determination until the first
Adjustment Date following the Cut-off Date shall be the rate set forth in the
Mortgage Loan Schedule as the Mortgage Interest Rate in effect immediately
following the Cut-off Date and (B) as of any date of determination thereafter
shall be the rate as adjusted on the most recent Adjustment Date, to equal the
sum, rounded to the nearest 0.125% as provided in the Mortgage Note, of the
Index, determined as set forth in the related Mortgage Note, plus the related
Gross Margin subject to the limitations set forth in 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. The Mortgage Interest Rate, to the extent it is not calculated on
the basis of a 30-day month assumption shall be adjusted so that the interest
that actually accrues on the Mortgage Loan during the Interest Accrual Period
of the Certificates (other than the Class A-1A Certificates), disregarding any
principal payments during such period would be a rate that would equal
interest calculations on a 30-day month assumption.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to
time held as a part of the Trust Fund, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between
the Seller and the Depositor, dated as of May 1, 2001, regarding the transfer
of the Mortgage Loans by the Seller to or at the direction of the Depositor.
25
"Mortgage Loan Schedule": As of any date (i) with respect to
the Mortgage Loans, the list of such Mortgage Loans included in the Trust Fund
on such date, separately identifying the Group 1 Mortgage Loans and the Group
2 Mortgage Loans, attached hereto as Exhibit D. The Mortgage Loan Schedule
shall be prepared by the Seller and shall set forth the following information
with respect to each Mortgage Loan:
(1) the Seller's Mortgage Loan identifying number;
(2) the city, state, and zip code of the Mortgaged Property;
(3) the type of Residential Dwelling constituting the Mortgaged
Property or a designation that the Mortgaged Property is a multi-family
property;
(4) the occupancy status of the Mortgaged Property at origination;
(5) the original months to maturity;
(6) the date of origination;
(7) the first payment date;
(8) the stated maturity date;
(9) the stated remaining months to maturity;
(10) the original principal amount of the Mortgage Loan;
(11) the Principal Balance of each Mortgage Loan as of the Cut-off
Date;
(12) the Arrearage of the Mortgage Loan as of the Cut-off Date;
(13) the Mortgage Interest Rate of the Mortgage Loan as of the
Cut-off Date;
(14) the current principal and interest payment of the Mortgage Loan
as of the Cut-off Date;
(15) the contractual interest paid to date of the Mortgage Loan;
(16) if the Mortgage Loan is not owner-financed, the Combined
Loan-to-Value Ratio at origination;
(17) a code indicating the loan performance status of the Mortgage
Loan as of the Cut-off Date;
(18) a code indicating whether the Mortgage Loan is a Simple Interest
Mortgage Loan or an Actuarial Mortgage Loan;
(19) a code indicating whether the Mortgaged Property is in
bankruptcy or in its forbearance period as of the Cut-off Date;
26
(20) a code indicating whether the Mortgage Loan is conventional,
insured by the FHA or guaranteed by the VA;
(21) a code indicating the Index that is associated with such
Mortgage Loan;
(22) the Gross Margin;
(23) the Periodic Rate Cap;
(24) the Minimum Loan Rate;
(25) the Maximum Loan Rate;
(26) a code indicating whether the Mortgage Loan has a prepayment
penalty and the type of prepayment penalty;
(27) the first Adjustment Date immediately following the Cut-off
Date;
(28) the rate adjustment frequency;
(29) the payment adjustment frequency;
(30) a code indicating whether the Mortgage Loan is owner-financed;
(31) a code indicating whether the Mortgage Loan is subject to
negative amortization;
(32) a code indicating whether the Mortgage Loan is a second lien or
third lien; and
(33) the PMI Premium Rate, if applicable.
The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date, with respect to the Mortgage Loans in the
aggregate and for each Loan Group: (1) the number of Mortgage Loans; (2) the
current Principal Balance of the Mortgage Loans; (3) the weighted average
Mortgage Interest 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 Seller in accordance with the provisions of this
Agreement. With respect to any Eligible Substitute Mortgage Loan, 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 indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on
Exhibit D from time to time, and any REO Properties acquired in respect
thereof.
"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 or multi-family dwelling.
"Mortgagor": The obligor on a Mortgage Note.
27
"Net Liquidation Proceeds": With respect to any Liquidated
Mortgage Loan or any other disposition of related Mortgaged Property
(including REO Property) the related Liquidation Proceeds net of Advances,
Servicing Advances, Servicing Fees and any other accrued and unpaid servicing
fees received and retained in connection with the liquidation of such Mortgage
Loan or Mortgaged Property.
"Net Mortgage Interest Rate": With respect to any Mortgage
Loan, the Mortgage Interest Rate borne by such Mortgage Loan minus the sum of
the (i) Expense Fee Rate and (ii) the PMI Premium Rate, if any.
"New Lease": Any lease of REO Property entered into on
behalf of the Trust, including any lease renewed or extended on behalf of the
Trust if the Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan that, in
the good faith business judgment of the Servicer, will not or, in the case of
a proposed Advance or Servicing Advance, would not be ultimately recoverable
from Late Collections on such Mortgage Loan as provided herein.
"Notional Amount": The Class A-IO Notional Amount or Class
N-1 Notional Amount as the context requires.
"Offered Certificates": The Class A-IO, Class A-1A, Class
A-1F, Class A-2F, Class A-3F, Class M-1, Class M-2, and Class B-1
Certificates.
"Officers' Certificate": A certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President or a vice
president (however denominated), and by the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Servicer, the
Seller or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be a salaried counsel for the Depositor or the Servicer
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 first Distribution Date on
which the Servicer (or its affiliate) may opt to terminate the Mortgage Pool
pursuant to Section 10.01.
"Original Class A-IO Notional Amount": The Notional Amount
of the Class A-IO Certificates on the Closing Date which shall equal
$50,000,000.
"Original Class N-1 Notional Amount": The Notional Amount of
the Class N-1 Certificates on the Closing Date which shall equal $5,125,000.
"Original Class N-2 Principal Amount": The Principal Amount
of the Class N-2 Certificates on the Closing Date which shall equal
$1,875,000.
"Original Class Certificate Principal Balance": With respect
to each Class of Certificates, the Certificate Principal Balance thereof on
the Closing Date, as set forth opposite
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such Class in the Preliminary Statement, except with respect to the Class
A-IO, Class N-2, Class X and Residual Certificates, which have an Original
Class Certificate Principal Balance of zero.
"Original Notional Amount": Either of the Original Class N-1
Notional Amount or Original Class A-IO Notional Amount as the context
requires.
"Overcollateralization Amount": As of any Distribution Date,
the excess, if any, of (x) the Pool Balance as of the last day of the
immediately preceding Collection Period over (y) the aggregate Certificate
Principal Balances of all Classes of Offered Certificates and the Class B-2
Certificates (after taking into account all distributions of principal on such
Distribution Date).
"Overcollateralization Deficiency": As of any Distribution
Date, the excess, if any, of (x) the Targeted Overcollateralization Amount for
such Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of
all Classes of Offered Certificates and Class B-2 Certificates resulting from
the distribution of the Principal Distribution Amount (but not the Extra
Principal Distribution Amount) on such Distribution Date, but prior to taking
into account any Applied Realized Loss Amounts on such Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date on or after the Stepdown Date on which a Trigger Event is
not in effect, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the excess, if any, of (i) the Overcollateralization
Amount for such Distribution Date, assuming that 100% of the Principal
Remittance Amount is applied as a principal payment on the Certificates on
such Distribution Date, over (ii) the Targeted Overcollateralization Amount
for such Distribution Date. With respect to any Distribution Date on which a
Trigger Event is in effect, the Overcollateralization Release Amount will be
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.
"Pass-Through Rate": Any of the Class A-IO Pass-Through
Rate, Class A-1A Pass-Through Rate, the Class A-1F Pass-Through Rate, the
Class A-2F Pass-Through Rate, the Class A-3F Pass-Through Rate, the Class M-1
Pass-Through Rate, the Class M-2 Pass-Through Rate, Class B-1 Pass-Through
Rate, the Class B-2 Pass-Through Rate, the Class N-1 Pass-Through Rate and the
Class N-2 Pass-Through Rate.
"Paying Agent": Any paying agent appointed pursuant to
Section 5.05.
"Percentage Interest": With respect to any Certificate
(other than a Class N-1, Class X or Residual Certificate), a fraction,
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 Original Class Certificate Principal Balance of the related
Class. With respect to a Class N-1 Certificate, the undivided percentage
interest obtained by dividing the Initial Class N-1 Notional Amount, evidenced
on such Certificate by the Original Class N-1 Notional Amount of such Class.
With respect to a Class X or Residual Certificate, the portion of the Class
29
evidenced thereby, expressed as a percentage, as stated on the face of such
Certificate; provided, however, that the sum of all such percentages for each
such Class totals 100%.
"Performing Mortgage Loan": A Mortgage Loan pursuant to
which no payment due under the related Mortgage Note (or any modification
thereto) prior to the Cut-off Date, is 30 or more days Delinquent.
"Periodic Rate Cap": With respect to each Group 2 Mortgage
Loan and any Adjustment Date therefor, the fixed percentage set forth in the
related Mortgage Note, which is the maximum amount by which the Mortgage
Interest Rate for such Mortgage Loan may increase or decrease (without regard
to the Maximum Loan Rate or the Minimum Loan Rate) on such Adjustment Date
from the Mortgage Interest Rate in effect immediately prior to such Adjustment
Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than
par, regardless of whether issued or managed by the Depositor, the Servicer,
the Trustee or any of their respective Affiliates or for which an Affiliate of
the Trustee serves as an advisor:
(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 agents acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal
and/or state authorities, so long as, at the time of such investment
or contractual commitment providing for such investment, such
depository institution or trust company or its ultimate parent has a
short-term uninsured debt rating in one of the two highest available
rating categories of S&P and Moody's and the highest available
rating category of Fitch and provided that each such investment has
an original maturity of no more than 365 days 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 or higher by S&P and Fitch and rated 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 or (B) pursuant to such valuation, be
equal, at all times, to 105% of the cash transferred by the Trustee
in exchange for such collateral and (C) be delivered to the Trustee
or, if the Trustee is supplying the collateral, an agent for the
Trustee, 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 in its highest long-term unsecured
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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 in its
highest short-term unsecured debt rating available at the time of
such investment;
(vi) units of money market funds registered under the
Investment Company Act of 1940 including funds managed or advised by
the Trustee or affiliates thereof having the highest rating category
by the applicable Rating Agency; and
(vii) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to the Rating Agencies
in writing as a permitted investment of funds backing securities
having ratings equivalent to its highest initial rating of the Class
A Certificates;
provided, 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 a non-U.S. Person.
"Person": Any individual, corporation, partnership, joint
venture, association, joint stock company, trust, limited liability company,
unincorporated organization or government or any agency or political
subdivision thereof.
"Plan Investor": An employee benefit plan or arrangement
subject to Section 406 of ERISA or a plan subject to section 4975 of the Code,
or a person acting on behalf of any such plan or arrangement or using the
assets of any such plan or arrangement to invest in a Certificate.
"PMI Insurer": Mortgage Guaranty Insurance Corporation, a
monoline private insurance company organized and created under the laws of the
State of Wisconsin, or its successors in interest.
"PMI Mortgage Loans": The list of Mortgage Loans insured by
the PMI Insurer attached as Schedule II to the Mortgage Loan Purchase
Agreement.
"PMI Policy": The Primary Mortgage Insurance Policy (No. [
]) with respect to the PMI Mortgage Loans and all endorsements thereto dated
the Closing Date, issued by the PMI Insurer.
"PMI Premium": With respect to any Distribution Date, the
sum for each PMI Mortgage Loan of the product of (x) one-twelfth of the PMI
Premium Rate for such PMI Mortgage Loan and (y) the Principal Balance of such
PMI Mortgage Loan as of the opening of business on the first day of the
related Collection Period.
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"PMI Premium Rate": The PMI Premium on a PMI Mortgage Loan,
expressed as a per annum rate as set forth in the Mortgage Loan Schedule. The
PMI Premium Rate shall be 0% for any PMI Mortgage Loan no longer required to
be covered by the PMI Policy.
"Pool Balance": As of any date of determination, the
aggregate Principal Balance of the Mortgage Loans.
"Pool Cap": With respect to any Distribution Date will equal
the average of the Net Mortgage Interest Rates (adjusted, for purposes of the
calculation applicable to the Class A-1A Certificates, to an effective rate
reflecting the calculation of interest on the basis of the actual number of
days elapsed during the related Interest Accrual Period and a 360-day year),
weighted on the basis of the Mortgage Loan balances as of the first day of the
related Collection Period, less a fraction (expressed as a percentage) the
numerator of which is the amount of Accrued Certificate Interest paid with
respect to the Class A-IO Certificates on such Distribution Date and the
denominator of which is one-twelfth of the Pool Balance (adjusted, for
purposes of the calculation applicable to the Class A-1A Certificates, to an
effective rate reflecting the calculation of interest on the basis of the
actual number of days elapsed during the related Interest Accrual Period and a
360-day year). The Pool Cap is intended to equal the Adjusted Net WAC,
(adjusted to reflect the actual number of days in the Interest Accrual Period
for purpose of applying the Pool Cap to the Class A-1A Certificates).
"Prepayment Assumption": Prepayment Scenario III as set
forth in the Prospectus Supplement.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related
Prepayment Period the subject of a Principal Prepayment in full that was
applied by the Servicer to reduce the outstanding principal balance of such
loan on a date preceding the related Due Date, an amount equal to interest at
the applicable Mortgage Interest Rate (net of the Servicing Fee 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
related Prepayment Period.
"Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the month in which such Distribution Date occurs.
"Primary Insurance Policy": Each policy of primary guaranty
mortgage insurance issued by a Qualified Insurer, other than the PMI Policy,
in effect with respect to any Mortgage Loan, or any replacement policy
therefor obtained by the Servicer pursuant to Section 3.08.
"Principal Balance": As to any Mortgage Loan and any day,
other than a Liquidated Mortgage Loan, the related Cut-off Date Principal
Balance, minus all collections credited against the principal balance of any
such Mortgage Loan and the principal portion of Advances plus, Deferred
Interest, if any. For purposes of this definition, a Liquidated Mortgage Loan
shall be deemed to have a Principal Balance equal to the Principal Balance of
the related Mortgage Loan as of the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter. As to any REO Property
and any day, the Principal Balance of the related Mortgage Loan immediately
prior to such Mortgage Loan becoming REO Property minus any REO Principal
Amortization received with respect thereto on or prior to such day.
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"Principal Distribution Amount": As to any Distribution
Date, the sum of (i) the Principal Remittance Amount minus, for Distribution
Dates occurring on and after the Stepdown Date and for which a Trigger Event
is not in effect, the Overcollateralization Release Amount, if any, and (ii)
the Extra Principal Distribution Amount, if any.
"Principal Prepayment": Any 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 Remittance Amount": With respect to any
Distribution Date, to the extent of funds available therefor, the sum (less
amounts available for reimbursement of Advances and Servicing Advances
pursuant to Section 3.05 and expenses reimbursable pursuant to Section 6.03)
of: (i) each payment of principal on a Mortgage Loan due during the related
Collection Period and received by the Servicer on or prior to the related
Determination Date, and any Advances with respect thereto, (ii) all full and
partial Principal Prepayments received by the Servicer during the related
Prepayment Period, (iii) the Net Liquidation Proceeds allocable to principal
actually collected by the Servicer during the related Prepayment Period, (iv)
with respect to Defective Mortgage Loans repurchased with respect to such
Prepayment Period, the portion of the Purchase Price allocable to principal,
(v) any Substitution Adjustment Amounts received on or prior to the previous
Determination Date and not yet distributed and (vi) on the Distribution Date
on which the Trust is to be terminated in accordance with Section 10.01
hereof, that portion of the Termination Price in respect of principal.
"Private Certificates": Any of the Class N-1, Class N-2,
Class X, Class B-2 and Residual Certificates.
"Property Insurance Proceeds": Proceeds of any title policy,
hazard policy or other insurance policy covering a Mortgage Loan, to the
extent such proceeds are received by the Servicer and are not to be applied to
the restoration of the related Mortgaged Property or released to the Mortgagor
in accordance with the Servicer's servicing procedures, subject to the terms
and conditions of the related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement
dated June 11, 2001, as amended by that certain supplement dated June 13, 2001
relating to the public offering of the Offered Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, 3.16
or 10.01, and as confirmed by an Officers' Certificate from the Servicer to
the Trustee, an amount equal to the sum of (i) 100% of the 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
Principal Balance at the applicable Mortgage Interest 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 an Advance by the Servicer, which payment or Advance had
as of the date of purchase been distributed pursuant to Section 4.01, through
the end of the calendar month in which the purchase is to be effected, and (y)
an REO Property, its fair market value, determined in good faith by the
Servicer, (iii) any unreimbursed Servicing Advances and Advances and any
unpaid Servicing Fees and Special Servicing Fees allocable to such Mortgage
Loan or REO Property, (iv) any amounts previously
33
withdrawn from the Collection Account in respect of such Mortgage Loan or REO
Property pursuant to Section 3.13, and (v) in the case of a Mortgage Loan
required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the Servicer or the Trustee in respect of the
breach or defect giving rise to the purchase obligation.
"Qualified Insurer": Any insurance company acceptable to
FNMA or FHLMC.
"Rating Agency or Rating Agencies": Fitch, Moody's and S&P,
or their respective successors. If such agencies or their successors are no
longer in existence, "Rating Agencies" shall be such nationally recognized
statistical rating organizations as set forth on the most current list of such
organizations released by the Securities and Exchange Commission and
designated by the Depositor, notice of which designation shall be given to the
Trustee and the Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan,
the amount by which the remaining unpaid principal balance of the Mortgage
Loan exceeds the amount of Net Liquidation Proceeds applied to the principal
balance of the related Mortgage Loan.
"Realized Loss Amortization Amount": Any of the Class M-1
Realized Loss Amortization Amount, the Class M-2 Realized Loss Amortization
Amount, the Class B-1 Realized Loss Amortization Amount and the Class B-2
Realized Loss Amortization Amount.
"Record Date": With respect to all of the Certificates
(except for the Class A-1A Certificates), the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs
(or the Closing Date, in the case of the first Distribution Date). With
respect to the Class A-1A Certificates, the Business Day immediately preceding
such Distribution Date; provided, however, that if any Class A-1A Certificate
becomes a Definitive Certificate, the Record Date for such Certificate shall
be the last Business Day of the month immediately preceding the month in which
the related Distribution Date occurs.
"Reference Banks": Those banks (i) with an established place
of business in London, England, (ii) not controlling, under the control of or
under common control with the Depositor or the Trustee, (iii) whose quotations
appear on the Telerate Page 3750 on the relevant LIBOR Determination Date and
(iv) which have been designated as such by the Trustee; provided, however,
that if fewer than two of such banks provide a LIBOR rate, then any leading
banks selected by the Trustee which are engaged in transactions in United
States dollar deposits in the international Eurocurrency market.
"Regular Certificate": Any of the Offered Certificates, the
Class B-2, Class N-1, Class N-2 and Class X Certificates.
"Related Documents": With respect to any Mortgage Loan, the
related Mortgage Notes, Mortgages and other related documents.
"Relief Act": The Soldiers' and Sailors Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any
Distribution Date, for any Mortgage Loan with respect to which there has been
a reduction in the amount of interest collectible thereon for the most
recently ended Collection Period as a result of the application of the Relief
Act, the amount by which (i) interest collectible on such Mortgage Loan during
such
34
Collection Period is less than (ii) one month's interest on the Principal
Balance of such Mortgage Loan at the Mortgage Interest Rate for such Mortgage
Loan before giving effect to the application of the Relief Act.
"Remaining Initial Overcollateralization Amount": As of any
Distribution Date, an amount equal to (a) the Initial Overcollateralization
Amount minus (b) the sum of (i) any Overcollateralization Release Amounts
distributed and (ii) Realized Losses allocated to the Class T1-4, Class T1-5
or Class T1-6 Interests.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC 1 Regular Interests": As defined in the Preliminary
Statement.
"REMIC 2 Pass-Through Rate": As defined in the Preliminary
Statement.
"REMIC 2 Regular Interests": As defined in the Preliminary
Statement.
"REMIC 3 Regular Interests": As defined in the Preliminary
Statement.
"REMIC 4 Regular Interests": As defined in the Preliminary
Statement.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
"REMIC Regular Interest": As defined in the Preliminary
Statement.
"Remittance Report": A report prepared by the Servicer and
delivered to the Trustee pursuant to Section 4.07.
"Rents from Real Property": With respect to any REO
Property, gross income of the character described in Section 856(d) of the
Code.
"REO Account": The account or accounts maintained by the
Servicer in respect of an REO Property pursuant to Section 3.13.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust Fund.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the aggregate of all amounts received in
respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion
of the Termination Price paid in connection with a purchase of all of the
Mortgage Loans and REO Properties pursuant to Section 10.01 that is allocable
to such REO Property) or otherwise, net of any portion of such amounts (i)
payable pursuant to Section 3.13 in respect of the proper operation,
management and maintenance of such REO Property or (ii) payable or
reimbursable to the Servicer pursuant to Section 3.13 for unpaid Servicing
Fees in
35
respect of the related Mortgage Loan and unreimbursed Servicing Advances and
Advances in respect of such REO Property or the related Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the
Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.13.
"Re-Performing 60+ Day Delinquent Loan": Each Mortgage Loan
with respect to which, as of any date of determination, (x) any portion of a
Monthly Payment is, as of the last day of the prior Collection Period, two
months or more past due and (y) with respect to which the Mortgagor has made
three Monthly Payments within the three calendar months preceding such date of
determination. To the extent that, as of any date of determination, more than
25% of the Mortgage Loans (measured by aggregate principal balance) are
Re-Performing 60+ Day Delinquent Loans, the Re-Performing 60+ Day Delinquent
Loans constituting such excess shall be deemed to be 60+ Day Delinquent Loans.
"Re-Performance Test": The following criteria one of which
must be met for a Mortgage Loan to qualify as a Re-Performing Mortgage Loan:
(a) the Mortgagor has made at least three aggregate Monthly Payments in the
three calendar months preceding the Cut-off Date (regardless of either the
timing of receipt of such payments or the payment history of such loans prior
to February 1, 2001), or (b) the Mortgagor has made at least four aggregate
Monthly Payments in the four calendar months preceding the Cut-off Date
(regardless of either the timing of receipt of such payments or the payment
history of such loans prior to January 1, 2001), or (c) the Mortgagor has made
at least five aggregate Monthly Payments in the five calendar months preceding
the Cut-off Date (regardless of either the timing of receipt of such payments
or the payment history of such loans prior to December 1, 2000).
"Re-Performing Mortgage Loan": A Mortgage Loan which has
defaulted in the past and which is at least 90 days Delinquent with respect to
certain Monthly Payments but which satisfies one of the Re-Performance Test
criteria.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E attached hereto.
"Required Reserve Fund Deposit": As defined in Section 4.09.
"Reserve Fund": The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.09 in the name of
the Trustee for the benefit of the Certificateholders and designated "U.S.
Bank National Association in trust for registered holders of C-BASS Mortgage
Loan Asset-Backed Certificates, Series 2001-CB2". Funds in the Reserve Fund
shall be held in trust for the Certificateholders for the uses and purposes
set forth in this Agreement.
"Residential Dwelling": Any one of the following: (i) a
one-family dwelling, (ii) a two- to four-family dwelling, (iii) a one-family
dwelling unit in a FNMA eligible condominium project, (iv) a one-family
dwelling in a planned unit development, which is not a co-operative, or (v) a
mobile or manufactured home (as defined in 42 United States Code, Section
5402(6)).
"Residual Certificates": The Class R1-3 and Class R-4
Certificates.
36
"Residual Interest": The sole Class of "residual interests"
in each REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the
Trustee, any officer assigned to the Corporate Trust Division (or any
successor thereto), including any Vice President, Assistant Vice President,
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and in each case having direct
responsibility for the administration of this Agreement.
"S&P": Standard & Poor's Ratings Services and its
successors, and if such company shall for any reason no longer perform the
functions of a securities rating agency, "S&P" shall be deemed to refer to any
other "nationally recognized statistical rating organization" as set forth on
the most current list of such organizations released by the Securities and
Exchange Commission.
"Seller": Credit-Based Asset Servicing and Securitization
LLC, or its successor in interest, in its capacity as seller under the
Mortgage Loan Purchase Agreement.
"Senior Certificates": The Class A-IO, Class A-1F, Class
A-2F, Class A-3F and Class A-1A Certificates.
"Senior Enhancement Percentage": For any Distribution Date,
the percentage obtained by dividing (x) the sum of (i) the aggregate
Certificate Principal Balances of the Subordinated Certificates and (ii) the
Overcollateralization Amount, in each case after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date by
(y) the Pool Balance as of the last day of the related Collection Period.
"Senior Specified Enhancement Percentage": On any date of
determination thereof, 23.00%.
"Servicer": Litton Loan Servicing LP, a Delaware limited
partnership, or any successor servicer appointed as herein provided, in its
capacity as Servicer hereunder.
"Servicer Affiliate": A Person (i) controlling, controlled
by or under common control with the Servicer or which is 50% or more owned by
the Servicer and (ii) which is qualified to service residential mortgage
loans.
"Servicer Event of Termination": One or more of the events
described in Section 7.01.
"Servicer Remittance Date": With respect to any Distribution
Date, one Business Day prior to such Distribution Date.
"Servicing Advances": All customary, reasonable and
necessary "out of pocket" costs and expenses incurred by the Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of the Mortgaged
Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of the REO Property and
(iv) compliance with the obligations under Section 3.08.
37
"Servicing Fee": With respect to each Mortgage Loan
(including each REO Property) and for any calendar month, an amount equal to
one month's interest (or in the event of any payment of interest which
accompanies a Principal Prepayment in full made by the Mortgagor during such
calendar month, interest for the number of days covered by such payment of
interest) at the Servicing Fee Rate on the same principal amount on which
interest on such Mortgage Loan accrues for such calendar month.
"Servicing Fee Rate": With respect to each Mortgage Loan,
0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved
in, or responsible for, the administration and servicing of Mortgage Loans,
whose name and specimen signature appear on a list of servicing officers
furnished by the Servicer to the Trustee and the Depositor on the Closing
Date, as such list may from time to time be amended.
"Servicing Rights Pledgee": One or more lenders, selected by
the Servicer, to which the Servicer will pledge and assign all of its right,
title and interest in, to and under this Agreement, including First Union
National Bank, as the representative of certain lenders.
"Servicing Standard": Shall mean the standards set forth in
Section 3.01.
"Simple Interest Method": The method of allocating a payment
to principal and interest, pursuant to which the portion of such payment that
is allocated to interest is equal to the product of the fixed rate of interest
multiplied by the unpaid principal balance multiplied by the period of time
elapsed since the preceding payment of interest was made and divided by either
360 or 365, as specified in the related Mortgage Note, and the remainder of
such payment is allocated to principal.
"Simple Interest Mortgage Loan": Any Mortgage Loan under
which the portion of a payment allocable to interest and the portion of such
payment allocable to principal is determined in accordance with the Simple
Interest Method.
"Special Servicing Fee": With respect to each Mortgage Loan
that is delinquent 90 or more days (other than Re-Performing Mortgage Loans),
$150 per month payable until the earlier of (i) 18 consecutive months and (ii)
the Delinquency status of such Mortgage Loan has been reduced to less than 90
days.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the
terms of the Certificates and this Agreement but which is not remitted by the
Servicer because the Servicer is the subject of a proceeding under the
Bankruptcy Code and the making of such remittance is prohibited by Section 362
of the Bankruptcy Code.
"Stepdown Date": The later to occur of (x) the earlier to
occur of (A) the Distribution Date in June 2004 and (B) the Distribution Date
on which the aggregate Certificate Principal Balance of the Class A
Certificates is reduced to zero, and (y) the first Distribution Date on which
the Senior Enhancement Percentage (after taking into account distributions of
principal on such Distribution Date) is greater than or equal to the Senior
Specified Enhancement Percentage.
38
"Subordinated Certificates": The Class M-1, Class M-2, Class
B-1, Class B-2, Class N-1, Class N-2, Class X, Class R, Class R-5, Class R-6
and Class R-7 Certificates.
"Sub-Performing Mortgage Loan": A Mortgage Loan pursuant to
which a payment due prior to the Cut-off Date under the terms of the related
Mortgage Note (or any modification thereto), is at least 30 but not more than
89 days Delinquent.
"Subsequent Overcollateralization Amount": As of any
Distribution Date, after the application of principal payments and Applied
Realized Loss Amounts, an amount equal to the excess, if any of (a) the Pool
Balance over (b) the sum of (i) the Certificate Principal Balance of each
Class of Offered Certificates and of the Class B-2 Certificates and (ii) the
Remaining Initial Overcollateralization Amount.
"Substitution Adjustment Amount": As defined in Section
2.03(d) hereof.
"Targeted Overcollateralization Amount": As of any
Distribution Date, (x) prior to the Stepdown Date, 1.00% of the initial Pool
Balance and (y) on and after the Stepdown Date, the lesser of (i) 1.00% of the
initial Pool Balance and (ii) the greater of (A) 2.00% of the Pool Balance as
of the last day of the related Collection Period and (B) 0.50% of the initial
Pool Balance.
"Tax Matters Person": The tax matters person appointed
pursuant to Section 9.01(e) hereof.
"Tax Returns": The federal income tax returns 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 the REMIC Taxable Income or Net Loss Allocation, or any
successor forms, to be filed on behalf of the Trust for each of the seven
REMICs created pursuant to this Agreement under the REMIC Provisions, together
with any and all other information reports or returns that may be required to
be furnished to the Certificateholders of the related Group 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 page currently so
designated on the Bridge Telerate Service (or such other page as may replace
the Telerate Page 3750 page on that service for the purpose of displaying
London interbank offered rates of major banks).
"Termination Price": As defined in Section 10.01(a) hereof.
"Trigger Event": With respect to any Distribution Date, if
(i) the six-month rolling average of 60+ Day Delinquent Loans equals or
exceeds 45% of the Senior Enhancement Percentage; provided, that if the
Certificate Principal Balance of the Senior Certificates has been reduced to
zero, a Trigger Event will have occurred if the six-month rolling average of
60+ Day Delinquent Loans equals or exceeds 20% or (ii) the aggregate amount of
Realized Losses incurred since the Cut-off Date through the last day of the
related Collection Period divided by the initial Pool Balance exceeds the
applicable percentages set forth below with respect to such Distribution Date:
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Distribution Date Occurring In Percentage
June 2004 through May 2005 3.00%
June 2005 through May 2006 3.75%
June 2006 through May 2007 4.25%
June 2007 and thereafter 4.75%
"Trust": 2001-CB2 Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered
hereunder, with respect to a portion of which seven REMIC elections are to be
made, such entire Trust Fund consisting of: (i) such Mortgage Loans 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) and (v) the Collection Account, the Distribution Account and any REO
Account and such assets that are deposited therein from time to time and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto. Notwithstanding the foregoing, however, the Trust Fund
specifically excludes all payments and other collections of principal and
interest representing Arrearage.
"Trustee": U.S. Bank National Association, a national
banking association, or any successor Trustee appointed as herein provided.
"Trustee Fee": With respect to any Distribution Date, the
product of (x) one-twelfth of the Trustee Fee Rate and (y) the aggregate of
the Principal Balances of all Mortgage Loans as of the opening of business on
the first day of the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date,
0.012% per annum.
"Underwriters": Deutsche Banc Alex. Brown Inc. and First
Union Securities, Inc., as underwriters with respect to the Offered
Certificates.
"United States Person" or "U.S. Person": (i) A citizen or
resident of the United States, (ii) a corporation, partnership or other entity
treated as a corporation or partnership for United States federal income tax
purposes organized in or under the laws of the United States or any state
thereof or the District of Columbia (unless, in the case of a partnership,
Treasury regulations provide otherwise) or (iii) an estate the income of which
is includible in gross income for United States tax purposes, regardless of
its source, or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trust. Notwithstanding the preceding sentence, to the extent provided
in Treasury regulations, certain Trusts in existence on August 20, 1996, and
treated as United States persons prior to such date, that elect to continue to
be treated as United States persons will also be a U.S. Person.
"Unpaid Realized Loss Amount": For any Class B-1, Class B-2,
Class M-1 and Class M-2 Certificates and as to any Distribution Date, the
excess of (x) the aggregate Applied
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Realized Loss Amounts applied respect to such Class for all prior Distribution
Dates over (y) the aggregate Realized Loss Amortization Amounts with respect
to such Class for all prior Distribution Dates.
"VA": The United States Department of Veterans Affairs.
"VA Approved Lender": Those institutions that are approved
by the VA to act as servicer and mortgagee of record pursuant to VA
Regulations.
"VA Guaranty Agreements": With respect to a VA Loan, the
agreements evidencing the guaranty of such Mortgage Loan by the VA.
"VA Loan": A Mortgage Loan guaranteed by the VA.
"VA Regulations": Any and all regulations promulgated by the
VA under the Servicemen's Readjustment Act of 1944, as amended.
"Value": With respect to any Mortgaged Property, the value
thereof as determined by an independent appraisal made at the time of the
origination of the related Mortgage Loan or the sale price, if the appraisal
is not available; except that, with respect to any Mortgage Loan that is a
purchase money mortgage loan, the lesser of (i) the value thereof as
determined by an independent appraisal made at the time of the origination of
such Mortgage Loan, if any, and (ii) the sales price of the related Mortgaged
Property.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. The Voting Rights
allocated among Holders of the Offered Certificates and the Class B-2
Certificates shall be 98%, and shall be allocated among each such Class
according to the fraction, expressed as a percentage, the numerator of which
is the aggregate Certificate Principal Balance of all the Certificates of such
Class then outstanding and the denominator of which is the aggregate
Certificate Principal Balance of all the Offered Certificates and the Class
B-2 Certificates then outstanding. The Voting Rights allocated to each such
Class of Certificates shall be allocated among all holders of each such Class
in proportion to the outstanding Certificate Principal Balance of such
Certificates; provided, however, that any Certificate registered in the name
of the Servicer, the Depositor, the Trustee or any of their respective
affiliates shall not be included in the calculation of Voting Rights; provided
that only such Certificates as are known by a Responsible Officer of the
Trustee to be so registered will be so excluded. The percentage of all the
Voting Rights allocated among the Holders of the Class X Certificate shall be
2%. The Class N-1, Class N-2 and Residual Certificates shall have no Voting
Rights.
"Weighted Average Group 1 Net Mortgage Rate": The weighted
average (based on Principal Balance as of the first day of the related
Collection Period or, in the case of the first Distribution Date, the Cut-Off
Date) of the Net Mortgage Interest Rates of the Group 1 Mortgage Loans,
expressed as an annual rate and calculated on the basis of twelve months
consisting of 30 days each and a 360-day year.
"Weighted Average Group 2 Net Mortgage Rate": The weighted
average (based on Principal Balance as of the first day of the related
Collection Period or, in the case of the first Distribution Date, the Cut-Off
Date) of the Net Mortgage Interest Rates of the Group 2 Mortgage
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Loans, expressed as an annual rate and calculated on the basis of twelve
months consisting of 30 days each and a 360-day year.
"Weighted Average Net Mortgage Rate": The weighted average
(based on Principal Balance as of the first day of the related Collection
Period or, in the case of the first Distribution Date, the Cut-Off Date) of
the Net Mortgage Interest Rates of the Mortgage Loans, expressed as an annual
rate and calculated on the basis of twelve months consisting of 30 days each
and a 360-day year.
"Written Order to Authenticate": A written order by which
the Depositor directs the Trustee to execute and to authenticate and deliver
the Certificates.
Section 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any
definition or calculation, whenever amounts are required to be netted,
subtracted or added or any distributions are taken into account such
definition or calculation and any related definitions or calculations shall be
determined without duplication of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of 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 (i) each Mortgage Loan identified on the Mortgage Loan Schedule,
including the related Cut-off Date Principal Balance, all interest accruing
thereon after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of
foreclosure; (iii) its interest in any insurance policies in respect of the
Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of
the Depositor under the Mortgage Loan Purchase Agreement, and (vi) all other
assets included or to be included in the Trust Fund; provided, however, so
long as the Servicer is an FHA Approved Mortgagee, the Commissioner of HUD
shall have no obligation to recognize or deal with any person other than the
Servicer with respect to FHA Insurance. Such assignment includes all interest
and principal due to the Depositor or the Servicer after the Cut-off Date with
respect to the Mortgage Loans.
In connection with such transfer and assignment, the Seller,
on behalf of the Depositor, does hereby deliver to, and deposit with the
Trustee, or its designated agent (the "Custodian"), the following documents or
instruments with respect to each Mortgage Loan (a "Mortgage File") so
transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank or (B)
in the following form: "Pay to the order of U.S. Bank National
Association, as Trustee under the Pooling and Servicing
Agreement, dated as of May 1, 2001, among Credit-Based
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Asset Servicing and Securitization LLC, ACE Securities Corp.,
Litton Loan Servicing LP and U.S. Bank National Association,
C-BASS Mortgage Loan Asset-Backed Certificates, Series
2001-CB2, without recourse", or with respect to any lost
Mortgage Note, an original Lost Note Affidavit, together with a
copy of the related Mortgage Note;
(ii) the original Mortgage with evidence of recording thereon, and
the original recorded power of attorney, if the Mortgage was
executed pursuant to a power of attorney, with evidence of
recording thereon or, if such Mortgage or power of attorney has
been submitted for recording but has not been returned from the
applicable public recording office, has been lost or is not
otherwise available, a copy of such Mortgage or power of
attorney, as the case may be, certified to be a true and
complete copy of the original submitted for recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned either
(A) in blank or (B) to "U.S. Bank National Association, as
Trustee under the Pooling and Servicing Agreement, dated as of
May 1, 2001, among Credit-Based Asset Servicing and
Securitization LLC, ACE Securities Corp., Litton Loan Servicing
LP and U.S. Bank National Association, C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2001-CB2, without recourse";
(iv) an original copy of any intervening assignment of Mortgage
showing a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance
policy;
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any;
(vii) for each FHA Loan, the original Mortgage Insurance Certificate;
(viii) for each VA Loan, the original Loan Guaranty Certificate;
(ix) [Reserved]; and
(x) the original, or a certified copy of the, Primary Insurance
Policy.
The Trustee agrees to execute and deliver (or cause the
Custodian to execute and deliver) to the Depositor on or prior to the Closing
Date an acknowledgment of receipt of the original Mortgage Note (with any
exceptions noted), substantially in the form attached as Exhibit F-3 hereto.
The Servicer shall within 90 days following the Closing
Date, with respect to each Mortgage Loan that is subject to the provisions of
the Homeownership and Equity Protection Act of 1994 place a legend on the
original Mortgage Note indicating the satisfaction of the provisions of such
Act and the regulations issued thereunder, to the effect that the Mortgage
Loan is subject to special truth in lending rules.
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The Servicer shall promptly (and in no event later than
thirty days following the Closing Date) submit or cause to be submitted for
recording, at the Servicer's expense and at no expense to the Trust Fund or
the Trustee, in the appropriate public office for real property records, each
Assignment referred to in Sections 2.01(iii) and (iv) above. In the event that
any such Assignment is lost or returned unrecorded because of a defect
therein, the Seller shall promptly prepare or cause to be prepared a
substitute Assignment or cure or cause to be cured such defect, as the case
may be, and thereafter cause each such Assignment to be duly recorded.
If any of the documents referred to in Section 2.01(ii),
(iii) or (iv) above has as of the Closing Date been submitted for recording
but either (x) has not been returned from the applicable public recording
office or (y) has been lost or such public recording office has retained the
original of such document, the obligations of the Seller to deliver such
documents shall be deemed to be satisfied upon (1) delivery to the Trustee or
the Custodian no later than the Closing Date, of a copy of each such document
certified by the Seller in the case of (x) above or the applicable public
recording office in the case of (y) above to be a true and complete copy of
the original that was submitted for recording and (2) if such copy is
certified by the Seller, delivery to the Trustee or the Custodian, promptly
upon receipt thereof of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. The Seller shall deliver or cause to be delivered to the
Trustee or the Custodian promptly upon receipt thereof any other documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File,
the Seller shall have 90 days to cure such defect or 150 days following the
Closing Date, in the case of missing Mortgages or Assignments or deliver such
missing document to the Trustee or the Custodian. If the Seller does not cure
such defect or deliver such missing document within such time period, the
Seller shall either repurchase or substitute for such Mortgage Loan in
accordance with Section 2.03.
The Seller shall cause the Assignments of Mortgage which
were delivered in blank to be completed and shall cause all Assignments
referred to in Section 2.01(iii) hereof and, to the extent necessary, in
Section 2.01(iv) hereof to be recorded; provided, however, the Seller need not
cause to be recorded any Assignment which relates to a Mortgage Loan in any
jurisdiction under the laws of which, as evidenced by an Opinion of Counsel
delivered by the Seller to the Trustee and the Rating Agencies, the
recordation of such assignment is not necessary to protect the Trustee's
interest, on behalf of the Trust, in the related Mortgage Loan. The Seller
shall be required to deliver such assignments for recording within 30 days of
the Closing Date. The Seller shall furnish the Trustee, or its designated
agent, with a copy of each assignment of Mortgage submitted for recording. In
the event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Seller shall promptly have a substitute Assignment
prepared or have such defect cured, as the case may be, and thereafter cause
each such Assignment to be duly recorded. In the event that any Mortgage Note
is endorsed in blank as of the Closing Date, promptly following the Closing
Date the Seller shall cause to be completed such endorsements "Pay to the
order of U.S. Bank National Association, as Trustee under the Pooling and
Servicing Agreement, dated as of May 1, 2001, among Credit-Based Asset
Servicing and Securitization LLC, ACE Securities Corp., Litton Loan Servicing
LP and U.S. Bank National Association, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2001-CB2, without recourse."
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The Depositor herewith delivers to the Trustee executed
copies of the Mortgage Loan Purchase Agreement.
Section 2.02. Acceptance by Trustee.
The Trustee acknowledges the receipt of, subject to the
provisions of Section 2.01 and subject to the review described below and any
exceptions noted on the exception report described in the next paragraph
below, the documents referred to in Section 2.01 above and all other assets
included in the definition of "Trust Fund" and declares that it holds and will
hold such documents and the other documents delivered to it constituting a
Mortgage File, and that it holds or will hold all such assets and such other
assets included in the definition of "Trust Fund" in trust for the exclusive
use and benefit of all present and future Certificateholders.
The Trustee agrees, for the benefit of the
Certificateholders, to review (or cause the Custodian to review) each Mortgage
File within 60 days after the Closing Date (or, with respect to any document
delivered after the Startup Day, within 60 days of receipt and with respect to
any Eligible Substitute Mortgage Loan, within 60 days after the assignment
thereof) and to certify in substantially the form attached hereto as Exhibit
F-1 that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in the exception report annexed thereto as not being covered by
such certification), (i) all documents required to be delivered to it pursuant
Section 2.01 of this Agreement are in its possession, (ii) such documents have
been reviewed by it and have not been mutilated, damaged or torn and relate to
such Mortgage Loan and (iii) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (1), (2), (3), (5), (13) and (26) (in the case of (26),
only as to whether there is a prepayment penalty) of the Mortgage Loan
Schedule accurately reflects information set forth in the Mortgage File. It is
herein acknowledged that, in conducting such review, the Trustee (or the
Custodian, as applicable) is under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they have actually been recorded or that they are
other than what they purport to be on their face.
Prior to the first anniversary date of this Agreement the
Trustee shall deliver (or cause the Custodian to deliver) to the Depositor and
the Servicer a final certification in the form annexed hereto as Exhibit F-2
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee (or the Custodian, as applicable) finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, at the conclusion of its review the Trustee shall so notify
the Seller, the Depositor and the Servicer. In addition, upon the discovery by
the Seller, Depositor, the Trustee or the Servicer (or upon receipt by the
Trustee of written notification of such breach) of a breach of any of the
representations and warranties made by the Seller in the related Mortgage Loan
Purchase Agreement in respect of any Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests of the related Certificateholders
in such Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties.
45
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a sale of the Mortgage Loans and the
Related Documents, conveying good title thereto free and clear of any liens
and encumbrances, from the Depositor to the Trustee and that such property not
be part of the Depositor's estate or property of the Depositor in the event of
any insolvency by the Depositor. In the event that such conveyance is deemed
to be, or to be made as security for, a loan, the parties intend that the
Depositor shall be deemed to have granted and does hereby grant to the
Trustee, on behalf of the Trust, a first priority perfected security interest
in all of the Depositor's right, title and interest in and to the Mortgage
Loans and the Related Documents, and that this Agreement shall constitute a
security agreement under applicable law.
Section 2.03. Repurchase or Substitution of Mortgage Loans
by the Seller.
(a) Upon discovery or receipt of written notice of any
materially defective document in, or that a document is missing from, a
Mortgage File or of the breach by the Seller of any representation, warranty
or covenant under the Mortgage Loan Purchase Agreement or in Section 2.04 in
respect of any Mortgage Loan which materially adversely affects the value of
such Mortgage Loan or the interest therein of the Certificateholders, the
Trustee (or the Custodian, as applicable) shall promptly notify the Seller and
the Servicer of such defect, missing document or breach and request that the
Seller deliver such missing document or cure such defect or breach within 120
days or 150 days following the Closing Date, in the case of missing Mortgages
or Assignments 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 Seller's obligation under the Mortgage Loan Purchase
Agreement and cause the Seller to repurchase such Mortgage Loan from the Trust
Fund at the Purchase Price on or prior to the Determination Date following the
expiration of such 120 day period (subject to Section 2.03(e)); provided that,
in connection with any such breach that could not reasonably have been cured
within such 120 day or 150 day period, if the Seller shall have commenced to
cure such breach within such 120 day or 150 day period, the Seller shall be
permitted to proceed thereafter diligently and expeditiously to cure the same
within the additional period provided under the Mortgage Loan Purchase
Agreement. The Purchase Price for the repurchased Mortgage Loan shall be
deposited in the Collection Account, and the Trustee, upon receipt of written
certification from the Servicer of such deposit, shall release to the Seller
the related Mortgage File and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, 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 have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, the Seller may cause such Mortgage Loan
to be removed from the Trust Fund (in which case it shall become a Defective
Mortgage Loan) and substitute one or more Eligible Substitute Mortgage Loans
in the manner and subject to the limitations set forth in Section 2.03(d). 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
against the Seller respecting such omission, defect or breach available to the
Trustee on behalf of the Certificateholders.
(b) A Mortgage Loan that has an Arrearage cannot be
substituted for a Mortgage Loan that does not have an Arrearage.
46
(c) Within 90 days of the earlier of discovery by the
Servicer or receipt of notice by the Servicer of the breach of any
representation, warranty or covenant of the Servicer set forth in Section 2.05
which materially and adversely affects the interests of the Certificateholders
in any Mortgage Loan, the Servicer shall cure such breach in all material
respects.
(d) Any substitution of Eligible Substitute Mortgage Loans
for Defective Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the last Business Day that is within two years after the Closing
Date. As to any Defective Mortgage Loan for which the Seller substitutes a
Eligible Substitute Mortgage Loan or Loans, such substitution shall be
effected by the Seller delivering to the Trustee, for such Eligible 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 2.01, together with an
Officers' Certificate providing that each such Eligible Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution
Adjustment Amount (as described below), if any, in connection with such
substitution. The Trustee shall acknowledge receipt for such Eligible
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
shall review such documents as specified in Section 2.02 and deliver (or cause
the Custodian to deliver) to the Servicer, with respect to such Eligible
Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit F-1, with any applicable exceptions noted thereon.
Within one year of the date of substitution, the Trustee shall deliver (or
cause the Custodian to deliver) to the Servicer a certification substantially
in the form of Exhibit F-2 hereto with respect to such Eligible Substitute
Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly
Payments due with respect to Eligible Substitute Mortgage Loans in the month
of substitution are not part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders
will reflect the collections and recoveries in respect of such Defective
Mortgage Loan in the Collection Period preceding the month of substitution and
the Depositor or the Seller, as the case may be, shall thereafter be entitled
to retain all amounts subsequently received in respect of such Defective
Mortgage Loan. The Seller 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 Defective Mortgage Loan
from the terms of this Agreement and the substitution of the Eligible
Substitute Mortgage Loan or Loans and shall deliver a copy of such amended
Mortgage Loan Schedule to the Trustee. Upon such substitution, such Eligible
Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool
and shall be subject in all respects to the terms of this Agreement and, in
the case of a substitution effected by the Seller, the Mortgage Loan Purchase
Agreement, including, in the case of a substitution effected by the Seller all
applicable representations and warranties thereof included in the Mortgage
Loan Purchase Agreement and all applicable representations and warranties
thereof set forth in Section 2.04, in each case as of the date of
substitution.
For any month in which the Seller substitutes one or more
Eligible Substitute Mortgage Loans for one or more Defective Mortgage Loans,
the Servicer will determine the amount (the "Substitution Adjustment Amount"),
if any, by which the aggregate Purchase Price of all such Defective Mortgage
Loans exceeds the aggregate, as to each such Eligible Substitute Mortgage
Loan, of the principal balance thereof as of the date of substitution,
together with one month's interest on such principal balance at the applicable
Net Mortgage Interest Rate. On the date of such substitution, the Seller will
deliver or cause to be delivered to the Servicer for deposit in the Collection
Account an amount equal to the Substitution Adjustment Amount, if
47
any, and the Trustee, upon receipt of the related Eligible Substitute Mortgage
Loan or Loans and certification by the Servicer of such deposit, shall release
to the Seller the related Mortgage File or Files and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Seller shall deliver to it and as shall be necessary to vest therein any
Defective 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 the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of the Code or on "contributions after
the startup date" under Section 860G(d)(l) of the Code, or (b) any REMIC to
fail to qualify as a REMIC at any time that any Certificate is outstanding. If
such Opinion of Counsel can not be delivered, then such substitution may only
be effected at such time as the required Opinion of Counsel can be given.
(e) Upon discovery by the Seller, the Servicer, 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, subject to
the limitations set forth in Section 2.03(d), substitute one or more Eligible
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. In addition, upon discovery that a Mortgage Loan is defective
in a manner that would cause it to be a "defective obligation" within the
meaning of Treasury regulations relating to REMICs, the Seller shall cure the
defect or make the required purchase or substitution no later than 90 days
after the discovery of the defect. Any such repurchase or substitution shall
be made in the same manner as set forth in Section 2.03(a), if made by the
Seller. 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.
Notwithstanding anything to the contrary contained herein,
the parties hereto acknowledge that the functions of the Trustee with respect
to the custody, acceptance, inspection, review and release of the Mortgage
Files pursuant to Sections 2.01, 2.02 and 2.03 and Article III and preparation
and delivery of the certifications in the form of Exhibit F-1 and Exhibit F-2
and the acknowledgement of receipt in the form of Exhibit F-3 shall be
performed by the Custodian pursuant to the terms and conditions of the
Custodial Agreement. The fees and expenses of the Custodian shall be paid by
the Servicer.
Section 2.04. Representations and Warranties of the Seller
with Respect to the Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for
the benefit of the Certificateholders that as of the Closing Date or as of
such other date specifically provided herein:
(a) The representations and warranties made by the Seller
pursuant to Section 6 of the Mortgage Loan Purchase Agreement are hereby being
made to the Trustee and are true and correct as of the Closing Date.
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(b) Any written agreement between the Mortgagor in respect
of a Mortgage Loan and the Servicer modifying such Mortgagor's obligation to
make payments under the Mortgage Loan (such modified Mortgage Loan, a
"Modified Mortgage Loan") involved the application of the Seller's
underwriting standards or some assessment of the Mortgagor's ability to repay
the Modified Mortgage Loan.
(c) The information set forth in the Mortgage Loan Schedule
regarding prepayment penalties is complete, true and correct in all material
respects at the date or dates respecting which such information is furnished
and each prepayment penalty is permissible and enforceable in accordance with
its terms upon the Mortgagor's full and voluntary Principal Prepayment (except
to the extent that: (1) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally; or (2) the collectability thereof may
be limited due to acceleration in connection with a foreclosure or other
involuntary prepayment.
With respect to the representations and warranties set forth
in this Section 2.04 that are made to the best of the Seller's knowledge or as
to which the Seller has no knowledge, if it is discovered by the Depositor,
the Seller, the Servicer or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan or the interest
therein of the Certificateholders then, notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
Upon discovery by the Depositor, the Seller, the Servicer or
the Trustee of a breach of any of the representations and warranties contained
in this Section that materially and adversely affects the value of any
Mortgage Loan or the interest therein of the Certificateholders, the party
discovering the breach shall give prompt written notice to the others and in
no event later than two Business Days from the date of such discovery. Within
ninety days of its discovery or its receipt of notice of any such missing or
materially defective documentation or any such breach of a representation or
warranty, the Seller shall promptly deliver such missing document or cure such
defect or breach in all material respects, or in the event such defect or
breach cannot be cured, the Seller shall repurchase the affected Mortgage Loan
or cause the removal of such Mortgage Loan from the Trust Fund and substitute
for it one or more Eligible Substitute Mortgage Loans, in either case, in
accordance with Section 2.03.
It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the
Mortgage Files to the Trustee and shall inure to the benefit of the
Certificateholders notwithstanding any restrictive or qualified endorsement or
assignment. It is understood and agreed that the obligations of the Seller set
forth in Section 2.03(a) to cure, substitute for or repurchase a Mortgage Loan
pursuant to the Mortgage Loan Purchase Agreement constitute the sole remedies
available to the Certificateholders or to the Trustee on their behalf
respecting a breach of the representations and warranties contained in this
Section 2.04.
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Section 2.05. Representations, Warranties and Covenants of
the Servicer.
The Servicer hereby represents, warrants and covenants to
the Trustee, for the benefit of each of the Trustee and the Certificateholders
and to the Depositor that as of the Closing Date or as of such date
specifically provided herein:
(i) The Servicer is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its formation and
has all licenses necessary to carry on its business as now being
conducted, except for such licenses, certificates and permits the
absence of which, individually or in the aggregate, would not have a
material adverse effect on the ability of the Servicer to conduct its
business as it is presently conducted, and is licensed, qualified and
in good standing in the states where the Mortgaged Property is
located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Servicer or
to ensure the enforceability or validity of each Mortgage Loan; the
Servicer has the power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby
have been duly and validly authorized; this Agreement evidences the
valid, binding and enforceable obligation of the Servicer, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally; and all requisite corporate action has been taken by the
Servicer to make this Agreement valid and binding upon the Servicer
in accordance with its terms;
(ii) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Servicer
and will not result in the breach of any term or provision of the
certificate of formation or the partnership agreement of the Servicer
or result in the breach of any term or provision of, or conflict with
or constitute a default under or result in the acceleration of any
obligation under, any agreement, indenture or loan or credit
agreement or other instrument to which the Servicer or its property
is subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Servicer or its property is
subject;
(iii) The Servicer is an approved seller/servicer of
conventional mortgage loans for FNMA, and is an FHA Approved
Mortgagee in good standing to service mortgages, is a VA Approved
Lender and has not been suspended as a mortgagee or servicer by the
FHA or VA and has the facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Servicer is, and shall remain
for as long as it is servicing the Mortgage Loans hereunder, in good
standing as a FHA Approved Mortgagee and a VA Approved Lender and to
service mortgage loans for HUD, FNMA or FHLMC, and no event has
occurred, including but not limited to a change in insurance
coverage, which would make the Servicer unable to comply with HUD,
FNMA, FHLMC, FHA or VA eligibility requirements or which would
require notification to any of HUD, FNMA, FHLMC, FHA or VA;
(iv) This Agreement, and all documents and instruments
contemplated hereby which are executed and delivered by the Servicer,
constitute and will constitute valid,
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legal and binding obligations of the Servicer, enforceable in
accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy laws and general
principles of equity;
(v) The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vi) There is no action, suit, proceeding or investigation
pending or, to its knowledge, threatened against the Servicer that,
either individually or in the aggregate, may result in any material
adverse change in the business, operations, financial condition,
properties or assets of the Servicer, or in any material impairment
of the right or ability of the Servicer to carry on its business
substantially as now conducted, or in any material liability on the
part of the Servicer, or that would draw into question the validity
or enforceability of this Agreement or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated
herein, or that would be likely to impair materially the ability of
the Servicer to perform under the terms of this Agreement;
(vii) No consent, approval or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Servicer of or compliance by the Servicer with
this Agreement or the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained; and
(viii) Neither this Agreement nor any information,
certificate of an officer, statement furnished in writing or report
delivered to the Trustee by the Servicer in connection with the
transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made,
not misleading.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the Mortgage Files to the Trustee and shall inure to the benefit of the
Trustee, the Depositor and the Certificateholders. Upon discovery by any of
the Depositor, the Servicer, the Seller or the Trustee of a breach of any of
the foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan 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 other parties hereto.
Section 2.06. Representations and Warranties of the
Depositor.
The Depositor represents and warrants to the Trust and the
Trustee on behalf of the Certificateholders as follows:
(i) This agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the
enforcement of
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creditors' rights in general and except as such
enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust of each Mortgage
Loan, the Depositor had good and marketable title to each Mortgage
Loan (insofar as such title was conveyed to it by the Seller) subject
to no prior lien, claim, participation interest, mortgage, security
interest, pledge, charge or other encumbrance or other interest of
any nature;
(iii) As of the Closing Date, the Depositor has transferred
all right, title interest in the Mortgage Loans to the Trustee on
behalf of the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to
the Trustee on behalf of the Trust with any intent to hinder, delay
or defraud any of its creditors;
(v) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with full corporate power and authority to own its
assets and conduct its business as presently being conducted;
(vi) The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor is
a party or by which it or its properties may be bound, which default
might result in any material adverse changes in the financial
condition, earnings, affairs or business of the Depositor or which
might materially and adversely affect the properties or assets, taken
as a whole, of the Depositor;
(vii) The execution, delivery and performance of this
Agreement by the Depositor, and the consummation of the transactions
contemplated thereby, do not and will not result in a material breach
or violation of any of the terms or provisions of, or, to the
knowledge of the Depositor, constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Depositor is a party or by which the
Depositor is bound or to which any of the property or assets of the
Depositor is subject, nor will such actions result in any violation
of the provisions of the articles of incorporation or by-laws of the
Depositor or, to the best of the Depositor's knowledge without
independent investigation, any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets
(except for such conflicts, breaches, violations and defaults as
would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body of the United States or any other
jurisdiction is required for the issuance of the Certificates, or the
consummation by the Depositor of the other transactions contemplated
by this Agreement, except such consents, approvals, authorizations,
registrations or qualifications as (a) may be required
52
under State securities or Blue Sky laws, (b) have been previously
obtained or (c) the failure of which to obtain would not have a
material adverse effect on the performance by the Depositor of its
obligations under, or the validity or enforceability of, this
Agreement; and
(ix) There are no actions, proceedings or investigations
pending before or, to the Depositor's knowledge, threatened by any
court, administrative agency or other tribunal to which the Depositor
is a party or of which any of its properties is the subject: (a)
which if determined adversely to the Depositor would have a material
adverse effect on the business, results of operations or financial
condition of the Depositor; (b) asserting the invalidity of this
Agreement or the Certificates; (c) seeking to prevent the issuance of
the Certificates or the consummation by the Depositor of any of the
transactions contemplated by this Agreement, as the case may be; (d)
which might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability
of, this Agreement.
Section 2.07. Issuance of Certificates and the
Uncertificated Regular Interests.
The Trustee acknowledges the assignment to it of the
Mortgage Loans and the delivery to it (or the Custodian, as bailee and
Custodian of the Trustee) of the Mortgage Files, subject to the provisions of
Sections 2.01 and 2.02, and the Trustee acknowledges the assignment to it of
all other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee, pursuant to the Written Order to Authenticate executed
by an officer of the Depositor, has executed, and the Certificate Registrar
has authenticated and delivered to or upon the order of the Depositor, the
Certificates (other than the Class X and Residual Certificates) in minimum
dollar denominations or $25,000 and integral dollar multiples of $1 in excess.
The Class X, Class R1-3 and Class R-4 Certificates are issuable only in
minimum Percentage Interests of 10%. . The Trustee acknowledges the issuance
of the uncertificated REMIC 1 Regular Interests, the uncertificated REMIC 2
Regular Interests, the uncertificated REMIC 3 Regular Interests (the Class
T3-AIO, Class T3-A-1F, Class T3-A-2F, Class T3-A-3F, Class T3-AF and Class
T3-X Interests and declares that it hold such regular interests as assets of
REMIC 2, REMIC 3 and REMIC 4, respectively. The interests evidenced by the
Certificates constitute the entire beneficial ownership interest in the Trust
Fund.
Section 2.08. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and
the Trustee on behalf of the Certificateholders that as of the Closing Date or
as of such date specifically provided herein:
(i) The Seller is duly organized, validly existing and in
good standing as a limited liability company under the laws of the
State of Delaware and has the power and authority to own its assets
and to transact the business in which it is currently engaged. The
Seller is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the business transacted
by it or properties owned or leased by it requires such qualification
and in which the failure to so qualify would have a material adverse
effect on (a) its business, properties, assets or condition
(financial or other), (b)
53
the performance of its obligations under this Agreement, (c) the
value or marketability of the Mortgage Loans, or (d) its ability to
foreclose on the related Mortgaged Properties.
(ii) The Seller has the power and authority to make,
execute, deliver and perform this Agreement and to consummate all of
the transactions contemplated hereunder and has taken all necessary
action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will
constitute the Seller's legal, valid and binding obligations
enforceable in accordance with its terms, except as enforcement of
such terms may be limited by (1) bankruptcy, insolvency,
reorganization, receivership, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by the
availability of equitable remedies, (2) general equity principles
(regardless of whether such enforcement is considered in a proceeding
in equity or at law) or (3) public policy considerations underlying
the securities laws, to the extent that such policy considerations
limit the enforceability of the provisions of this Agreement which
purport to provide indemnification from securities laws liabilities.
(iii) The Seller holds all necessary licenses, certificates
and permits from all governmental authorities necessary for
conducting its business as it is presently conducted, except for such
licenses, certificates and permits the absence of which, individually
or in the aggregate, would not have a material adverse effect on the
ability of the Seller to conduct its business as it is presently
conducted. It is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau
or agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement, except for such
consents, licenses, approvals or authorizations, or registrations or
declarations as shall have been obtained or filed, as the case may
be, prior to the Closing Date.
(iv) The execution, delivery and performance of this
Agreement by the Seller will not conflict with or result in a breach
of, or constitute a default under, any provision of any existing law
or regulation or any order or decree of any court applicable to the
Seller or any of its properties or any provision of its Limited
Liability Company Agreement, or constitute a material breach of, or
result in the creation or imposition of any lien, charge or
encumbrance upon any of its properties pursuant to any mortgage,
indenture, contract or other agreement to which it is a party or by
which it may be bound.
(v) No certificate of an officer, written statement or
report delivered pursuant to the terms hereof by the Seller contains
any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report
not misleading.
(vi) The transactions contemplated by this Agreement are in
the ordinary course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be
made insolvent by the transfer of the Mortgage Loans to the
Depositor, nor is the Seller aware of any pending insolvency.
54
(viii) The Seller is not in violation of, and the execution
and delivery of this Agreement by it and its performance and
compliance with the terms of this Agreement will not constitute a
violation with respect to any order or decree of any court, or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the Seller's condition (financial or otherwise) or
operations or any of the Seller's properties, or materially and
adversely affect the performance of any of its duties hereunder.
(ix) There are no actions or proceedings against, or
investigations of, the Seller pending or, to its knowledge,
threatened, before any court, administrative agency or other tribunal
(i) that, if determined adversely, would prohibit the Seller from
entering into this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement or (iii) that, if determined adversely, would prohibit or
materially and adversely affect the Seller's performance of any of
its respective obligations under, or the validity or enforceability
of, this Agreement.
(x) The Seller did not transfer the Mortgage Loans to the
Depositor with any intent to hinder, delay or defraud any of its
creditors.
(xi) The Seller acquired title to the Mortgage Loans in good
faith, without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller to the Depositor are
not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction.
Section 2.09. Covenants of the Seller.
(a) The Seller hereby covenants that except for the transfer
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any lien on any
Mortgage Loan, or any interest therein; the Seller will notify the Trustee, as
assignee of the Depositor, of the existence of any lien on any Mortgage Loan
immediately upon discovery thereof, and the Seller will defend the right,
title and interest of the Trust, as assignee of the Depositor, in, to and
under the Mortgage Loans, against all claims of third parties claiming through
or under the Seller; provided, however, that nothing in this Section 2.09
shall prevent or be deemed to prohibit the Seller from suffering to exist upon
any of the Mortgage Loans any liens for municipal or other local taxes and
other governmental charges if such taxes or governmental charges shall not at
the time be due and payable or if the Seller shall currently be contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto.
(b) The Seller hereby covenants that neither it nor any
Affiliate of the Seller will directly solicit any Mortgagor hereunder to
refinance the related Mortgage Loan. For the purposes of the foregoing,
neither the Seller nor any Affiliate of the Seller shall be deemed to directly
solicit any Mortgagor if the Seller responds to a request from a Mortgagor
regarding a refinancing or if the Mortgagor receives marketing materials which
are generally disseminated.
ARTICLE III
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ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01. Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall
service and administer the Mortgage Loans in accordance with this Agreement
and the normal and usual standards of practice of prudent mortgage servicers,
and shall have full power and authority, acting alone, to do or cause to be
done any and all things in connection with such servicing and administration
which the Servicer may deem necessary or desirable and consistent with the
terms of this Agreement including, in the case of FHA Loans and VA Loans,
taking all actions that a mortgagee is permitted or required to take by the
FHA or the VA, as the case may be (the "Servicing Standards").
Consistent with the terms of this Agreement, the Servicer
may waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Certificateholders; provided, however, that the
Servicer shall not make future advances and (unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment
of the Servicer, imminent) the Servicer shall not permit any modification with
respect to any Mortgage Loan that would (i) change the Mortgage Interest Rate,
defer or forgive the payment thereof of any principal or interest payments,
reduce the outstanding principal amount (except for actual payments of
principal) or extend the final maturity date with respect to such Mortgage
Loan, (ii) in the case of FHA Loans and VA Loans, affect the FHA Insurance
Contract or VA Guaranty Agreement, as the case may be, with respect to such
Mortgage Loan, (iii) affect adversely the status of any REMIC as a REMIC or
(iv) cause any REMIC to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions. Notwithstanding the
foregoing, the Servicer shall not permit any modification with respect to any
Mortgage Loan that would both (x) effect an exchange or reissuance of such
Mortgage Loan under Section 1.860G-2(b) of the Treasury Regulations and (y)
cause any REMIC constituting part of the Trust Fund to fail to qualify as a
REMIC under the Code or the imposition of any tax on "prohibited transactions"
or "contributions" after the Startup Day under the REMIC Provisions. Without
limiting the generality of the foregoing, the Servicer shall continue, and is
hereby authorized and empowered to execute and deliver on behalf of itself,
and the Trustee, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Property. The
Servicer shall make all required Servicing Advances and shall service and
administer the Mortgage Loans in accordance with Applicable Regulations, and
shall provide to the Mortgagor any reports required to be provided to them
thereby. If reasonably required by the Servicer, the Trustee shall furnish the
Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
In servicing and administering FHA Loans and VA Loans, the
Servicer shall comply strictly with the National Housing Act, the FHA
Regulations, the Servicemen's Readjustment Act and the VA Regulations and
administrative guidelines issued thereunder or pursuant thereto (insofar as
the same apply to any Mortgage Loan) and, to the extent permitted hereunder,
promptly discharge all of the obligations of the mortgagee thereunder and
under each
56
Mortgage including the timely giving of notices, the essence hereof being that
the full benefits of each FHA Insurance Contract and VA Guaranty Agreement
inure to the Trustee, on behalf of the Certificateholders.
In servicing and administering the Mortgage Loans, the
Servicer shall employ procedures including collection procedures and exercise
the same care that it customarily employs and exercises in servicing and
administering mortgage loans for its own account giving due consideration to
accepted mortgage servicing practices of prudent lending institutions, the FHA
Insurance Contracts and the VA Guaranty Agreements, where applicable, and the
Certificateholders' reliance on the Servicer.
The Servicer shall give prompt notice to the Trustee of any
action, of which the Servicer has actual knowledge, to (i) assert a claim
against the Trust Fund or (ii) assert jurisdiction over the Trust Fund.
Notwithstanding anything in this Agreement to the contrary,
in the event of a Principal Prepayment in full of a Mortgage Loan, the
Servicer may not waive any prepayment penalty or portion thereof required by
the terms of the related Mortgage Note unless (i) the Servicer determines that
such waiver would maximize recovery of Liquidation Proceeds for such Mortgage
Loan, taking into account the value of such prepayment penalty, or (ii) (A)
the enforceability thereof is limited (1) by bankruptcy, insolvency,
moratorium, receivership, or other similar law relating to creditors' rights
generally or (2) due to acceleration in connection with a foreclosure or other
involuntary payment, or (B) the enforceability is otherwise limited or
prohibited by applicable law. In the event of a Principal Prepayment in full
with respect to any Mortgage Loan, the Servicer shall deliver to the Trustee
an Officer's Certificate substantially in the form of Exhibit Q no later than
the third Business Day following the immediately succeeding Determination Date
with a copy to the Class X Certificateholder. If the Servicer has waived or
does not collect all or a portion of a prepayment penalty relating to a
Principal Prepayment in full due to any action or omission of the Servicer,
other than as provided above, the Servicer shall, within 90 days of the date
on which the Principal Prepayment in full is remitted to the Trustee, deliver
to the Trustee the amount of such prepayment penalty (or such portion thereof
as had been waived for deposit) into the Distribution Account for distribution
in accordance with the terms of this Agreement.
With respect to each Mortgage Loan which is the subject of a
Principal Prepayment in full, the Trustee shall verify whether such Mortgage
Loan was identified on the Mortgage Loan Schedule as being subject to a
prepayment penalty and, if such Mortgage Loan is so identified, whether the
amount of the prepayment penalty remitted by the Servicer (including any
amounts to be remitted by the Servicer pursuant to the last sentence of the
preceding paragraph), if any, is consistent with the amount of the prepayment
penalty set forth in the Mortgage Loan Schedule. In the event that the Trustee
determines that a prepayment penalty received with respect to a Principal
Prepayment in full is inconsistent with the prepayment penalty set forth in
the Mortgage Loan Schedule for the related Mortgage Loan and such
inconsistency results in the receipt of a reduced prepayment penalty, the
Trustee shall provide written notice to the Seller of such inconsistency.
Within 90 days of receipt of such notice, the Seller shall remit to the
Trustee for deposit in the Distribution Account an amount equal to the
difference between the amount of the prepayment penalties received by the
Trustee and the amount of the prepayment penalties determined in accordance
with the description thereof set forth in the Mortgage Loan Schedule for the
related Mortgage Loans.
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The Trustee shall prepare and deliver to the Depositor and
the owner of the Class N-1, Class N-2 and Class X Certificates, on a monthly
basis, a statement setting forth the amounts due and received with respect to
prepayment penalties.
Section 3.02. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and
interest on all Mortgage Loans are paid in full, the Servicer will diligently
collect all payments due under each Mortgage Loan when the same shall become
due and payable and shall, to the extent such procedures shall be consistent
with this Agreement and the terms and provisions of any related Primary
Insurance Policy and Applicable Regulations, follow such collection procedures
as it follows with respect to mortgage loans comparable to the Mortgage Loans
and held for its own account. Further, the Servicer will take special care in
ascertaining and estimating annual ground rents, taxes, assessments, water
rates, fire and hazard insurance premiums, mortgage insurance premiums, and
all other charges that, as provided in the Mortgage, will become due and
payable to that end that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable.
Section 3.03. Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Conventional
Mortgage Loan is not paid when the same becomes due and payable, or in the
event the Mortgagor fails to perform any other covenant or obligation under
the Mortgage Loan and such failure continues beyond any applicable grace
period, the Servicer shall take such action as it shall deem to be in the best
interest of the Certificateholders. In the event that any payment due under
any FHA Loan becomes delinquent, the Servicer shall take all such actions as
are in the best interests of the Certificateholders and permitted under any
applicable FHA loss mitigation proceedings, including, but not limited to,
requesting the FHA to accept an assignment of such FHA Loan, and, upon the
Servicer's determination that foreclosure is in the best interest of the
Certificateholders, commencing foreclosure proceedings. With respect to each
VA Loan, the Servicer shall diligently seek to mitigate losses by utilizing
all remedies available in the VA Regulations. With respect to any defaulted
Mortgage Loan, the Servicer shall have the right to review the status of the
related forbearance plan and, subject to the second paragraph of Section 3.01,
may modify such forbearance plan; including, extending the Mortgage Loan
repayment date for a period of one year or reducing the Loan Rate up to 50
basis points.
In connection with a foreclosure or other conversion, the
Servicer shall exercise such rights and powers vested in it hereunder and use
the same degree of care and skill in its exercise as prudent mortgage
servicers would exercise or use under the circumstances in the conduct of
their own affairs and consistent with Applicable Regulations and the servicing
standards set forth in the FNMA Guide, including, without limitation,
advancing funds for the payment of taxes and insurance premiums with respect
to first lien Mortgage Loans.
Notwithstanding the foregoing provisions of this Section
3.03, with respect to any Mortgage Loan as to which the Servicer has received
actual notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the related Mortgaged Property, the Servicer shall not
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 would be
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considered to hold title to, to be a mortgagee-in-possession of, or to be an
owner or operator of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended from time to time, or any comparable law, unless the Servicer has
also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
A. such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic interest
of the Certificateholders to take such actions as are necessary to bring the
Mortgaged Property into compliance therewith; and
B. there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment, clean-up
or remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the
Certificateholders to take such actions with respect to the affected Mortgaged
Property.
The cost of the environmental audit report contemplated by
this Section 3.03 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.05(ii).
If the Servicer determines, as described above, that it is
in the best economic interest of the Certificateholders to take such actions
as are necessary to bring any such Mortgaged Property into compliance with
applicable environmental laws, or to take such action with respect to the
containment, clean-up or remediation of hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials affecting any such
Mortgaged Property, then the Servicer shall take such action as it deems to be
in the best economic interest of the Certificateholders. The cost of any such
compliance, containment, cleanup or remediation shall be advanced by the
Servicer, subject to the Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.05(ii).
Section 3.04. Collection Account and Distribution Account.
(a) The Servicer shall segregate and hold all funds
collected and received pursuant to each Mortgage Loan separate and apart from
any of its own funds and general assets and shall establish and maintain one
or more Collection Accounts. Each Collection Account shall be an Eligible
Account.
The Servicer shall deposit in the Collection Account on a
daily basis within two Business Days of receipt, and retain therein, the
following payments and collections received or made by it after the Cut-off
Date with respect to the Mortgage Loans:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage
Loans adjusted to the Mortgage Interest Rate less the Servicing Fee
Rate and the PMI Premium Rate;
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(iii) all proceeds from a Cash Liquidation;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 3.10, other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with
the Servicer's normal servicing procedures, the loan documents or
applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged
Property which are not released to the Mortgagor in accordance with
the Servicer's normal servicing procedures, the loan documents or
applicable law; and
(vi) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Section 3.13.
Any interest paid on funds deposited in the Collection
Account, subject to Section 3.25, shall accrue to the benefit of the Servicer
and the Servicer shall be entitled to retain and withdraw such interest from
the Collection Account pursuant to Section 3.05(v). The foregoing requirements
for deposit from 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, prepayment charges that are
not prepayment penalties, and assumption fees need not be deposited by the
Servicer in the Collection Account.
(b) On behalf of the Trust Fund, the Trustee shall establish
and maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders. On behalf
of the Trust Fund, the Servicer shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account by the close of
business New York time on the Servicer Remittance Date, that portion of the
Available Funds (calculated without regard to the references in the definition
thereof to amounts that may be deposited to the Distribution Account from a
different source as provided herein) then on deposit in the Collection
Account. Amounts in the Distribution Account shall be deemed to be held on
behalf of the related REMICs and the Grantor Trust in accordance with the
REMIC distributions set forth in Section 4.08.
(c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.25. The Servicer shall give notice to the
Trustee of the location of the Collection Account maintained by it when
established and prior to any change thereof. The Trustee shall give notice to
the Servicer and the Depositor of the location of the Distribution Account
when established and prior to any change thereof.
(d) In the event the Servicer shall deliver to the Trustee
for deposit in the Distribution Account any amount not required to be
deposited therein, it may at any time request that the Trustee withdraw such
amount from the Distribution Account and remit to the Servicer any such
amount, any provision herein to the contrary notwithstanding. In addition, the
Servicer shall deliver to the Trustee from time to time for deposit, and the
Trustee shall so deposit, in the Distribution Account in respect of REMIC 1:
(i) any Advances, as required pursuant to Section 4.07;
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(ii) any Stayed Funds, as soon as permitted by the federal
bankruptcy court having jurisdiction in such matters;
(iii) any prepayment penalties and premiums or amounts in
connection with the waiver of such prepayment penalties or premiums,
in each case required to be deposited pursuant to Section 3.01;
(iv) any amounts required to be deposited in the
Distribution Account pursuant to Section 2.03, 3.04, 3.15, 3.16,
3.23, 3.28 or 4.07; and
(v) any amounts required to be deposited by the Servicer
pursuant to Section 3.11 in connection with the deductible clause in
any blanket hazard insurance policy, such deposit being made from the
Servicer's own funds, without reimbursement therefor.
(e) Promptly upon receipt of any Stayed Funds, whether from
the Servicer, a trustee in bankruptcy, or federal bankruptcy court or other
source, the Trustee shall notify the Servicer of such receipt and deposit such
funds in the Distribution Account, subject to withdrawal thereof as permitted
hereunder. In addition, the Trustee shall deposit in the Distribution Account
any amounts required to be deposited pursuant to Section 3.15 in connection
with losses realized on Permitted Investments with respect to funds held in
the Distribution Account.
Section 3.05. Permitted Withdrawals From the Collection
Account.
The Servicer may, from time to time, withdraw from the
Collection Account for the following purposes:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Section
3.04(b) or permitted to be so remitted pursuant to the first sentence
of Section 3.04(d);
(ii) to reimburse itself for Advances and Servicing
Advances; the Servicer's right to reimburse itself pursuant to this
subclause (ii) being limited to amounts received on the related
Mortgage Loan which represent payments of (a) principal and/or
interest respecting which any such Advance was made or (b)
Condemnation Proceeds, Insurance Proceeds or Liquidation Proceeds
respecting which any such Servicing Advance was made;
(iii) to reimburse itself for unreimbursed Servicing
Advances, any unpaid Servicing Fees and for unreimbursed Advances to
the extent that such amounts are deemed to be Nonrecoverable
Advances, and to reimburse itself for such amounts to the extent that
such amounts are nonrecoverable from the disposition of REO Property
pursuant to Section 3.03 or Section 3.13 hereof;
(iv) to reimburse itself for any amounts paid pursuant to
Section 3.03 (and not otherwise previously reimbursed);
(v) to pay to itself as servicing compensation (a) any
interest earned on funds in the Collection Account (all such interest
to be withdrawn monthly not later than each Servicer Remittance Date)
and (b) the Servicing Fee from that portion of any payment or
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recovery as to interest to a particular Mortgage Loan to the extent
not retained pursuant to Section 3.04(ii);
(vi) to reimburse itself for any amounts paid pursuant to
Section 6.03 (and not otherwise previously reimbursed);
(vii) to reimburse itself for the PMI Premium, to the extent
such amounts have been deposited into the Collection Account; and
(viii) to clear and terminate the Collection Account upon
the termination of this Agreement.
The foregoing requirements for withdrawal from the
Collection Account shall be exclusive. In the event the Servicer shall deposit
in the Collection Account any amount not required to be deposited therein, it
may at any time withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding.
Section 3.06. Establishment of Escrow Accounts; Deposits in
Escrow Accounts.
The Servicer shall segregate and hold all funds collected
and received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time
deposit or demand accounts. A copy of such letter agreement shall be furnished
to the Trustee upon request. The Escrow Account shall be an Eligible Account.
The Servicer shall deposit in the Escrow Account or Accounts
on a daily basis within two Business Days of receipt, and retain therein, (i)
all Escrow Payments collected on account of the Mortgage Loans, for the
purpose of effecting timely payment of any such items as required under the
terms of this Agreement, and (ii) all Insurance Proceeds which are to be
applied to the restoration or repair of any Mortgaged Property. The Servicer
shall make withdrawals therefrom only to effect such payments as are required
under this Agreement, and for such other purposes as shall be set forth in, or
in accordance with, Section 3.07. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid
to the Mortgagor and, to the extent required by the related Mortgage Loan or
Applicable Regulations, the Servicer shall pay interest on escrowed funds to
the Mortgagor notwithstanding that the Escrow Account is non-interest bearing
or that interest paid thereon is insufficient for such purposes.
Section 3.07. Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the
Servicer (i) to effect timely payments of ground rents, taxes, assessments,
water rates, fire, flood and hazard insurance premiums, Primary Insurance
Policy premiums, if applicable, and comparable items, (ii) to reimburse the
Servicer for any Servicing Advance made by the Servicer with respect to a
related Mortgage Loan but only from amounts received on the related Mortgage
Loan which represent late payments or Late Collections of Escrow Payments
thereunder, (iii) to refund to the Mortgagor any funds as may be determined to
be overages, (iv) for transfer to the Collection Account in accordance with
the terms of this Agreement, (v) for application to restoration or repair of
the Mortgaged Property, (vi) to pay to the Servicer, or to the Mortgagor to
the extent
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required by the related Mortgage Loan or Applicable Regulations, any interest
paid on the funds deposited in the Escrow Account, (vii) to clear and
terminate the Escrow Account on the termination of this Agreement, (viii) to
transfer to the Collection Account any insurance proceeds, or (ix) in the case
of FHA Loans and VA Loans, for transfer to the Collection Account, fire and
hazard insurance proceeds and Escrow Payments with respect to any Mortgage
Loan where the FHA or VA, as the case may be, has directed application of such
funds as a credit against the proceeds of the FHA Insurance Contract or the VA
Guaranty Agreement. As part of its servicing duties, the Servicer shall pay to
the Mortgagor interest on funds in the Escrow Account, to the extent required
by the related Mortgage Loan or Applicable Regulations, and to the extent that
interest earned on funds in the Escrow Account is insufficient, shall pay such
interest from its own funds, without any reimbursement therefor.
In the event the Servicer shall deposit in the Escrow
Account any amount not required to be deposited therein, it may at any time
withdraw such amount from the Escrow Account, any provision herein to the
contrary notwithstanding.
Section 3.08. Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
With respect to each first lien Mortgage Loan, the Servicer
shall maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of Primary Insurance Policy premiums and
fire, flood and hazard insurance coverage and shall obtain, from time to time,
all bills for the payment of such charges (including renewal premiums) and
shall effect payment thereof prior to the applicable penalty or termination
date and at a time appropriate for securing maximum discounts allowable,
employing for such purpose deposits of the Mortgagor in the Escrow Account
which shall have been estimated and accumulated by the Servicer in amounts
sufficient for such purposes, as allowed under the terms of the Mortgage or
Applicable Regulations. To the extent that the Mortgage does not provide for
Escrow Payments, the Servicer shall determine that any such payments are made
by the Mortgagor at the time they first become due. The Servicer assumes full
responsibility for the timely payment of all such bills and shall effect
timely 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 from its own funds to effect such payments.
The Servicer, on behalf of the Trustee, as mortgagee, will
maintain in full force and effect (to the extent a Mortgage Loan has a Primary
Insurance Policy) a Primary Insurance Policy issued by a Qualified Insurer
with respect to each Mortgage Loan for which such coverage is required. Such
coverage will be maintained until the Combined Loan-to-Value Ratio of the
related Mortgage Loan is reduced to 80% or less. The Servicer will not cancel
or refuse to renew any Primary Insurance Policy in effect on the Closing Date
that is required to be kept in force under this Agreement unless a replacement
Primary Insurance Policy for such cancelled or non-renewed policy is obtained
from and maintained with a Qualified Insurer. The Servicer shall not take any
action which would result in non-coverage under any applicable Primary
Insurance Policy of any loss which, but for the actions of the Servicer, would
have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into pursuant to Section
3.14, the Servicer shall promptly notify the insurer under the related Primary
Insurance Policy, if any, of such assumption or substitution of liability in
accordance with the terms of such policy and shall take all actions which may
be required by
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such insurer as a condition to the continuation of coverage under the Primary
Insurance Policy. If such Primary Insurance Policy is terminated as a result
of such assumption or substitution of liability, the Servicer shall obtain a
replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Servicer
agrees to prepare and present, on behalf of itself and the Trustee, claims to
the insurer under any Primary Insurance Policy in a timely fashion in
accordance with the terms of such policies and, in this regard, to take such
action as shall be necessary to permit recovery under any Primary Insurance
Policy respecting a defaulted Mortgage Loan. Pursuant to Section 3.04, any
amounts collected by the Servicer under any Primary Insurance Policy shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.05.
Section 3.09. Transfer of Accounts.
The Servicer may transfer the Collection Account or the
Escrow Account to a different depository institution from time to time. Upon
such transfer, the Servicer shall deliver to the Trustee and the Depositor, a
certification or letter agreement, as the case may be, as required pursuant to
Sections 3.04 and 3.06.
Section 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each first
lien 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 (i) the amount necessary to fully
compensate for any damage or loss to the improvements which are a part of such
property on a replacement cost basis, (ii) the Principal Balance of the
Mortgage Loan, in each case in an amount not less than such amount as is
necessary to prevent the Mortgagor and/or the Mortgagee from becoming a
co-insurer or (iii) the amount required under applicable HUD/FHA regulations.
If the Mortgaged Property is in an area identified in the Federal Register by
the Flood Emergency Management Agency as having special flood hazards and
flood insurance has been made available, the Servicer will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least
of (i) the Principal Balance of the Mortgage Loan, (ii) the maximum insurable
value of the improvements securing such Mortgage Loan or (iii) the maximum
amount of insurance which is available under the Flood Disaster Protection Act
of 1973, as amended. The Servicer shall also maintain on the REO Property for
the benefit of the Certificateholders, (x) fire and hazard insurance with
extended coverage in an amount which is at least equal to the replacement cost
of the improvements which are a part of such property, (y) public liability
insurance and, (z) to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in an amount as
provided above. Any amounts collected by the Servicer under any such policies
other than amounts to be deposited in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or REO Property, or released
to the Mortgagor in accordance with the Servicer's normal servicing
procedures, shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.05. It is understood and agreed that no
earthquake or other additional insurance is required to be maintained by the
Servicer or the Mortgagor or maintained on property acquired in respect of the
Mortgage Loan, other than pursuant to such Applicable Regulations as shall at
any time be in force and as shall require such additional insurance. All such
policies shall be endorsed with standard mortgagee clauses with
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loss payable to the Servicer and shall provide for at least thirty days prior
written notice of any cancellation, reduction in the amount of or material
change in coverage to the Servicer. The Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Servicer shall not accept any such
insurance policies from insurance companies unless such companies currently
reflect a general policy rating of B:VI or better in Best's Key Rating Guide
and are licensed to do business in the state wherein the property subject to
the policy is located.
Section 3.11. Maintenance of Mortgage Impairment Insurance
Policy.
In the event that the Servicer shall obtain and maintain a
blanket policy issued by an insurer that has a general policy rating of B:VI
or better in Best's Key Rating Guide insuring against hazard losses on all of
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 3.10 and otherwise
complies with all other requirements of Section 3.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 3.10, it
being understood and agreed that such policy may contain a deductible clause,
in which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy
complying with Section 3.10, and there shall have been a loss which would have
been covered by such policy, deliver to the Trustee for deposit in the
Distribution Account the amount not otherwise payable under the blanket policy
because of such deductible clause, which amount shall not be reimbursable to
the Servicer from the Trust Fund. In connection with its activities as
servicer of the Mortgage Loans, the Servicer agrees to prepare and present, on
behalf of the Trustee, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy. Upon request of the
Trustee, the Servicer shall cause to be delivered to the Trustee a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without thirty
days prior written notice to the Trustee.
Section 3.12. Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket
fidelity bond (the "Fidelity Bond") and an errors and omissions insurance
policy, with broad coverage with financially responsible companies on all
officers, employees or other persons acting in any capacity with regard to the
Mortgage Loans to handle funds, money, documents and papers relating to the
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be
in the form of the Mortgage Banker's Blanket Bond and shall protect and insure
the Servicer against losses, including forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such persons. Such Fidelity Bond
shall also protect and insure the Servicer against losses in connection with
the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 3.12 requiring the Fidelity Bond and errors and omissions
insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The minimum coverage under any
such bond and insurance policy shall be at least equal to the corresponding
amounts required by FNMA in the FNMA MBS Selling and Servicing Guide or by
FHLMC in the FHLMC Servicer's Guide. Upon request of the Trustee, the Servicer
shall cause to be delivered to the Trustee a certified true copy of the
Fidelity Bond and errors and omissions insurance policy and a statement from
the surety and the insurer that such Fidelity Bond and errors and omissions
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insurance policy shall in no event be terminated or materially modified
without thirty days' prior written notice to the Trustee.
Section 3.13. Title, Management and Disposition of REO
Property.
(a) In the event that title to a Mortgaged Property is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be taken (pursuant to a limited power of attorney to
be provided by the Trustee to the Servicer) in the name of the Trustee, on
behalf of the Certificateholders, or in the event the Trustee is not
authorized or permitted to hold title to real property in the state where the
REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an Opinion of Counsel obtained by the Servicer from
an attorney duly licensed to practice law in the state where the REO Property
is located. Any Person or Persons holding such title other than the Trustee
shall acknowledge in writing that such title is being held as nominee for the
benefit of the Trustee.
(b) In the event that the Trust Fund acquires any REO
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Servicer shall dispose of such REO Property
before the end of the third calendar year beginning after the year of its
acquisition by the Trust Fund for purposes of Section 860G(a)(8) of the Code
or, at the expense of the Trust Fund, request from the Internal Revenue
Service, more than 60 days before the day on which the above-mentioned grace
period would otherwise expire, an extension of the above-mentioned grace
period, unless the Servicer obtains an Opinion of Counsel, addressed to the
Servicer and the Trustee, to the effect that the holding by the Trust Fund of
such REO Property subsequent to such period will not: (i) result in the
imposition of any tax on "prohibited transactions" as defined in Section 860F
of the Code; or (ii) cause any REMIC constituting any part of the Trust Fund
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 REO
Property (subject to any conditions contained in such Opinion of Counsel). The
Servicer shall be entitled to be reimbursed from the Collection Account for
any costs incurred in obtaining such Opinion of Counsel, as provided in
Section 3.05.
Subject to compliance with applicable laws and regulations
as shall at any time be in force, and notwithstanding any other provisions of
this Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would: (i) cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code; or (ii) subject any REMIC
constituting part of the Trust Fund to the imposition of any federal income
taxes on the income earned from such REO Property, including any taxes imposed
by reason of Sections 860F or 860G(c) of the Code, unless the Servicer has
agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.
The Servicer shall manage, conserve, protect and operate
each REO Property for the Certificateholders and the Trust Fund 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 the
related REMIC of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B)
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of the Code, or any "net income from foreclosure property" which is subject to
taxation under the REMIC Provisions. The Servicer shall cause each REO
Property to be inspected promptly upon the acquisition of title thereto and
shall cause each REO Property to be inspected at least annually thereafter.
The Servicer shall make or cause to be made a written report of each such
inspection. Such reports shall be retained in the Mortgage Servicing File and
copies thereof shall be forwarded by the Servicer to the Trustee upon request.
The Servicer shall attempt to sell the same (and may temporarily rent the
same) on such terms and conditions as the Servicer deems to be in the best
interest of the Certificateholders and the Trust Fund.
With respect to each REO Property, the Servicer shall
segregate and hold all funds collected and received in connection with the
operation of the REO Property separate and apart from its own funds or general
assets and shall establish and maintain with respect to all REO Property an
REO Account or Accounts in the form of a time deposit or demand account,
unless an Opinion of Counsel is obtained by the Servicer to the effect that
the classification as a REMIC for federal income tax purposes of the
arrangement under which the Mortgage Loans and the REO Property is held will
not be adversely affected by holding such funds in another manner. Such REO
Account shall be established with the Servicer or with a commercial bank, a
mutual savings bank or a savings and loan association. The creation of any REO
Account shall be evidenced by a letter agreement, in the case of an account
held by a depository. In either case, an original of such certification or
letter agreement shall be furnished to the Trustee upon request.
The Servicer shall deposit or cause to be deposited, on a
daily basis, within two Business Days of receipt, in each REO Account, all
revenues received with respect to the related REO Property and shall withdraw
therefrom funds necessary for the proper operation, management and maintenance
of the REO Property, including the cost of maintaining any hazard insurance
pursuant to Section 3.10 hereof and the fees of any managing agent acting on
behalf of the Servicer. The Servicer shall have the right to earn interest, if
any, on funds deposited in such REO Account. On or before each Determination
Date, the Servicer shall withdraw from each REO Account and deposit into the
Collection Account the net receipts from the REO Property on deposit in the
REO Account and retain any interest.
The Servicer shall furnish to the Trustee, on each Servicer
Remittance Date, an operating statement for each REO Property covering the
operation of each REO Property for the previous month. Such operating
statement shall be accompanied by such other information as the Trustee shall
reasonably request.
The Servicer shall use its best efforts to dispose of the
REO Property as promptly as is practically consistent with protecting the
Certificateholders' interests.
Each REO Disposition shall be carried out by the Servicer at
such price and upon such terms and conditions as the Servicer deems to be in
the best interest of the Certificateholders. If as of the date title to any
REO Property was acquired by the Servicer there were outstanding unreimbursed
Servicing Advances with respect to the REO Property, the Servicer, upon an REO
Disposition of such REO Property, shall be entitled to reimbursement for any
related unreimbursed Servicing Advances from proceeds received in connection
with such REO Disposition. The proceeds from the REO Disposition, net of any
payment to the Servicer as provided above, shall be deposited in the REO
Account and shall be transferred to the
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Collection Account on the Determination Date in the month following receipt
thereof for distribution on the succeeding Servicer Remittance Date in
accordance with Section 4.01.
Any REO Disposition shall be for cash only (unless changes
in the REMIC Provisions made subsequent to the Startup Day allow a sale for
other consideration and an Opinion of Counsel is obtained by the Servicer to
the effect that such sale shall not cause any REMIC constituting part of the
Trust Fund to fail to qualify as a REMIC).
The Servicer shall not complete, or allow to be completed, a
foreclosure or accept a deed in lieu of a foreclosure with respect to any
Ineligible Foreclosure Property Loan if it would cause the Trustee to hold REO
Property from Ineligible Foreclosure Property Loans with an aggregate value in
excess of 0.75% of the aggregate outstanding Principal Balance of the Mortgage
Loans as of the end of the prior Collection Period. If the Value of REO
Property from Ineligible Foreclosure Property Loans equals or exceeds 1% of
the outstanding Principal Balance of the Mortgage Loans as of the end of any
Collection Period, the Seller shall purchase at the Purchase Price on or prior
to the related Distribution Date sufficient REO Property from Ineligible
Foreclosure Property Loans to cause the Trustee to hold REO Property from
Ineligible Foreclosure Property Loans with a Value of less than 1% of the
outstanding Principal Balance of the Mortgage Loans and such proceeds shall be
treated as received during the related Prepayment Period. If the Seller shall
fail to purchase any REO Property as described in the preceding sentences, the
Servicer shall sell such REO Property as soon as reasonably practicable and in
a commercially reasonable manner. For purposes of this paragraph the "Value"
of REO Property from a Ineligible Foreclosure Property Loan shall be treated
as equal to the Principal Balance of the related Ineligible Foreclosure
Property Loan plus interest that had accrued on such Mortgage Loan as of the
date of acquisition of the REO Property by the Trustee. The Trustee shall
reconvey a Mortgage Loan so purchased in the same manner and under the same
terms as specified in Section 2.03.
Section 3.14. Due-on-Sale Clauses; Assumption and
Substitution Agreements.
When a Mortgaged Property has been or is about to be
conveyed by the Mortgagor, the Servicer shall, to the extent it has knowledge
of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the "due-on-sale"
clause, in the reasonable belief of the Servicer, is not enforceable under
applicable law. An Opinion of Counsel at the expense of the Servicer (which
expense shall constitute a Servicing Advance) delivered to the Trustee and the
Depositor to the foregoing effect shall conclusively establish the
reasonableness of such belief. In such event, the Servicer shall make
reasonable efforts to enter into an assumption and modification agreement with
the Person to whom such property has been or is about to be conveyed, pursuant
to which such Person becomes liable under the Mortgage Note and, unless
prohibited by applicable law or the Mortgage, the Mortgagor remains liable
thereon. If the foregoing is not permitted under applicable law, the Servicer
is 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 Mortgagor and becomes liable under the Note.
The Mortgage Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement. The Servicer
shall notify the Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Trustee (or the Custodian, as the case
may be) the original copy of such assumption or substitution
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agreement (indicating the Mortgage File to which it relates) which copy shall
be added by the Trustee (or the Custodian, as the case may be) to the related
Mortgage File and which shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording
any such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, the Monthly Payment on the related
Mortgage Loan shall not be changed but shall remain as in effect immediately
prior to the assumption or substitution, the stated maturity or outstanding
principal amount of such Mortgage Loan shall not be changed nor shall any
required monthly payments of principal or interest be deferred or forgiven.
Any fee collected by the Servicer for consenting to any such conveyance or
entering into an assumption or substitution agreement shall be retained by or
paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other
provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan by operation of law or any assumption
which the Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 3.15. Notification of Adjustments.
On each Adjustment Date, the Servicer shall make Mortgage
Interest Rate adjustments for each Group 2 Mortgage Rate Loan in compliance
with the requirements of the related Mortgage and Mortgage Note and Applicable
Regulations. The Servicer shall execute and deliver the notices required by
each Mortgage and Mortgage Note and Applicable Regulations regarding Mortgage
Interest Rate adjustments. The Servicer also shall provide timely notification
to the Trustee of all applicable data and information regarding such Mortgage
Interest Rate adjustments and the Servicer's methods of implementing such
Mortgage Interest Rate adjustments. Upon the discovery by the Servicer or the
Trustee that the Servicer has failed to adjust or has incorrectly adjusted a
Mortgage Interest Rate or a Monthly Payment pursuant to the terms of the
related Mortgage Note and Mortgage, the Servicer shall deliver to the Trustee
for deposit in the Distribution Account from its own funds the amount of any
interest loss caused thereby without reimbursement therefor; provided,
however, the Servicer shall be held harmless with respect to any Mortgage
Interest Rate adjustments made by any servicer prior to the Servicer.
Section 3.16. Optional Purchases of Mortgage Loans by
Servicer.
The Servicer (or an Affiliate of the Servicer) may, at its
option, purchase a Mortgage Loan or REO Property which becomes 120 or more
days delinquent or for which the Servicer has accepted a deed in lieu of
foreclosure. Prior to purchase pursuant to this Section 3.16, the Servicer
shall be required to continue to make monthly advances pursuant to Section
4.07. The Servicer shall not use any procedure in selecting Mortgage Loans to
be purchased which is materially adverse to the interests of the
Certificateholders. The Servicer (or an Affiliate of the Servicer) shall
purchase such (i) delinquent Mortgage Loan at a price equal to the Principal
Balance of the Mortgage Loan plus accrued interest thereon at the Mortgage
Interest Rate from the date to which interest has last been paid to the Trust
Fund to the date of purchase plus any unreimbursed Servicing Advances and
Advances or (ii) REO Property at its fair market value as determined in good
faith by the Servicer. Any such repurchase of a
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Mortgage Loan or REO Property pursuant to this Section 3.16 shall be
accomplished by delivery to the Trustee for deposit in the Distribution
Account of the amount of the purchase price. The Trustee shall immediately
effectuate the conveyance of such delinquent Mortgage Loan or REO Property to
the Servicer (or the Affiliate of the Servicer exercising such purchase
option) to the extent necessary, including the prompt delivery of all
documentation to the Servicer (or the Affiliate of the Servicer exercising
such purchase option).
Section 3.17. Optional Purchase of Defaulted Loans by Seller
On or after [September 30, 2001,] as to any Mortgage Loan
which is Delinquent in payment by 120 days or more, the Seller may, at its
option, purchase such Mortgage Loan from the Trust Fund at the Purchase Price
for such Mortgage Loan provided that the Seller may exercise the purchase
right during the period commencing on the first day of the calendar quarter
succeeding the calendar quarter in which the Initial Delinquency Date occurred
and ending on the last Business Day of such calendar quarter. The "Initial
Delinquency Date" of a Mortgage Loan shall mean the date on which the Mortgage
Loan first became 120 days Delinquent or, in the event such loan is a
Re-Performing Mortgage Loan which is Delinquent 120 days or more as of the
Cut-off Date, the date on which the such Re-Performing Mortgage Loan first
becomes an additional 30 days or ore Delinquent.
If the Seller does not exercise the purchase right with
respect to a Mortgage Loan during the period specified in the preceding
paragraph, such Mortgage Loan shall thereafter again become eligible for
purchase pursuant to the preceding paragraph only after the Mortgage Loan
ceases to be 120 days or more Delinquent and thereafter becomes 120 day
Delinquent again.
Section 3.18. Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including
any liquidation of such Mortgage Loan through foreclosure or otherwise, or the
receipt by the Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes), the Servicer shall deliver
to the Trustee (or the Custodian as the case may be) two executed copies of a
completed "Request for Release" in the form of Exhibit E. Upon receipt of such
Request for Release of Documents, the Trustee (or the Custodian as the case
may be) shall promptly release the related Mortgage File, in trust to (i) the
Servicer, or (ii) such other party identified in the related Request for
Release. Upon any such payment in full, or the receipt of such notification
that such funds have been placed in escrow, the Servicer shall direct the
Trustee in writing to execute an instrument of satisfaction (or assignment of
Mortgage without recourse) regarding the Mortgaged Property relating to such
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 payment in full, it being understood and agreed that no expense
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Collection Account. In lieu of
executing any such satisfaction or assignment, as the case may be, the
Servicer may prepare and submit to the Trustee a satisfaction (or assignment
without recourse, if requested by the Person or Persons entitled thereto) in
form for execution by the Trustee with all requisite information completed by
the Servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related Mortgage File, as aforesaid.
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(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any insurance
policy relating to a Mortgage Loan, the Trustee shall (except in the case of
the payment or liquidation pursuant to which the related Mortgage File is
released to an escrow agent or an employee, agent or attorney of the Trustee),
upon written request of the Servicer and delivery to the Trustee (or the
Custodian, as the case may be) of two executed copies of a "Request for
Release" in the form of Exhibit E signed by a Servicing Officer, release the
related Mortgage File to the Servicer and shall execute such documents as
shall be necessary to the prosecution of any such proceedings, including,
without limitation, an assignment without recourse of the related Mortgage to
the Servicer. Such receipt shall obligate the Servicer to return the Mortgage
File to the Trustee (or the Custodian, as the case may be) when the need
therefor by the Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a Request for Release evidencing
such liquidation, the receipt shall be released by the Trustee (or the
Custodian, as the case may be) to the Servicer.
(c) Subject to Section 3.01, the Servicer shall have the
right to accept applications of Mortgagors for consent to (i) partial releases
of Mortgages, (ii) alterations, (iii) removal, demolition or division of
properties subject to Mortgages and (iv) second mortgage subordination
agreements. No application for approval shall be considered by the Servicer
unless: (w) it has received an Opinion of Counsel, addressed to the Trustee
(which opinion shall not be an expense of the Trustee or the Trust Fund) that
such sale, disposition, substitution, acquisition or contribution will not
affect adversely the status of any REMIC constituting part of the Trust Fund
as a REMIC or cause any REMIC constituting part of the Trust Fund to be
subject to a tax on "prohibited transactions" or "contributions" pursuant to
the REMIC Provisions; (x) the provisions of the related Note and Mortgage have
been complied with; (y) the Combined Loan-to-Value Ratio and debt-to-income
ratio after any release does not exceed the maximum Combined Loan-to-Value
Ratio and debt-to-income ratio established in accordance with the underwriting
standards of the Mortgage Loans; and (z) the lien priority of the related
Mortgage is not affected. Upon receipt by the Trustee of a Servicing Officer's
certificate setting forth the action proposed to be taken in respect of a
particular Mortgage Loan and certifying that the criteria set forth in the
immediately preceding sentence have been satisfied, the Trustee shall execute
and deliver to the Servicer the consent or partial release so requested by the
Servicer. A proposed form of consent or partial release, as the case may be,
shall accompany any Servicing Officer's certificate delivered by the Servicer
pursuant to this paragraph.
Section 3.19. Servicing Compensation.
As compensation for its activities hereunder, the Servicer
shall be entitled to retain the amount of the Servicing Fee with respect to
each Mortgage Loan (including REO Properties). The Servicer shall be entitled
to retain additional servicing compensation in the form of release fees, bad
check charges, assumption fees, modification or extension fees, late payment
charges, or any other service-related fees, Insurance Proceeds and Liquidation
Proceeds not required to be deposited in the Collection Account and similar
items, to the extent collected from Mortgagors. Additionally, the Servicer
shall be entitled to the Special Servicing Fee, payable in accordance with
Section 4.02.
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Section 3.20. Annual Statement as to Compliance.
(a) The Servicer, at its own expense, will deliver to the
Trustee and the Depositor, not later than 90 days following the end of the
fiscal year of the Servicer which as of the Startup Day ends on the last day
of December, commencing in 2001, a Servicing Officer's certificate stating, as
to each signer thereof, that (i) a review of the activities of the Servicer
during such preceding fiscal year (or such shorter period in the case of the
first such report) and of performance under this Agreement has been made under
such officers' supervision, and (ii) to the best of such officers' knowledge,
based on such review, the Servicer has fulfilled all its obligations under
this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to
such officers and the nature and status thereof including the steps being
taken by the Servicer to remedy such default.
(b) Delivery of such reports, information and documents to
the Trustee is for informational purposes only and their receipt of such shall
not constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.21. Annual Independent Certified Public
Accountants' Reports.
(a) Not later than 90 days following the end of each fiscal
year of the Servicer commencing in 2001, the Servicer, at its expense, shall
cause a nationally recognized firm of independent certified public accountants
to furnish to the Trustee and the Depositor a report stating that (i) it has
obtained a letter of representation regarding certain matters from the
management of the Servicer which includes an assertion that the Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in either the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America or the
Audit Program for Mortgages serviced by FHLMC, 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 in all material respects,
subject to such exceptions and other qualifications that may be appropriate.
Immediately upon receipt of such report, the Servicer shall furnish a copy of
such report to the Trustee, the Depositor and each Rating Agency. Copies of
such statement shall be provided by the Trustee to any Certificateholder upon
request at the Servicer's expense, provided that such statement is delivered
by the Servicer to the Trustee.
(b) Delivery of such reports, information and documents to
the Trustee is for informational purposes only and their receipt of such shall
not constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(c) The Trustee shall, on behalf of the Trust Fund, prepare
and shall file with the Securities and Exchange Commission any and all
reports, statements and information respecting the Trust which the Depositor
determines are required to be filed with the Securities and Exchange
Commission pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended, each such report, statement and information to be filed
on or prior to the
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required filing date for such report, statement or information. Upon the
request of the Trustee, each of the Seller, the Servicer and the Depositor
shall cooperate with the Trustee in the preparation of any such report and
shall provide to the Trustee in a timely manner all such information or
documentation as the Trustee may reasonably request in connection with the
performance of its duties and obligations under this Section.
Section 3.22. Access to Certain Documentation and
Information Regarding the Mortgage Loans.
The Servicer shall provide to the Trustee,
Certificateholders that are federally insured savings and loan associations,
the Office of Thrift Supervision, the FDIC and the supervisory agents and
examiners of each of the foregoing (which, in the case of supervisory agents
and examiners, may be required by applicable state and federal regulations)
access to the documentation regarding the Mortgage Loans, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer designated by it.
Section 3.23. Reserved.
Section 3.24. Obligations of the Servicer in Respect of
Compensating Interest.
Not later than the close of business on each Servicer
Remittance Date, the Servicer shall deliver to the Trustee for deposit in the
Distribution Account an amount ("Compensating Interest") equal to the lesser
of (A) the aggregate of the Prepayment Interest Shortfalls on the Actuarial
Mortgage Loans for the related Distribution Date resulting from Principal
Prepayments on the Actuarial Mortgage Loans during the related Prepayment
Period and (B) 50% of its aggregate Servicing Fee received in the related
Collection Period. The Servicer shall apply Compensating Interest to offset
any Prepayment Interest Shortfalls on the Actuarial Mortgage Loans. The
Servicer shall not have the right to reimbursement for any amounts remitted to
the Trustee in respect of Compensating Interest. Such amounts so remitted
shall be included in the Available Funds and distributed therewith on the next
Distribution Date. The Servicer shall not be obligated to pay Compensating
Interest with respect to Prepayment Interest Shortfalls on Simple Interest
Mortgage Loans or Relief Act Interest Shortfalls.
Section 3.25. Obligations of the Servicer in Respect of
Mortgage Interest Rates and Monthly Payments.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Interest Rates, Monthly Payments or Principal Balances
that were made by the Servicer in a manner not consistent with the terms of
the related Mortgage Note and this Agreement, the Servicer, upon discovery or
receipt of notice thereof, immediately shall deliver to the Trustee for
deposit in the Distribution Account from its own funds the amount of any such
shortfall and shall indemnify and hold harmless the Trust Fund, the Trustee,
the Depositor and any successor servicer in respect of any such liability.
Such indemnities shall survive the termination or discharge of this Agreement.
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Section 3.26. Investment of Funds in the Collection Account
and the Distribution Account.
(a) The Servicer may direct any depository institution
maintaining the Collection Account and the Trustee may direct any depository
institution maintaining the Distribution Account (for purposes of this Section
3.25, each an "Investment Account"), to invest the funds in such 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 Trustee 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 Trustee is the obligor thereon. All such Permitted
Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account shall be made in the name of the
Trustee or the Servicer, as applicable (in its capacity as such) or in the
name of a nominee of the Trustee. The Trustee shall be entitled to sole
possession (except with respect to investment direction of funds held in the
Collection Account) over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment shall be
delivered directly to the Trustee 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 an Investment Account are at any
time invested in a Permitted Investment payable on demand, the Trustee shall
at the direction of the Servicer:
(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 determination by
a Responsible Officer of the Trustee 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 in the Collection Account shall be for the benefit of the Servicer. The
Servicer shall deposit in the Collection Account the amount of any loss
incurred in respect of any such Permitted Investment made with funds in such
account immediately upon realization of such loss. All income and gain
realized from the investment of funds in the Distribution Account shall be for
the benefit of the Trustee. The Trustee shall deposit in 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 8.01
and Section 8.02(a)(v), upon the request of the Holders of Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of
appropriate proceedings.
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The Trustee shall not in any way be held liable by reason of
any insufficiency in any Account held by the Trustee resulting from any
investment loss on any Permitted Investment included therein (except to the
extent that the Trustee is the obligor and has defaulted thereon).
Section 3.27. Liability of Servicer; Indemnification.
(a) Subject to clause (b) below and Section 6.03, the
Servicer (except the Trustee if it is required to succeed the Servicer
hereunder) indemnifies and holds the Trustee, the Seller, the Depositor and
each Certificateholder harmless against any and all claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and
any other costs, fees and expenses that the Trustee, the Depositor and any
Certificateholder may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance
with the Servicing Standards. The Servicer shall immediately notify the
Trustee, the Depositor and each Certificateholder if a claim is made that may
result in such claims, losses, penalties, fines, forfeitures, legal fees or
related costs, judgments, or any other costs, fees and expenses, and the
Servicer shall assume (with the consent of the Trustee) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Depositor and/or
Certificateholder in respect of such claim. The provisions of this Section
3.26 shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
(b) None of the Depositor, the Seller, the Servicer, or any
of the directors, officers, employees or agents of the Depositor, the Seller
or the Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
Depositor, the Seller or the Servicer or any such Person against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Servicer for a breach of the Servicing Standard, or against any
liability which would otherwise be imposed by reason of its respective willful
misfeasance, bad faith, fraud or negligence in the performance of its duties
or by reasons of negligent disregard of its respective obligations or duties
hereunder.
The Depositor, the Servicer, the Seller and any director,
officer, employee or agent of the Depositor, the Seller or the Servicer, may
rely in good faith on any document of any kind which, prima facie, is properly
executed and submitted by any appropriate Person with respect to any matters
arising hereunder. The Depositor, the Servicer, the Seller, and any director,
officer, employee or agent of the Depositor, the Seller or the 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 or the Certificates, other than any loss, liability or expense
incurred in connection with any legal action incurred by reason of its
respective misfeasance, bad faith, fraud or negligence, a breach of a
representation or warranty hereunder or (in the case of the Servicer) a breach
of the Servicing Standard in the performance of its respective duties or by
reason of negligent disregard of its respective obligations or duties
hereunder. Neither the Depositor, the Seller nor the 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 expose it to any expense or liability; provided, however,
that the Depositor, the Seller or the Servicer may in its discretion undertake
any action related to its obligations hereunder which it may deem necessary or
desirable with
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respect to this Agreement and the rights and duties of the parties hereto and
the interests of the Certificateholders hereunder.
Section 3.28. Reports of Foreclosure and Abandonment of
Mortgaged Properties.
On or before the last day of February of each year beginning
in 2002, the Servicer shall file the reports of foreclosure and abandonment of
any Mortgaged Property required by Section 6050J of the Code with the Internal
Revenue Service and provide an Officer's Certificate certifying its compliance
with this Section 3.27 to the Trustee. The reports from the Servicer shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Section 6050J.
Section 3.29. Claims Under the PMI Policy.
The Servicer shall, on behalf of the Trustee, prepare and
file in a timely basis with the PMI Insurer, with a copy to the Trustee, all
claims which may be made under the PMI Policy with respect to PMI Mortgage
Loans. Consistent with its rights and obligations hereunder, the Servicer
shall take all actions required under the PMI Policy as a condition to the
payment of any such claim. Any amount received from the PMI Insurer with
respect to any such PMI Mortgage Loan shall be deposited by the Servicer, not
later than two Business Days following receipt thereof, into the Distribution
Account for distribution on the related Distribution Date as part of
Liquidation Proceeds for the related Loan Group.
The Servicer hereby covenants that it shall pay the PMI
Insurer the PMI Premium due under the PMI Policy with respect to the PMI
Mortgage Loans.
Section 3.30. Protection of Assets.
(a) Except for transactions and activities entered into in
connection with the securitization that is the subject of this Agreement, the
Trust is not authorized and has no power to:
(1) borrow money or issue debt;
(2) merge with another entity, reorganize, liquidate or sell
assets; or
(3) engage in any business or activities.
(b) Each party to this Agreement agrees that it will not
file an involuntary bankruptcy petition against the Trustee or the Trust Fund
or initiate any other form of insolvency proceeding until after the
Certificates have been paid.
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ARTICLE IV
FLOW OF FUNDS
Section 4.01. Interest Distributions.
On each Distribution Date, the Trustee shall withdraw from
the Distribution Account the Interest Remittance Amount and apply it in the
following order of priority (based upon the Mortgage Loan information provided
to it in the Remittance Report, upon which the Trustee may conclusively rely),
and the calculations required to be made by the Trustee, to the extent
available:
(i) to the Trustee, the Trustee Fee for such Distribution
Date;
(ii) concurrently, to the Class A-IO, Class A-1F, Class
A-2F, Class A-3F and Class A-1A Certificates, pro rata, the
applicable Accrued Certificate Interest for such Distribution Date;
(iii) concurrently, to the Class A-IO, Class A-1F, Class
A-2F, Class A-3F and Class A-1A Certificates, pro rata, the
applicable Interest Carry Forward Amount for the Class A-IO, Class
A-1F, Class A-2F, Class A-3F and Class A-1A Certificates,
respectively;
(iv) to the Class M-1 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(v) to the Class M-2 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(vi) to the Class B-1 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(vii) to the Class B-2 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date; and
(viii) the amount, if any, of the Interest Remittance Amount
remaining after application with respect to the priorities set forth
above will be applied as described under Section 4.02(b) hereof.
Any payment of interest to the Class A-1A Certificates in
excess of the Pool Cap (including payments pursuant to clause (iii) and any
LIBOR Carryover Amounts) shall be accounted for by the Trustee as though
distributed to the Class X Certificate and then paid by the Class X
Certificate to an outside reserve fund owned for U.S. federal income tax
purposes by the Class X Certificateholders. The Class A-1A Certificateholders'
right to such additional amount shall be accounted for by the Trustee as
contractual right to reserve such amounts separate and apart from the REMIC
Regular Interest as required by Treasury Regulation ss. 1.860G-2(i). Any Rate
Payment Amounts that come from amounts that otherwise would be distributed to
the Class T4-N2 Certificate shall be treated as distributed to such
Certificate and then paid by such Certificate to the Reserve Fund. This
payment obligation of the Class T4-N2 shall be accounted for by the Trustee as
an obligation separate from the REMIC Regular Interest represented by the
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Class T4-N2 and the right of reimbursement of such amounts from amounts
otherwise distributable to the Class X Certificate shall also be accounted for
as a right separate from the REMIC Regular Interest represented by the Class
T4-N2 Interest consistent with the requirements of Treasury Regulation Section
1.860G-2(i). The Class T3-N2 Interest shall not be treated as having an
obligation to make such payments. Notwithstanding the foregoing, to the extent
that the principal balance of the Class T3-N2 Interest is less than the
Overcollateralization Amount, the Class T3-N2 Interest shall be treated as
accruing interest to the extent such accrual would not cause its balance to
exceed the Overcollateralization Amount and such amounts shall be treated as
paid to the Class X/N Interest.
Section 4.02. Distributions of Principal and Monthly Excess
Cashflow Amounts.
(a) On each Distribution Date, the Trustee shall make the
following distributions in the following order of priority (based upon the
Mortgage Loan information provided to it in the Remittance Report), and the
calculations required to be made by the Trustee, to the extent of the
Principal Distribution Amount:
(i) before the Stepdown Date or with respect to which a
Trigger Event is in effect,
(A) concurrently, as follows:
(1) sequentially to the Holders of the Class
A-1F, Class A-2F and Class A-3F Certificates, in that
order, the Group 1 Principal Percentage of the
Principal Distribution Amount for such Distribution
Date, until the Certificate Principal Balance of each
such Class has been reduced to zero and then to the
Class A-1A Certificates, until the Certificate
Principal Balance of such Class has been reduced to
zero; and
(2) to the Holders of the Class A-1A
Certificates, the Group 2 Principal Percentage of the
Principal Distribution Amount for such Distribution
Date, until the Certificate Principal Balance of such
Class has been reduced to zero and then sequentially
to the Class A-1F, Class A-2F and Class A-3F
Certificates, in that order, until the Certificate
Principal Balance of each such Class has been reduced
to zero;
(B) to the Holders of the Class M-1 Certificates, 100%
of the remaining Principal Distribution Amount for such
Distribution Date, until the Certificate Principal Balance
of the Class M-1 Certificates has been reduced to zero;
(C) to the Holders of the Class M-2 Certificates, 100%
of the remaining Principal Distribution Amount, until the
Certificate Principal Balance of the Class M-2 Certificates
has been reduced to zero;
(D) to the Holders of the Class B-1 Certificates, 100%
of the remaining Principal Distribution Amount, until the
Certificate Principal Balance of the Class B-1 Certificates
has been reduced to zero;
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(E) to the Holders of the Class B-2 Certificates, 100%
of the remaining Principal Distribution Amount, until the
Certificate Principal Balance of the Class B-2 Certificates
has been reduced to zero; and
(F) any amount of the Principal Distribution Amount
remaining after making all of the distributions in clauses
(A), (B), (C), (D) and (E) shall be applied as set forth in
Section 4.02(b).
(ii) on or after the Stepdown Date and as long as a Trigger
Event is not in effect:
(A) Concurrently as follows:
(1) the Group 1 Principal Percentage of the lesser of
(x) the Principal Distribution Amount and (y) Class A
Principal Distribution Amount will be distributed
sequentially, to the Class A-1F, Class A-2F and Class A-3F
Certificates, in that order, until the Certificate
Principal Balance of each such Class has been reduced to
zero and then to the Class A-1A Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero; and
(2) the Group 2 Principal Percentage of the lesser of
(x) the Principal Distribution Amount and (y) Class A
Principal Distribution Amount will be distributed to the
Class A-1A Certificates, until the Certificate Principal
Balance of such Class has been reduced to zero and then
sequentially to the Class A-1F, Class A-2F and Class A-3F
Certificates, in that order, until the Certificate
Principal Balance of each such Class has been reduced to
zero;
(B) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Class A Certificates in clause (A) above and (y) the Class M-1
Principal Distribution Amount will be distributed to the Class
M-1 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero;
(C) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A Certificates in clause (A) above and the amount
distributed to the Class M-1 Certificates in clause (B) above
and (y) the Class M-2 Principal Distribution Amount will be
distributed to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(D) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A Certificates pursuant to clause (A) above, the
amount distributed to the Class M-1 Certificates pursuant to
clause (B) above and the amount distributed to the Class M-2
Certificates pursuant to clause (C) above and (y) the Class B-1
Principal Distribution Amount will be distributed to the Class
B-1 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero;
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(E) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed
to the Class A Certificates pursuant to clause (A) above, the
amount distributed to the Class M-1 Certificates pursuant to
clause (B) above, the amount distributed to the Class M-2
Certificates pursuant to clause (C) above and the amount
distributed to the Class B-1 Certificates pursuant to clause (D)
above and (y) the Class B-2 Principal Distribution Amount will
be distributed to the Class B-2 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
and
(F) any amount of the Principal Distribution Amount
remaining after making all of the distributions in clauses (A),
(B), (C), (D) and (E) above shall be applied as set forth in
Section 4.02(b).
(b) On each Distribution Date, any Monthly Excess Cashflow
Amount shall be distributed, to the extent available, in the following order
of priority on such Distribution Date:
(i) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date, pro rata, among the Class A-IO, Class
A-1F, Class A-2F, Class A-3F and Class A-1A Certificates;
(ii) to pay the remaining Interest Carry Forward Amounts for
the Classes of Class A Certificates, if any, pro rata, among the
Class A-IO, Class A-1F, Class A-2F, Class A-3F and the Class A-1A
Certificates;
(iii) to pay the Extra Principal Distribution Amount for
such Distribution Date in accordance with Section 4.02(a);
(iv) to pay any remaining unpaid Accrued Certificate
Interest for such Distribution Date for the Class M-1
Certificates;
(v) to pay the remaining Class M-1 Interest Carry Forward
Amount, if any;
(vi) to pay the Class M-1 Realized Loss Amortization Amount
for such Distribution Date;
(vii) to pay any remaining unpaid Accrued Certificate
Interest for such Distribution Date for the Class M-2
Certificates;
(viii) to pay the remaining Class M-2 Interest Carry Forward
Amount, if any;
(ix) to pay the Class M-2 Realized Loss Amortization Amount
for such Distribution Date;
(x) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class B-1 Certificates;
(xi) to pay the remaining Class B-1 Interest Carry Forward
Amount, if any;
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(xii) to pay the Class B-1 Realized Loss Amortization
Amount for such Distribution Date;
(xiii) to pay any remaining unpaid Accrued Certificate
Interest for such Distribution Date for the Class B-2
Certificates;
(xiv) to pay the remaining Class B-2 Interest Carry
Forward Amount, if any;
(xv) to pay the Class B-2 Realized Loss Amortization
Amount for such Distribution Date;
(xvi) to the Class A-1A Certificates, the aggregate amount
of any LIBOR Carryover Amount;
(xvii) to pay the Special Servicing Fees for such
Distribution Date and any accrued and unpaid Special Servicing
Fees which remain unpaid from any previous Distribution Date;
(xviii) to the Reserve Fund, an amount equal to the
Required Reserve Fund Deposit; and then concurrently, to pay
the Class N-1 and Class N-2 Certificates (A) the Accrued
Certificate Interest for the Class N-1 and Class N-2
Certificates and (B) the unpaid Interest Carry Forward Amount
for the Class N-1 and Class N-2 Certificates;
(xix) any remaining Monthly Excess Cashflow Amount to
reduce the Class N-1 Notional Amount, until the Class N-1
Notional Amount has been reduced to zero;
(xx) after the Class N-1 Notional Amount has been reduced
to zero, to pay any remaining Monthly Excess Cashflow Amount to
reduce the Class N-2 Principal Amount, until the Class N-2
Principal Amount has been reduced to zero; and
(xxi) to the Class X Certificates, the Class X
Distributable Amount for such Distribution Date.
On each Distribution Date, there shall be distributed to the
Holders of the Class R Certificates in respect of the Class R-1 Interest, any
remaining amount in the Distribution Account on such date after the
application pursuant to Sections 4.01, 4.02(a), 4.02(b)(i)-(xix) and 4.02(c).
(c) On each Distribution Date, all prepayment premiums and
penalties (including amounts deposited by the Seller in lieu thereof pursuant
to Section 3.01) shall be paid to (1) the Class N-1 and Class N-2 Certificates
to make distributions pursuant to Section 4.02(b)(xviii) above, as an
additional payment of interest or principal (2) to the Class N-1 Certificates
for so long as the Class N-1 Notional Amount of the Class N-1 Certificates is
greater than zero, pursuant to Section 4.02(b)(xix) above as an additional
payment of interest or principal, (3) to the Class N-2 Certificates after the
Class N-1 Notional Amount has been reduced to zero for so long as the Class
N-2 Principal Amount of the Class N-2 Certificates is greater than zero, as an
additional payment of interest or principal pursuant to Section 4.02(b)(xx)
above, and (4) to the Class X Certificates after the Class N-2 Principal
Amount has been reduced to zero, pursuant to Section 4.02(b)(xxi) above.
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Section 4.03. Allocation of Losses.
Realized Losses shall be allocated first against the
Remaining Initial Overcollateralization Amount and second to the Subsequent
Overcollateralization Amount, until the Overcollateralization Amount has been
reduced to zero. If, after giving effect to the distribution of the Principal
Distribution Amount on any Distribution Date the aggregate Certificate
Principal Balance of the Offered Certificates exceeds the Pool Balance as of
the end of the related Collection Period, such excess will be allocated
against the Class B-2, Class B-1, Class M-2, Class M-1 and the Senior
Certificates, in that order and until the respective Certificate Principal
Balances thereof are reduced to zero. Any allocation to the Senior
Certificates shall be further allocated among the Class A-1A, Class A-1F,
Class A-2F and Class A-3F Certificates, pro rata, on the basis of their
respective Certificate Principal Balances.
Section 4.04. Method of Distribution.
The Trustee shall make distributions in respect of a
Distribution Date to each Certificateholder of record on the related Record
Date (other than as provided in Section 10.01 respecting the final
distribution), in the case of Certificateholders of the Certificates, by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of such Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Distributions among
Certificateholders shall be made in proportion to the Percentage Interests
evidenced by the Certificates held by such Certificateholders.
Section 4.05. Distributions on Book-Entry Certificates.
Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, which shall credit the amount of such
distribution to the accounts of its Depository Participants in accordance with
its normal procedures. Each Depository Participant shall be responsible for
disbursing such distribution to the Certificate Owners that it represents and
to each indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Certificate Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Certificate
are to be made by the Depository and the Depository Participants in accordance
with the provisions of the Certificates. None of the Trustee, the Depositor,
the Servicer or the Seller shall have any responsibility therefor except as
otherwise provided by applicable law.
Section 4.06. Statements.
(a) On each Distribution Date, based, as applicable, on the
Mortgage Loan information contained in the Remittance Report, the Trustee
shall prepare and post on its website at www.usbank.com/abs and forward by
mail to each Holder of the Regular Certificates, a statement as to the
distributions made on such Distribution Date:
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(i) the amount of the distribution made on such
Distribution Date to the Holders of each Class of Certificates
allocable to principal or reduction of Notional Amount,
separately identified;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of each Class of Certificates
allocable to interest or Class X Distributable Amount,
separately identified;
(iii) the Overcollateralization Amount, the
Overcollateralization Release Amount, the Overcollateralization
Deficiency and the Overcollateralization Target Amount as of
such Distribution Date and the Monthly Excess Interest Amount
and Monthly Excess Cashflow Amount for such Distribution Date;
(iv) the aggregate amount of servicing compensation
received by the Servicer during the related Collection Period
and accrued and unpaid Special Servicing Fees;
(v) the aggregate amount of Advances for the related
Collection Period;
(vi) the Pool Balance and the Loan Group Balance for each
Loan Group and Loan Sub-Group, as applicable, at the close of
business at the end of the related Collection Period;
(vii) separately stated for each Loan Group and each Loan
Sub-Group, as applicable, the number, weighted average
remaining term to maturity and weighted average Mortgage
Interest Rate of the Mortgage Loans as of the related Due Date;
(viii) separately stated for each Loan Group and each Loan
Sub-Group, as applicable, the number and aggregate unpaid
principal balance of Mortgage Loans (a) 30 to 59 days past due
on a contractual basis, (b) 60 to 89 days past due on a
contractual basis, (c) 90 or more days past due on a
contractual basis, (d) as to which foreclosure proceedings have
been commenced and (e) in bankruptcy as of the close of
business on the last day of the calendar month preceding such
Distribution Date;
(ix) separately stated for each Loan Group and each Loan
Sub-Group, as applicable, 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 Principal Balance of such Mortgage
Loan as of the date it became an REO Property;
(x) separately stated for each Loan Group and each Loan
Sub-Group, as applicable, 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, and,
cumulatively, the total number and cumulative principal balance
of all REO Properties as of the close of business of the last
day of the preceding Collection Period;
(xi) separately stated for each Loan Group and each Loan
Sub-Group, as applicable, the aggregate amount of Principal
Prepayments made during the related Prepayment Period;
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(xii) the aggregate amount of prepayment penalties
collected or deposits by the Seller in lieu thereof pursuant to
Section 3.01 during the related Collection Period and the
amounts thereof allocable to the Class N-2 Certificates and the
Class X Certificates;
(xiii) separately stated for each Loan Group and each Loan
Sub-Group, as applicable, the aggregate amount of Realized
Losses incurred during the related Collection Period and the
cumulative amount of Realized Losses;
(xiv) the Certificate Principal Balance, or Notional
Amount, as applicable, of each Class of Certificates, after
giving effect to the distributions, and allocations of Realized
Losses or Applied Realized Loss Amounts, as applicable, made on
such Distribution Date, separately identifying any reduction
thereof due to allocations of Realized Losses or Applied
Realized Loss Amounts;
(xv) the Accrued Certificate Interest in respect of each
Class of Offered Certificates for such Distribution Date,
separately identifying the portions thereof attributable to
Rate Payments, and the respective portions thereof, if any,
remaining unpaid following the distributions made in respect of
such Certificates on such Distribution Date;
(xvi) the aggregate amount of any Prepayment Interest
Shortfalls for such Distribution Date, to the extent not
covered by payments by the Servicer pursuant to Section 3.23;
(xvii) [Reserved];
(xviii) [Reserved];
(xix) the amount of the Trustee Fee paid;
(xx) the LIBOR Carryover Amounts for the Class A-1A
Certificates distributed on such Distribution Date and the
amounts remaining after giving effect to distributions thereof
on such Distribution Date;
(xxi) any Overcollateralization Deficiency after giving
effect to the distribution of principal on such Distribution
Date;
(xxii) whether a Trigger Event has occurred and is
continuing, and the cumulative Realized Losses, as a percentage
of the original Pool Balance;
(xxiii) the aggregate amount of 60+ Day Delinquent Loans
as a percentage of the current Pool Balance;
(xxiv) the aggregate amount of Re-Performing 60+ Day
Delinquent Loans as a percentage of the current Pool Balance;
(xxv) the Available Funds;
(xxvi) the rate at which interest accrues for each Class
of Certificates for such Distribution Date;
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(xxvii) the Liquidation Report for such Distribution Date;
(xxviii) the aggregate Principal Balance of Mortgage Loans
purchased by the Servicer or Seller during the related
Collection Period and indicating the Section of this Agreement
requiring or allowing the purchase of each such Mortgage Loan;
and
(xxix) the aggregate Principal Balance of the Mortgage
Loans repurchased by the Seller during the related Collection
Period in connection with Section 3.16.
The Trustee may fully rely upon and shall have no liability
with respect to information with respect to the Mortgage Loans provided by the
Servicer.
In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed in a separate section
of the report as a dollar amount for each Class for each $1,000 original
dollar amount as of the Cut-off Date.
(b) Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Certificateholder of a Regular Certificate, if
requested in writing by such Person, such information as is reasonably
necessary to provide to such Person a statement containing the information set
forth in subclauses (i), (ii), (xv) and (xx) above, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
prepared and furnished by the Trustee to Certificateholders pursuant to any
requirements of the Code as are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to
the Residual Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to
Residual Certificateholders by the Trustee pursuant to any requirements of the
Code as from time to time in force.
Section 4.07. Remittance Reports; Advances.
(a) On the second Business Day following each Determination
Date but in no event less than four Business Days prior to the related
Distribution Date, the Servicer shall deliver to the Trustee by telecopy (or
by such other means as the Servicer and the Trustee may agree from time to
time) a Remittance Report with respect to the related Distribution Date. On
the same date, the Servicer shall forward to the Trustee by overnight mail a
computer readable magnetic tape or diskette or in such other medium as may be
agreed between the Servicer and the Trustee containing the information set
forth in such Remittance Report with respect to the related Distribution Date.
Not later than the close of business New York time on the Servicer Remittance
Date, the Servicer shall deliver or cause to be delivered to the Trustee in
addition to the information provided on the Remittance Report, such other
information reasonably available to it with respect to the Mortgage Loans as
the Trustee may reasonably request or order in order for the Trustee to
perform the calculations necessary to make the distributions contemplated by
Section 4.01, 4.02 and 4.03 and to prepare the statements to
Certificateholders contemplated by
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Section 4.06. The Trustee shall not be responsible to recompute, recalculate or
verify any information provided to it by the Servicer.
(b) The amount of Advances to be made by the Servicer for
any Distribution Date shall equal, subject to Section 4.07(d), the aggregate
amount of Monthly Payments (net of the related Servicing Fee and the PMI
Premium), due during the related Collection Period in respect of the Actuarial
Mortgage Loans, which Monthly Payments were delinquent on a contractual basis
as of the close of business on the related Determination Date. 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 the such Balloon Mortgage Loan. The Servicer shall
not be obligated to make any Advance with respect to Simple Interest Mortgage
Loans or REO Properties.
On or before the close of business New York time on the
Servicer Remittance Date, the Servicer shall remit in immediately available
funds to the Trustee for deposit in the Distribution Account an amount equal
to the aggregate amount of Advances, if any, to be made in respect of the
Mortgage Loans for the related Distribution Date either (i) from its own funds
or (ii) from the Collection Account, to the extent of funds held therein for
future distribution (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 4.07, used by the
Servicer in discharge of any such Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Advances to be
made by the Servicer with respect to the Mortgage Loans. Any amounts held for
future distribution and so used shall be appropriately reflected in the
Servicer's records and replaced by the Servicer by deposit in the Collection
Account on or before any future Servicer Remittance Date to the extent that
the Available Funds for the related Distribution Date (determined without
regard to Advances to be made on the Servicer Remittance Date) shall be less
than the total amount that would be distributed to the Classes of
Certificateholders pursuant to Section 4.01 and 4.02 on such Distribution Date
if such amounts held for future distributions had not been so used to make
Advances. The Trustee will provide notice to the Servicer by telecopy by the
close of business on any Servicer Remittance Date in the event that the amount
remitted by the Servicer to the Trustee on such date is less than the Advances
required to be made by the Servicer for the related Distribution Date, as set
forth in the related Remittance Report.
(c) The obligation of the Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan, shall continue until the
earlier of such time as the Trust acquires title to the related Mortgaged
Property or such Mortgage Loan is paid in full by the Mortgagor or disposed of
by the Trust, or until the recovery of all Liquidation Proceeds thereon.
(d) Notwithstanding anything herein to the contrary, no
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer if such Advance would, if made, constitute a Nonrecoverable Advance.
The determination by the Servicer that it has made a Nonrecoverable Advance or
that any proposed Advance, if made, would constitute a Nonrecoverable Advance,
shall be evidenced by an Officers' Certificate of the Servicer delivered to
the Depositor and the Trustee.
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Section 4.08. REMIC Distributions.
(a) REMIC 4. On each Distribution Date, the timing and
amounts of principal and interest distributions and allocations of Applied
Realized Loss Amounts and Realized Loss Amortization Amounts on each Class of
REMIC 4 Regular Interests shall be identical to the timing, amounts and
allocations on the corresponding classes of Certificates, except that any
amount paid in respect of the Class A-1A Certificates as a Rate Payment Amount
or that is paid by amounts that would otherwise be paid, whether with respect
to the Distribution Date on which such amount is paid or a prior Distribution
Date, shall be treated as a distribution by REMIC 4 to the Class N-2
Certificates, then as paid by the Class N-2 Certificates to the applicable
class of Offered Certificates as a payment from the Grantor Trust outside of
the REMICs.
(b) REMIC 3. On each Distribution Date, the timing and
amounts of principal and interest distributions and allocations of Applied
Realized Loss Amounts and Realized Loss Amortization Amounts on the Classes of
REMIC 3 Regular Interests identified as Corresponding Classes shall be
identical to the timing, amounts and allocations in respect of Corresponding
Classes of REMIC 4 Certificate or REMIC 3 Certificate, as the case may be,
pursuant to Section 4.03. Amounts in the Distribution Account deemed
distributed (but not amounts actually distributed) in respect of the REMIC 3
Regular Interests shall be treated as held by REMIC 4 for distribution in
accordance with Sections 4.01 and 4.02. Any portion of Available Funds
remaining in REMIC 3 on a Distribution Date shall be distributed to the Class
R Certificates in respect of the Class R-3 Interest.
(c) REMIC 2. On each Distribution Date, 50% of the increase
in the Overcollateralization Amount (adjusted to include the Class N-2
Certificates) will be payable as a reduction of the principal balances of the
REMIC 2 Accretion Directed Classes (each such class will be reduced by an
amount equal to 50% of any increase in the Overcollateralization Amount that
is attributable to a reduction in the principal balance of its Corresponding
Class) and will be accrued and added to the principal balance of the T2
Accrual Class. All payments of scheduled principal and prepayments of
principal generated by the Mortgage Loans shall be allocated 50% to the T2
Accrual Class, and 50% to the REMIC 2 Accretion Directed Classes (principal
payments shall be allocated among such REMIC 2 Accretion Directed Classes in
an amount equal to 50% of the principal amounts allocated to their respective
Corresponding Classes), until paid in full. Realized Losses shall be applied
so that after all distributions have been made on each Distribution Date (i)
the principal balances of each of the REMIC 2 Accretion Directed Classes is
equal to 50% of the principal balance of their Corresponding Class, and (ii)
the REMIC 2 Accrual Class is equal to 50% of the aggregate principal balance
of the Mortgage Loans plus 50% of the Overcollateralization Amount.
(d) REMIC 1. On each Distribution Date, the REMIC 1 Regular
Interests shall receive distributions of interest and principal equal in the
aggregate to amounts distributable pursuant to Sections 4.01 and 4.02 from
amounts on deposit in the Distribution Account. Such amounts with respect to
interest shall accrue at the Weighted Average Net Mortgage Rate on each REMIC
1 Regular Interest. Any shortfalls of interest will be allocated, first, to
the Class T1-B and, second, to the Class T1-A Interests. Amounts in reduction
of principal balance of the REMIC 1 Regular Interests shall be allocated first
to the Class T1-B and second to the Class T1-A.
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Section 4.09. Reserve Fund.
(i) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders
of the Class A-1A Certificates, the Reserve Fund. The Reserve
Fund shall be an Eligible Account, and funds on deposit therein
shall be held separate and apart from, and shall not be
commingled with, any other moneys, including, without
limitation, other moneys of the Trustee held pursuant to this
Agreement. On the Closing Date, the Depositor shall deposit
into the Reserve Fund an amount equal to $5,000 (the "Required
Reserve Fund Deposit"). The Trustee shall distribute the
Reserve Amount only to the holders of the Class X/N Interest
and only on a Distribution Date to the extent that there is
insufficient cash in the Distribution Account to make the
distribution pursuant to Section 4.02(b) for such Distribution
Date.
On each Distribution Date, the Trustee shall transfer the
Required Reserve Fund Deposit from the Distribution Account to the
Reserve Fund pursuant to Section 4.02(b)(xviii). The Trustee shall
make withdrawals from the Reserve Fund to make distributions pursuant
to Sections 4.02(b)(xviii), (xix), (xx) and (xxi).
(ii) On each Distribution Date on which there exists a
Rate Payment Amount on the Class A-1A Certificates, the Trustee
shall withdraw from the Reserve Fund amounts necessary to pay
the Rate Payment Amount incurred by the Class A-1A
Certificates, until such amount is reduced to zero.
(iii) Funds in the Reserve Fund may be invested in
Permitted Investments by the Trustee at the direction of the
Holders of the Class X Certificates. Any earnings on such
amounts shall be distributed to the Holders of the Class X
Certificates and any losses shall be chargeable to amounts held
in the Reserve Fund. The Class X Certificates shall evidence
ownership of the Reserve Fund for federal income tax purposes
and shall direct the Trustee, in writing, as to the investment
of amounts on deposit therein. Upon termination of the Trust
Fund, any amounts remaining in the Reserve Fund shall be
distributed to the Holders of the Class X Certificates.
The Trustee shall treat the Reserve Fund as an outside
reserve fund within the meaning of Treasury Regulation Section
1.860G-2(h) that is owned by Holders of the Class X/N Interest and
that is not an asset of any REMIC. The Trustee shall treat the rights
of the Holders of the Offered Certificates to receive payments from
the Reserve Fund as a right in an interest rate cap contract written
by the Class X/N Interest holder in favor of the Holders of the
Offered Certificates that it shall account for such as property held
separate and apart from the regular interests it holds in REMIC 1,
REMIC 2, REMIC 3, and REMIC 4. This provision is intended to satisfy
the requirements of Treasury Regulation Section 1.860G-2(i) for the
treatment of property rights coupled with Regular Interests to be
separately respected and shall be interpreted consistent with such
regulation. Thus, each Offered Certificate shall be treated as
representing not only ownership of Regular Interests in REMIC 3 or
REMIC 4, as the case may be, but also ownership of an interest in an
interest rate cap contract. For purposes of determining the issue
prices of any REMIC 3 or REMIC 4 Regular Interests, the Trustee shall
assume that each interest rate cap contract has a value of [$5,000].
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(iv) In the event that the beneficial ownership of the
Class X Certificates and the Class N-1 Certificates is held by
separate entities for tax purposes, the Trustee shall treat the
Class N-1 Certificates as debt of the Class X
Certificateholders for federal income tax purposes and shall
not treat such class of Certificates as an interest in either
REMIC created hereunder. By acquiring the Class N-1
Certificates and the Class X Certificates, the respective
Holders will agree to treat the Class N-1 Certificates as debt
of the Class X Certificateholders for federal income tax
purposes in the event that the beneficial ownership of the
Class N-1 Certificates and the Class X Certificates is
separated.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
Each of the Class A-IO, Class A-1F, Class A-2F, Class A-3F,
Class A-1A, Class M-1, Class M-2, Class B-1, Class B-2, Class N-1, Class N-2,
Class X, Class R1-3 and Class R-4 Certificates shall be substantially in the
forms annexed hereto as exhibits, and shall, on original issue, be executed by
the Trustee and authenticated and delivered by the Certificate Registrar to or
upon the receipt of a Written Order to Authenticate from the Depositor
concurrently with the sale and assignment to the Trustee of the Trust Fund.
Each Class of the Offered Certificates shall be initially evidenced by one or
more Certificates representing a Percentage Interest with a minimum dollar
denomination of $25,000 and integral dollar multiples of $1 in excess thereof.
The Class N-1, Class N-2, Class X and Class R Certificates are issuable only
in minimum Percentage Interests of 10%.
The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature on behalf of the Trustee by a Responsible
Officer. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed,
authorized to sign on behalf of the Trustee shall bind the Trust,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates or
did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement or be valid for any
purpose, unless such Certificate shall have been manually authenticated by the
Certificate Registrar substantially in the form provided for herein, and such
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Subject to Section 5.02(c), the Offered Certificates shall be Book-Entry
Certificates. The Class B-2, Class N-1, Class N-2, Class X, Class R1-3 and
Class R-4 Certificates shall not be Book-Entry Certificates but shall be
issued in fully registered certificate form.
Section 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Certificate Registrar shall cause to be kept at the
Corporate Trust Office of the Trustee a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall initially serve as
Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as
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herein provided. The Trustee as Certificate Registrar shall be subject to the
same standards of care, limitations on liability and rights to indemnity
as the Trustee, and the provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05,
8.14, 8.15 and 8.16 shall apply to the Trustee to the same extent as they
apply to the Trustee. Any Certificate Registrar appointed in accordance with
this Section 5.02(a) may at any time resign by giving at least 30 days'
advance written notice of resignation to the Trustee, the Servicer and the
Depositor, such resignation to become effective upon appointment of a
successor Certificate Registrar.
Upon surrender for registration of transfer of any
Certificate at any office or agency of the Certificate Registrar maintained
for such purpose pursuant to the foregoing paragraph and, in the case of a
Residual Certificate, upon satisfaction of the conditions set forth below, the
Trustee on behalf of the Trust shall execute and the Certificate Registrar
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same aggregate Percentage
Interest.
At the option of the Certificateholders, Certificates may be
exchanged for other Certificates in authorized denominations and the same
aggregate Percentage Interests, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute on behalf of the Trust and
the Certificate Registrar shall authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or exchange
shall (if so required by the Trustee or the Certificate Registrar) be duly
endorsed by, or be accompanied by a written instrument of transfer
satisfactory to the Trustee and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(b) Upon original issuance, the Book-Entry Certificates
shall be issued in the form of one or more typewritten certificates, to be
delivered to the Depository, the initial Depository, by, or on behalf of, the
Depositor; or to, and deposited with the Certificate Custodian, on behalf of
the Depository, if directed to do so pursuant to instructions from the
Depository. Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to another
Depository; (ii) the Depository shall maintain book-entry records with respect
to the Certificate Owners and with respect to ownership and transfers of such
Certificates; (iii) ownership and transfers of registration of such
Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall for all purposes deal with the Depository as representative
of the Certificate Owners of the Certificates for purposes of exercising the
rights of Holders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they
are made with respect to different Certificate Owners; (vi) the Trustee may
rely and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and
Persons shown on the books of such indirect participating firms as direct or
indirect Certificate Owners; and (vii) the direct participants of the
Depository shall have no rights under this Agreement under or with respect to
any of the Certificates held on their behalf by the Depository, and the
Depository may be treated by the Trustee and its agents, employees, officers
and directors as the absolute owner of the Certificates for all purposes
whatsoever.
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All transfers by Certificate Owners of Book-Entry
Certificates shall be made in accordance with the procedures established by
the Depository Participant or brokerage firm representing such Certificate
Owners. Each Depository Participant shall only transfer Book-Entry
Certificates of Certificate Owners that it represents or of brokerage firms
for which it acts as agent in accordance with the Depository's normal
procedures. The parties hereto are hereby authorized to execute a Letter of
Representations with the Depository or take such other action as may be
necessary or desirable to register a Book-Entry Certificate to the Depository.
In the event of any conflict between the terms of any such Letter of
Representation and this Agreement, the terms of this Agreement shall control.
(c) If (i)(x) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as Depository and (y) the Trustee or
the Depositor is unable to locate a qualified successor, (ii) the Depositor,
at its sole option, with the consent of the Trustee, elects to terminate the
book-entry system through the Depository or (iii) after the occurrence of a
Servicer Event of Termination, the Certificate Owners of each Class of
Book-Entry Certificates representing Percentage Interests of such Classes
aggregating not less than 51% advises the Trustee and Depository through the
Financial Intermediaries and the Depository Participants in writing that the
continuation of a book-entry system through the Depository to the exclusion of
definitive, fully registered certificates (the "Definitive Certificates") to
Certificate Owners is no longer in the best interests of the Certificate
Owners. Upon surrender to the Certificate Registrar of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall, at the Depositor's
expense, in the case of (ii) above, or the Seller's expense, in the case of
(i) and (iii) above, execute on behalf of the Trust and the Certificate
Registrar shall authenticate the Definitive Certificates. Neither the
Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates, the
Trustee, the Certificate Registrar, the Servicer, any Paying Agent and the
Depositor shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
(d) Except with respect to the initial transfer of the
Private Certificates by the Depositor, no transfer, sale, pledge or other
disposition of any Private Certificate shall be made unless such disposition
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and any applicable state securities laws or is made
in accordance with the 1933 Act and laws. In the event of any such transfer,
(i) unless such transfer is made in reliance upon Rule 144A (as evidenced by
the investment letter delivered to the Certificate Registrar, in substantially
the form attached hereto as Exhibit J) under the 1933 Act, the Certificate
Registrar and the Depositor shall require a written Opinion of Counsel (which
may be in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Certificate Registrar and the Depositor that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from the 1933 Act or is being made pursuant to the 1933
Act, which Opinion of Counsel shall not be an expense of the Certificate
Registrar or the Depositor or (ii) the Certificate Registrar shall require the
transferor to execute a transferor certificate (in substantially the form
attached hereto as Exhibit L) and the transferee to execute an investment
letter (in substantially the form attached hereto as Exhibit J) acceptable to
and in form and substance reasonably satisfactory to the Depositor and the
Certificate Registrar certifying to the Depositor and the Certificate
Registrar the facts surrounding such transfer, which investment letter shall
not be an expense of the Certificate Registrar or the Depositor. The Holder of
a Private Certificate desiring to effect such transfer shall, and does hereby
agree to,
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indemnify the Certificate Registrar and the Depositor 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 a Class A Certificate shall be made unless
the Certificate Registrar shall have received a representation from the
transferee (and a transferee of a Class A Certificate that is a Book-Entry
Certificate, by its acceptance of an interest in such Class A Certificate,
shall be deemed to represent) that either (i) it is not a Plan Investor or
(ii) the Class A Certificates are rated at the time of purchase not lower than
AA- (or its equivalent) by at least one Rating Agency, or (iii) it is an
insurance company, the source of funds used to acquire and hold the Class A
Certificate or interest therein is an "insurance company general account," as
such term is defined in Section V(e) of Prohibited Transaction Class Exemption
("PTCE") 95-60, and the acquisition and holding of the Class A Certificate
satisfy the conditions for exemptive relief under Sections I and III of PTCE
95-60.
No transfer of an ERISA-Restricted Certificate shall be made
unless the Certificate Registrar shall have received either (i) a
representation from the transferee of such Certificate, acceptable to and in
form and substance satisfactory to the Certificate Registrar and the
Depositor, (such requirement is satisfied only by the Certificate Registrar's
receipt of a representation letter from the transferee substantially in the
form of Exhibit I hereto, as appropriate), to the effect that such transferee
is not a Plan Investor or (ii) (except in the case of a Residual Certificate,
and of a Class X, Class N-1, Class N-2 or Class B-2 Certificate that has not
been the subject of an ERISA-Qualifying Underwriting) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that the
purchase and holding of such Certificates are covered under Sections I and III
of PTCE 95-60 or (iii) in the case of any such ERISA Restricted Certificate
presented for registration in the name of a Plan Investor, an Opinion of
Counsel satisfactory to the Certificate Registrar, to the effect that the
purchase or holding of such ERISA Restricted Certificate will not result in
the assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Certificate Registrar to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. For purposes of clause (i)
and (ii) of the preceding sentence, such representation as appropriate shall
be deemed to have been made to the Certificate Registrar by the acceptance by
a Certificate Owner of the beneficial interest in any such Class of
ERISA-Restricted Certificates, unless the Certificate Registrar shall have
received from the transferee an alternative representation acceptable in form
and substance to the Depositor. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA-Restricted Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
delivery to the Certificate Registrar of an Opinion of Counsel satisfactory to
the Certificate Registrar as described above shall be void and of no effect.
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 appointed the Depositor or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
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(i) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Certificate Registrar of any change or impending
change in its status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a
Residual Certificate unless such Ownership Interest is a pro rata
undivided interest.
(iii) In connection with any proposed transfer (other than
the initial transfer by the Depositor) of any Ownership Interest in a
Class R Certificate, the Certificate Registrar shall as a condition
to registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit K hereto from the
proposed transferee to the effect that, among other things, such transferee is
a Permitted Transferee and 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 who is not a Permitted Transferee;
and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee
shall, in violation of the provisions of this Section, become a
Holder of a Residual Certificate, then the prior Holder of such
Residual Certificate that is a Permitted Transferee shall, upon
discovery that the registration of transfer of such Residual
Certificate was not in fact permitted by this Section, be restored to
all rights as Holder thereof retroactive to the date of registration
of transfer of such Residual Certificate. The Certificate Registrar
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 or for making any distributions due on such Residual
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the Certificate Registrar received the documents specified in
clause (iii). The Trustee shall be entitled to recover from any
Holder of a Residual Certificate that was in fact not a Permitted
Transferee at the time such distributions were made all distributions
made on such Residual Certificate. Any such distributions so
recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Holder of such Residual Certificate that is a
Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section, then the Certificate Registrar shall
have the right but not the obligation, without notice to the Holder
of such Residual Certificate or any other Person having an Ownership
Interest therein, to notify the Depositor to arrange for the sale of
such Residual Certificate. The proceeds of such sale, net of
commissions (which may include commissions payable to the Depositor
or its affiliates in connection with such sale), expenses and taxes
due, if any, will be remitted by the Trustee to the previous Holder
of such Residual Certificate that is a Permitted Transferee, except
that in the event that the Trustee determines that the
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Holder of such Residual Certificate may be liable for any amount due
under this Section or any other provisions of this Agreement, the
Trustee may withhold a corresponding amount from such remittance as
security for such claim. The terms and conditions of any sale under
this clause (v) shall be determined in the sole discretion of the
Trustee and it shall not be liable to any Person having an Ownership
Interest in a Residual Certificate as a result of its exercise of
such discretion.
(vi) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Residual Certificate in
violation of the restrictions in this Section, then the Trustee will
provide to the Internal Revenue Service, and to the persons specified
in Sections 860E(e)(3) and (6) of the Code, information needed to
compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations. The
Trustee shall be entitled to reasonable compensation for providing
such information from the person to whom it is provided.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Certificate Registrar, in form and substance satisfactory to the Certificate
Registrar, (i) written notification from each Rating Agency that the removal
of the restrictions on Transfer set forth in this Section will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion
of Counsel to the effect that such removal will not cause any REMIC hereunder
to fail to qualify as a REMIC.
(e) No service charge shall be made for any registration of
transfer or exchange of Certificates of any Class, but the Certificate
Registrar 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.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.
(f) If the Class X Certificate, or the Class N-1 Certificate
are separated, and subsequently the Class X Certificate, or Class N-1
Certificate is sold or transferred to an entity other than the entity which
holds the Class N-1 Certificate, or Class X Certificate, respectively, the
Class X Certificate, and Class N-1 Certificate shall not be held, transferred,
or sold to a person or entity other than a United State person as defined in
Section 7701(a)(30) of the Internal Revenue Code.
Section 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the
Certificate Registrar or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (ii)
there is delivered to the Trustee, the Depositor and the Certificate Registrar
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute on behalf of the Trust, and the Certificate
Registrar shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like tenor and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other
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governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Certificate
Registrar) in connection therewith. Any duplicate Certificate issued pursuant
to this Section, shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners.
The Servicer, the Depositor, the Trustee, the Certificate
Registrar, any Paying Agent and any agent of the Servicer, the Depositor, the
Certificate Registrar, any Paying Agent or the Trustee may treat the Person,
including a Depository, in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant
to Section 4.01 and 4.02 and for all other purposes whatsoever, and none of
the Servicer, the Trust, the Trustee nor any agent of any of them shall be
affected by notice to the contrary.
Section 5.05. Appointment of Paying Agent.
The Paying Agent shall make distributions to
Certificateholders from the Distribution Account pursuant to Section 4.01 and
4.02 and shall report the amounts of such distributions to the Trustee. The
duties of the Paying Agent may include the obligation (i) to withdraw funds
from the Collection Account pursuant to Section 3.05 and for the purpose of
making the distributions referred to above and (ii) to distribute statements
and provide information to Certificateholders as required hereunder. The
Paying Agent hereunder shall at all times be an entity duly incorporated and
validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authorities. The
Paying Agent shall initially be the Trustee. The Trustee may appoint a
successor to act as Paying Agent, which appointment shall be reasonably
satisfactory to the Depositor and the Rating Agencies. The Trustee as Paying
Agent shall be subject to the same standards of care, limitations on liability
and rights to indemnity as the Trustee, and the provisions of Sections 8.01,
8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall apply to the Paying Agent to
the same extent as they apply to the Trustee. Any Paying Agent appointed in
accordance with this Section 5.02(a) may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee, the Servicer
and the Depositor, such resignation to become effective upon appointment of a
successor Paying Agent.
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Seller, the Servicer and the
Depositor.
The Seller and the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Seller or Servicer, as the case may be, herein. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor.
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Section 6.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Seller, the Servicer or the Depositor.
Any entity into which the Seller, the Servicer or the
Depositor may be merged or consolidated, or any entity resulting from any
merger, conversion or consolidation to which the Seller, the Servicer or the
Depositor shall be a party, or any corporation succeeding to the business of
the Seller, the Servicer or the Depositor, shall be the successor of the
Seller, the Servicer or the Depositor, 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 the successor Servicer shall satisfy all the requirements of
Section 7.02 with respect to the qualifications of a successor Servicer.
Section 6.03. Limitation on Liability of the Servicer and
Others.
Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Trust
or the Certificateholders for any action taken or for refraining from the
taking of any action by the Servicer in good faith pursuant to this Agreement,
or for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability which would
otherwise be imposed by reason of its willful misfeasance, bad faith or gross
negligence in the performance of duties of the Servicer or by reason of its
reckless disregard of its obligations and duties of the Servicer hereunder;
provided, further, that this provision shall not be construed to entitle the
Servicer to indemnity in the event that amounts advanced by the Servicer to
retire any senior lien exceed Liquidation Proceeds (in excess of related
liquidation expenses) realized with respect to the related Mortgage Loan. The
Servicer and any director or officer or employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder. The
Servicer and any director or officer or employee or agent of the Servicer
shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its
willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of its reckless disregard of obligations and duties
hereunder. The Servicer may undertake any such action which it may deem
necessary or desirable in respect of this Agreement, and the rights and duties
of the parties hereto and the interests of the Certificateholders hereunder.
In such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust and the Servicer shall be entitled to be reimbursed therefor only
pursuant to Section 3.04. The Servicer's right to indemnity or reimbursement
pursuant to this Section shall survive any resignation or termination of the
Servicer pursuant to Section 6.04 or 7.01 with respect to any losses,
expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation or
termination). This paragraph shall apply to the Servicer solely in its
capacity as Servicer hereunder and in no other capacities.
Section 6.04. Servicer Not to Resign.
Subject to the provisions of Section 7.01 and Section 6.02,
the Servicer shall not resign from the obligations and duties hereby imposed
on it except (i) upon determination that
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the performance of its obligations or duties hereunder are no longer
permissible under applicable law or are in material conflict by reason
of applicable law with any other activities carried on by it or its
subsidiaries or Affiliates, the other activities of the Servicer so
causing such a conflict being of a type and nature carried on by
the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Trustee in writing and such
proposed successor servicer is reasonably acceptable to the Trustee; and (b)
each Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor servicer stating that the proposed appointment of
such successor servicer as Servicer hereunder will not result in the reduction
or withdrawal of the then current rating of the Regular Certificates or the
ratings that are in effect; provided, however, that no such resignation by the
Servicer shall become effective until such successor servicer or, in the case
of (i) above, the Trustee shall have assumed the Servicer's responsibilities
and obligations hereunder or the Trustee shall have designated a successor
servicer in accordance with Section 7.02. Any such resignation shall not
relieve the Servicer of responsibility for any of the obligations specified in
Sections 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion
of Counsel to such effect delivered to the Trustee. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee.
Section 6.05. Delegation of Duties.
In the ordinary course of business, the Servicer at any time
may delegate any of its duties hereunder to any Person, including any of its
Affiliates, who agrees to conduct such duties in accordance with standards
comparable to those set forth in Section 3.01. Such delegation shall not
relieve the Servicer of its liabilities and responsibilities with respect to
such duties and shall not constitute a resignation within the meaning of
Section 6.04. The Servicer shall provide the Trustee and the Rating Agencies
with 60 days prior written notice prior to the delegation of any of its duties
to any Person other than any of the Servicer's Affiliates or their respective
successors and assigns.
The Trustee and the Depositor hereby specifically (i)
consent to the pledge and assignment by the Servicer of all the Servicer's
right, title and interest in, to and under this Agreement to the Servicing
Rights Pledgee, for the benefit of certain lenders, and (ii) provided that no
Servicer Event of Termination exists, agree that upon delivery to the Trustee
by the Servicing Rights Pledgee of a letter signed by the Servicer whereunder
the Servicer shall resign as Servicer under this Agreement, the Trustee shall
appoint the Servicing Rights Pledgee or its designee as successor Servicer,
provided that at the time of such appointment, the Servicing Rights Pledgee or
such designee meets the requirements of a successor Servicer pursuant to
Section 7.02(a) and agrees to be subject to the terms of this Agreement. If,
pursuant to any provision hereof, the duties of the Servicer are transferred
to a successor, the entire amount of the Servicing Fee and other compensation
payable to the Servicer pursuant hereto shall thereafter be payable to such
successor.
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ARTICLE VII
DEFAULT
Section 7.01. Servicer Events of Termination.
(a) If any one of the following events ("Servicer Events of
Termination") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Advance; or
(B) any other failure by the Servicer to deposit in the Collection
Account or Distribution Account any deposit required to be made under
the terms of this Agreement which continues unremedied for a period
of one Business Day after the date upon which written notice of such
failure shall have been given to the Servicer by the Trustee or by
any Holder of a Regular Certificate evidencing at least 25% of the
Voting Rights; or
(ii) The failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of
30 days, or the failure by the Servicer duly to observe or perform,
in any material respect, any other covenants, obligations or
agreements of the Servicer as set forth in this Agreement, which
failure continues unremedied for a period of 30 days, after the date
(A) on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee or by
any Holder of a Regular Certificate evidencing at least 25% of the
Voting Rights or (B) actual knowledge of such failure by a Servicing
Officer of the Servicer; or
(iii) The entry against the Servicer of a decree or order by
a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 60 days; or
(iv) The Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator
or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially
all of its property; or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Servicer and such decree or order shall have remained in force
undischarged, unbonded or unstayed for a period of 60 days; or the
Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(v) The aggregate amount of cumulative Realized Losses
incurred since the Cut-off Date through the last day of the related
Collection Period divided by the initial
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Pool Balance exceeds the applicable percentages set forth below with
respect to such Distribution Date:
Distribution Date Occurring In Percentage
------------------------------------ ----------
June 2001 through May 2005 2.75%
June 2005 through May 2006 3.50%
June 2006 through May 2007 4.00%
June 2007 and thereafter 4.50%
(b) Then, and in each and every such case, so long as a
Servicer Event of Termination shall not have been remedied within the
applicable grace period, (x) with respect solely to clause (i)(A) above, if
such Advance is not made by 2:00 P.M., New York time, on the Business Day
immediately following the Servicer Remittance Date, the Trustee may terminate
all of the rights and obligations of the Servicer under this Agreement and the
Trustee, or a successor servicer appointed in accordance with Section 7.02,
shall immediately make such Advance and assume, pursuant to Section 7.02, the
duties of a successor Servicer and (y) in the case of (i)(B), (ii), (iii),
(iv) and (v) above, the Trustee shall, at the direction of the Holders of each
Class of Regular Certificates evidencing Percentage Interests aggregating not
less than 51%, by notice then given in writing to the Servicer and the
Trustee, terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency, the Depositor and the Seller. On or after the
receipt by the Servicer and the Trustee of such written notice, all authority
and power of the Servicer under this Agreement, whether with respect to the
Certificates or the Mortgage Loans or otherwise, 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 to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan and Related Documents or otherwise. The Servicer agrees to cooperate with
the Trustee (or the applicable successor Servicer) in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the delivery to the Trustee of all documents
and records requested by it to enable it to assume the Servicer's functions
under this Agreement within ten Business Days subsequent to such notice, the
transfer within one Business Day subsequent to such notice to the Trustee (or
the applicable successor Servicer) for the administration by it of all cash
amounts that shall at the time be held by the Servicer and to be deposited by
it in the Collection Account, the Distribution Account, any REO Account or any
Escrow Account or that have been deposited by the Servicer in such accounts or
thereafter received by the Servicer with respect to the Mortgage Loans or any
REO Property received by the Servicer. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
servicing to the successor Servicer and amending this Agreement to reflect
such succession as Servicer pursuant to this Section shall be paid by the
predecessor Servicer (or if the predecessor Servicer is the Trustee, the
initial Servicer) upon presentation of reasonable documentation of such costs
and expenses.
Section 7.02. Trustee to Act; Appointment of Successor.
(a) Within 90 days of the time the Servicer and the Trustee
receives a notice of termination pursuant to Section 7.01 or 6.04, the Trustee
(or such other successor Servicer as is approved in accordance with this
Agreement) shall be the successor in all respects to the
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Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof arising on and after its
succession. As compensation therefor, the Trustee (or such other successor
Servicer) shall be entitled to such compensation as the Servicer would have
been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Trustee is unwilling to act as successor
Servicer or (ii) if the Trustee is legally unable so to act, the Trustee shall
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan
or home equity loan servicer having a net worth of not less than $50,000,000
as the successor to the Servicer hereunder in the assumption of all or any
part of the responsibilities, duties or liabilities of the Servicer hereunder;
provided, that the appointment of any such successor Servicer will not result
in the qualification, reduction or withdrawal of the ratings assigned to the
Certificates or the ratings that are in effect by the Rating Agencies as
evidenced by a letter to such effect from the Rating Agencies. Pending
appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
successor shall be entitled to receive compensation out of payments on
Mortgage Loans in an amount equal to the compensation which the Servicer would
otherwise have received pursuant to Section 3.18 (or such other compensation
as the Trustee and such successor shall agree, not to exceed the Servicing
Fee). The successor servicer shall be entitled to withdraw from the Collection
Account all costs and expenses associated with the transfer of the servicing
to the successor servicer. The appointment of a successor servicer shall not
affect any liability of the predecessor Servicer which may have arisen under
this Agreement prior to its termination as Servicer to pay any deductible
under an insurance policy pursuant to Section 3.12 or to indemnify the parties
indicated in Section 3.26 pursuant to the terms thereof, nor shall any
successor Servicer be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
In the event of a Servicer Event of Termination,
notwithstanding anything to the contrary above, Trustee and the Depositor
hereby agree that upon delivery to the Trustee by the Servicing Rights Pledgee
of a letter signed by the Servicer within ten Business Days of when
notification of such event shall have been provided to the Trustee, whereunder
the Servicer shall resign as Servicer under this Agreement, the Servicing
Rights Pledgee or its designee shall be appointed as successor Servicer
(provided that at the time of such appointment the Servicing Rights Pledgee or
such designee meets the requirements of a successor Servicer set forth above)
and the Servicing Rights Pledgee agrees to be subject to the terms of this
Agreement.
(b) Any successor, including the Trustee, to the Servicer as
servicer shall during the term of its service as servicer continue to service
and administer the Mortgage Loans for the benefit of Certificateholders, and
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
Fidelity Bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
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Section 7.03. Waiver of Defaults.
The Majority Certificateholders may, on behalf of all
Certificateholders, waive any events permitting removal of the Servicer as
servicer pursuant to this Article VII, provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution
on a Certificate without the consent of the Holder of such Certificate. Upon
any waiver of a past default, such default shall cease to exist and any
Servicer Event of Termination arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right consequent thereto except
to the extent expressly so waived. Notice of any such waiver shall be given by
the Trustee to the Rating Agencies.
Section 7.04. Notification to Certificateholders.
(a) On any termination or appointment of a successor the
Servicer pursuant to this Article VII or Section 6.04, the Trustee shall give
prompt written notice thereof to the Certificateholders at their respective
addresses appearing in the Certificate Register and each Rating Agency.
(b) No later than 60 days after the occurrence of any event
which constitutes or which, with notice or a lapse of time or both, would
constitute a Servicer Event of Termination for five Business 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 Certificateholders notice of
such occurrence unless such default or Servicer Event of Termination shall
have been waived or cured. Such notice shall be given to the Rating Agencies
promptly after any such occurrence.
Section 7.05. Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon
termination of the Servicer hereunder, any liabilities of the Servicer which
accrued prior to such termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of
Termination of which a Responsible Officer of the Trustee shall have actual
knowledge and after the curing of all Servicer Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination
has occurred (which has not been cured) of which a Responsible Officer has
actual knowledge, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee, which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to
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determine whether they conform to the requirements of this Agreement; provided,
however, that the Trustee shall not be responsible for the accuracy or content
of any resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Servicer, the Seller or the Depositor
hereunder. If any such instrument is found not to conform in any material
respect to the requirements of this Agreement, the Trustee shall notify the
Certificateholders of such instrument in the event that the Trustee, after so
requesting, does not receive a satisfactorily corrected instrument.
No provision of this Agreement shall be construed to relieve
the Trustee 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 Servicer Event of
Termination, and after the curing of all such Servicer Events of
Termination which may have occurred, the duties and obligations of
the Trustee shall be determined solely by the express provisions of
this Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the absence of
bad faith on the part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer of the
Trustee unless it shall be proved that the Trustee was negligent in
ascertaining or investigating the facts related thereto;
(iii) the Trustee shall not be personally 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 Majority
Certificateholders relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising or omitting to exercise any trust or power conferred upon
the Trustee under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the
Servicer referred to in clauses (i) and (ii) of Section 7.01 or any
Servicer Event of Termination unless a Responsible Officer of the
Trustee at the Corporate Trust Office obtains actual knowledge of
such failure or the Trustee receives written notice of such failure
from the Servicer or the Majority Certificateholders. In the absence
of such receipt of such notice, the Trustee may conclusively assume
that there is no Servicer Event of Termination.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement,
except to the extent and during such time, if any, as the Trustee
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shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement.
The Trustee shall not have any duty (A) to see any
recording, filing, or depositing of this Agreement or any agreement referred
to herein or any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording or
filing or depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance or (C) to see to the payment or discharge
of any tax, assessment, or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied against, any
part of the Trust Fund other than from funds available in the Distribution
Account.
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any advice or
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) the Trustee shall not be under any obligation to
exercise any of the rights 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 the
Certificateholders pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of
the Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustee shall not
be answerable for other than its negligence or willful misconduct in
the performance of any such act;
(iv) the Trustee shall not be personally 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 Servicer Event of
Termination and after the curing of all Servicer Events of
Termination which may have occurred, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
documents, unless requested in writing to do so by the Majority
Certificateholder; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to
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the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against
such cost, expense or liability as a condition to such proceeding.
The reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be reimbursed by the
Servicer upon demand. Nothing in this clause (v) shall derogate from
the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall not have
any liability and shall not make any representation as to any acts or
omissions hereunder of the Servicer until such time as, and to the
extent, the Trustee may be required to act as Servicer pursuant to
Section 7.02;
(vii) 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 or a custodian and the Trustee shall not
be responsible for any misconduct or negligence on the part of any
such agent, attorney or custodian appointed by it with due care; and
(viii) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty,
and the Trustee shall not be answerable for other than its negligence
or willful misconduct in the performance of such act.
Section 8.03. Trustee Not Liable for Certificates or
Mortgage Loans.
The recitals contained herein and in the Certificates (other
than the authentication of the Trustee on the Certificates) shall be taken as
the statements of the Seller, and the Trustee does not assume any
responsibility for the correctness of the same. The Trustee does not make any
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature of the Trustee and authentication of
the Trustee on the Certificates) or of any Mortgage Loan or Related Document.
The Trustee shall not be accountable for the use or application by the
Servicer, or for the use or application of any funds paid to the Servicer in
respect of the Mortgage Loans or deposited in or withdrawn from the Collection
Account by the Servicer. The Trustee shall not at any time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Trust or its
ability to generate the payments to be distributed to Certificateholders under
this Agreement, including, without limitation: the existence, condition and
ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if, and to the extent, the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02); the validity of
the assignment of any Mortgage Loan to the Trustee or of any intervening
assignment; the completeness of any Mortgage Loan; the performance or
enforcement of any Mortgage Loan (other than if, and to the extent, the
Trustee shall assume the duties of the Servicer pursuant to Section 7.02); the
compliance by the Depositor, the Seller or the Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Servicer or
any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Servicer (other than if, and to
the extent, the Trustee shall assume the duties of the Servicer pursuant to
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Section 7.02), or any Mortgagor; any action of the Servicer (other than if,
and to the extent, the Trustee shall assume the duties of the Servicer
pursuant to Section 7.02), taken in the name of the Trustee the failure of the
Servicer to act or perform any duties required of it as agent of the Trustee
hereunder; or any action by the Trustee taken at the instruction of the
Servicer (other than if, and to the extent, the Trustee shall assume the
duties of the Servicer pursuant to Section 7.02); provided, however, that the
foregoing shall not relieve the Trustee of its obligation to perform its
duties under this Agreement. The Trustee shall not have responsibility for
filing any financing or continuation statement in any public office at any
time or to otherwise perfect or maintain the perfection of any security
interest or lien granted to it hereunder.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would
have if it were not Trustee and may transact any banking and trust business
with the Seller, the Servicer, the Depositor or their Affiliates.
Section 8.05. Seller to Pay Trustee Fees and Expenses.
The Trustee shall withdraw from the Distribution Account on
each Distribution Date and pay to itself its fees in an aggregate amount equal
to the Trustee Fee pursuant to Section 4.01(i) and, to the extent the Interest
Remittance Amount is at any time insufficient for such purpose, the Seller
shall pay such fees as reasonable compensation (which shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust) for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and the Seller will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of
this Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from such
party's negligence or bad faith or which is the responsibility of
Certificateholders or the Trustee hereunder. Notwithstanding any other
provision of this Agreement, including Section 2.03(a) and Section 2.04, to
the contrary, the Seller covenants and agrees to indemnify the Trustee and its
respective officers, directors, employees and agents from, and hold each of
them harmless against, any and all losses, liabilities, damages, claims or
expenses incurred in connection with any legal action relating to this
Agreement, the Certificates or incurred in connection with the administration
of the Trust, other than with respect to a party, any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence of
such party in the performance of their respective duties hereunder or by
reason of such party's reckless disregard of obligations and duties hereunder.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Trustee be liable for special, indirect or consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified, to the extent not paid
by the Seller pursuant to this Section, by the Trust Fund and held harmless
against any loss, liability or expense (not including expenses, disbursements
and advances incurred or made by the Trustee, in the ordinary course of the
Trustee's performance in accordance with the provisions of this Agreement)
incurred by the Trustee or such party arising out of or in connection with the
acceptance or administration of its duties
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under this Agreement, other than any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance by
the Trustee of its duties under this Agreement or by reason of the reckless
disregard of the Trustee's obligations and duties under this Agreement. This
section shall survive termination of this Agreement or the resignation or
removal of any Trustee hereunder.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a Department of
Housing and Urban Development and Federal Housing Administration approved
mortgagee, an entity duly organized and validly existing under the laws of the
United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and a minimum long-term debt rating of BBB by Fitch and S&P
and a long term debt rating of at least A1 or better by Moody's, and subject
to supervision or examination by federal or state authority. If such entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06, the combined capital and surplus of such entity
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time
such Trustee is appointed Trustee to the effect that the Trust will not be a
taxable entity under the laws of such state. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
8.06, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07.
Section 8.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from
the trusts hereby created by giving written notice thereof to the Depositor,
the Servicer and each Rating Agency. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and having accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
be legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee. If the Depositor or the Servicer removes
the Trustee under the authority of the immediately preceding sentence, the
Depositor shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee.
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The Majority Certificateholders may at any time remove the
Trustee by written instrument or instruments delivered to the Servicer, the
Depositor and the Trustee; the Depositor shall thereupon use its best efforts
to appoint a successor Trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of
a successor Trustee pursuant to any of the provisions of this Section 8.07
shall not become effective until acceptance of appointment by the successor
Trustee as provided in Section 8.08.
Section 8.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor, the Rating Agencies,
the Servicer and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective, and such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee. The Depositor, the
Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in
this Section 8.08 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 8.06 and the appointment of
such successor Trustee shall not result in a downgrading of the Regular
Certificates by either Rating Agency, as evidenced by a letter from each
Rating Agency.
Upon acceptance of appointment by a successor Trustee as
provided in this Section 8.08, the successor Trustee shall mail notice of the
appointment of a successor Trustee hereunder to all Holders of Certificates at
their addresses as shown in the Certificate Register and to each Rating
Agency.
Section 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
entity succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided such entity shall be eligible under the
provisions of Section 8.06 and 8.08, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at
any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust or any Mortgaged Property may at
the time be located, the Depositor and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders, such title to the Trust, or any part
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thereof, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. Any such co-trustee or separate trustee
shall be subject to the written approval of the Servicer. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by
it of a request so to do, or in the case a Servicer Event of Termination shall
have occurred and be continuing, the Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor Trustee under Section
8.06, and no notice to Certificateholders of the appointment of any co-trustee
or separate trustee shall be required under Section 8.08. The Servicer shall
be responsible for the fees of any co-trustee or separate trustee appointed
hereunder.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) 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 (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely
at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee, acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee except that following the occurrence of a Servicer Event
of Termination, the Trustee acting alone may accept the resignation
or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Depositor, the Rating Agencies and the
Servicer.
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
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its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
Section 8.11. Limitation of Liability.
The Certificates are executed by the Trustee, not in its
individual capacity but solely as Trustee of the Trust, in the exercise of the
powers and authority conferred and vested in it by this Agreement. Each of the
undertakings and agreements made on the part of the Trustee in the
Certificates is made and intended not as a personal undertaking or agreement
by the Trustee but is made and intended for the purpose of binding only the
Trust.
Section 8.12. Trustee May Enforce Claims Without Possession
of Certificates.
(a) All rights of action and claims under this Agreement or
the Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee for the benefit
of all Holders of such Certificates, subject to the provisions of this
Agreement. Any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursement and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the
Servicer and each Certificateholder upon reasonable notice during normal
business hours, access to all records maintained by the Trustee in respect of
its duties hereunder and access to officers of the Trustee responsible for
performing such duties. The Trustee shall cooperate fully with the Seller, the
Servicer, the Depositor and such Certificateholder and shall make available to
the Seller, the Servicer, the Depositor and such Certificateholder for review
and copying at the expense of the party requesting such copies, such books,
documents or records as may be requested with respect to the Trustee's duties
hereunder. The Seller, the Depositor, the Servicer and the Certificateholders
shall not have any responsibility or liability for any action or failure to
act by the Trustee and are not obligated to supervise the performance of the
Trustee under this Agreement or otherwise.
Section 8.13. Suits for Enforcement.
In case a Servicer Event of Termination or other default by
the Servicer or the Seller hereunder shall occur and be continuing, the
Trustee may proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution
of any power granted in this Agreement or for the enforcement of any other
legal, equitable or other remedy, as the Trustee, being advised by counsel,
and subject to the foregoing, shall deem most effectual to protect and enforce
any of the rights of the Trustee and the Certificateholders.
Section 8.14. Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder
hereby waives, any requirement of any jurisdiction in which the Trust, or any
part thereof, may be located that the Trustee post a bond or other surety with
any court, agency or body whatsoever.
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Section 8.15. Waiver of Inventory, Accounting and Appraisal
Requirement.
The Trustee shall be relieved of, and each Certificateholder
hereby waives, any requirement of any jurisdiction in which the Trust, or any
part thereof, may be located that the Trustee file any inventory, accounting
or appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
Section 8.16. Compliance with National Housing Act of 1934.
In performing its duties hereunder with respect to FHA
Loans, the Trustee shall comply with all requirements of the National Housing
Act of 1934, as amended.
ARTICLE IX
REMIC AND TRUST ADMINISTRATION
Section 9.01. REMIC Administration
(a) The Trustee shall make or cause to be made REMIC
elections for each of REMIC 1, REMIC 2, REMIC 3, and REMIC 4 as set forth in
the Preliminary Statement on Forms 1066 or other appropriate federal tax or
information return for the taxable year ending on the last day of the calendar
year in which the Certificates are issued. The regular interests and residual
interest in each REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup
Day" of each REMIC within the meaning of section 860G(a)(9) of the Code.
(c) The Servicer shall pay any and all tax related expenses
(not including taxes) of each REMIC, including but not limited to any
professional fees or expenses related to audits or any administrative or
judicial proceedings with respect to such REMIC that involve the Internal
Revenue Service or state tax authorities, but only to the extent that (i) such
expenses are ordinary or routine expenses, including expenses of a routine
audit but not expenses of litigation (except as described in (ii)); or (ii)
such expenses or liabilities (including taxes and penalties) are attributable
to the negligence or willful misconduct of the Servicer in fulfilling its
duties hereunder. The Servicer shall be entitled to reimbursement of expenses
to the extent provided in clause (i) above from the Collection Account.
(d) The Trustee shall prepare or cause to be prepared, sign,
file or cause to be filed, each REMIC's federal and state tax and information
returns as such REMIC's direct representative. The expenses of preparing and
filing such returns shall be borne by the Trustee.
(e) The Holder of the Residual Interests with respect to
each REMIC holding the largest Percentage Interest shall be the "tax matters
person" as defined in the REMIC Provisions (the "Tax Matters Person") with
respect to the applicable REMIC or REMICs, and the Trustee is irrevocably
designated as and shall act as attorney-in-fact and agent for such Tax Matters
Person for each REMIC. The Trustee, as agent for the Tax Matters Person, shall
perform, on behalf of each REMIC, all reporting and other tax compliance
duties that are the responsibility of such REMIC under the Code, the REMIC
Provisions, or other compliance guidance issued by the Internal Revenue
Service or any state or local taxing authority. Among its other duties, if
required by the Code, the REMIC Provisions, or other such guidance, the
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Trustee, as agent for the Tax Matters Person, shall provide (i) to the
Treasury or other governmental authority such information as is necessary for
the application of any tax relating to the transfer of a Residual Certificate
to any disqualified person or organization and (ii) to the Certificateholders
such information or reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Servicer, and the Holders of
Certificates shall take any action or cause any REMIC to take any action
necessary to create or maintain the status of such REMIC as a REMIC under the
REMIC Provisions and shall assist each other as necessary to create or
maintain such status. None of the Trustee, the Servicer, nor the Holder of any
Residual Certificate shall take any action which is not expressly permitted
under the terms of this Agreement or cause any REMIC 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 (i) endanger the
status of such REMIC as a REMIC or (ii) result in the imposition of a tax upon
such REMIC (including but not limited to the tax on prohibited transactions as
defined in Code Section 860F(a)(2) and the tax on prohibited contributions set
forth on Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless the Trustee and the Servicer have received an Opinion of
Counsel (at the expense of the party seeking to take such action) to the
effect that the contemplated action will not endanger such status or result in
the imposition of such a tax. In addition, prior to taking any action with
respect to any REMIC or the assets therein, or causing such REMIC to take any
action, which is not expressly permitted under the terms of this Agreement,
any Holder of a Residual Certificate will consult with the Trustee and the
Servicer, or their respective designees, in writing, with respect to whether
such action could cause an Adverse REMIC Event to occur with respect to such
REMIC, and no such Person shall take any such action or cause such REMIC to
take any such action as to which the Trustee or the Servicer has advised it in
writing that an Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due
its pro rata share of any and all taxes imposed on any REMIC by federal or
state governmental authorities. To the extent that such REMIC taxes are not
paid by Residual Certificateholders, the Trustee shall pay any remaining REMIC
taxes out of current or future amounts otherwise distributable to the Holder
of the Residual Certificate in each REMIC or, if no such amounts are
available, out of other amounts held in the Collection Account, and shall
reduce amounts otherwise payable to Holders of the REMIC Regular Interests or
the Certificates, as the case may be.
(h) The Trustee, shall, for federal income tax purposes,
maintain or cause to be maintained books and records with respect to each
REMIC on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to
any REMIC, except as expressly provided in this Agreement with respect to
Eligible Substitute Mortgage Loans.
(j) Neither the Trustee nor the Servicer shall enter into
any arrangement by which any REMIC will receive a fee or other compensation
for services.
(k) On or before April 15 of each calendar year beginning in
2002, the Servicer shall deliver to the Trustee and each Rating Agency an
Officer's Certificate stating the Servicer's compliance with the provisions of
this Section 9.01.
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(l) The Trustee shall treat the rights of the Class A-1A
Certificateholders to receive interest payments in excess of the Pool Cap as a
right in interest rate cap contracts written by the Class X, Class N-1 and
Class N-2 Certificateholders, as beneficial owners of the Class X/N Interest,
in favor of the Holders of the Class A-1A Certificates and the Trustee shall
account for such as property held separate and apart from the regular
interests it holds in each of the REMICs created hereunder. This provision is
intended to satisfy the requirements of Treasury Regulations Section
1.860G-2(i) for the treatment of property rights coupled with regular
interests to be separately respected and shall be interpreted consistent with
such regulation.
(m) On each Distribution Date, to the extent the Class A-1A
Certificates receive interest in excess of the Pool Cap, such interest will be
treated as distributed to the Class X Certificates (or in certain cases the
Class N-2 Certificates), and then paid to the Class A-1A Certificates,
pursuant to the related interest rate cap agreement.
Section 9.02. Prohibited Transactions and Activities.
None of the Seller, the Depositor, the Servicer nor the
Trustee shall sell, dispose of, or substitute for any of the Mortgage Loans,
except in a disposition pursuant to (i) the foreclosure of a Mortgage Loan,
(ii) the bankruptcy of the Trust Fund, (iii) the termination of any REMIC
pursuant to Article X of this Agreement, (iv) a substitution pursuant to
Article II of this Agreement or (v) a repurchase of Mortgage Loans pursuant to
Article II of this Agreement, nor acquire any assets for any REMIC, nor sell
or dispose of any investments in the Distribution Account for gain, nor accept
any contributions to any REMIC after the Closing Date, unless it has received
an Opinion of Counsel (at the expense of the party causing such sale,
disposition, or substitution) that such disposition, acquisition,
substitution, or acceptance will not (a) affect adversely the status of such
REMIC as a REMIC or of the interests therein other than the Residual
Certificates as the regular interests therein, (b) affect the distribution of
interest or principal on the Certificates, (c) result in the encumbrance of
the assets transferred or assigned to the Trust Fund (except pursuant to the
provisions of this Agreement) or (d) cause such REMIC to be subject to a tax
on prohibited transactions or prohibited contributions pursuant to the REMIC
Provisions.
Section 9.03. Indemnification with Respect to Certain Taxes
and Loss of REMIC Status.
In the event that any REMIC formed hereunder fails to
qualify as a REMIC, loses its status as a REMIC, or incurs federal, state or
local taxes as a result of a prohibited transaction or prohibited contribution
under the REMIC Provisions due to the negligent performance by the Servicer of
its duties and obligations set forth herein, the Servicer shall indemnify the
Holder of the related Residual Certificate against any and all losses, claims,
damages, liabilities or expenses ("Losses") resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of such Residual Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Residual
Certificate on which the Servicer has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the Holder of such
Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Servicer have
any liability (1) for any action or omission that is taken in accordance with
and in compliance with the express terms
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of, or which is expressly permitted by the terms of, this Agreement, (2) for
any Losses other than arising out of a negligent performance by the Servicer
of its duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders (in addition to payment of
principal and interest on the Certificates).
Section 9.04. REO Property.
(a) Subject to compliance with applicable laws and
regulations as shall at any time be in force, and notwithstanding any other
provision of this Agreement, the Servicer, acting on behalf of the Trust
hereunder, shall not rent, lease, or otherwise earn income on behalf of any
REMIC with respect to any REO Property which might 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 REMIC of any "income
from non-permitted assets" within the meaning of section 860F(a)(2) of the
Code or any "net income from foreclosure property" which is subject to tax
under the REMIC Provisions unless the Servicer has advised, or has caused the
applicable Servicer to advise, the Trustee in writing to the effect that,
under the REMIC Provisions, such action would not adversely affect the status
of any REMIC as a REMIC and any income generated for such REMIC by the REO
Property would not result in the imposition of a tax upon such REMIC.
(b) The Servicer shall make reasonable efforts to sell any
REO Property for its fair market value. In any event, however, the Servicer
shall dispose of any REO Property before the close of the third calendar year
beginning after the year of its acquisition by the Trust Fund unless the
Servicer has received a grant of extension from the Internal Revenue Service
to the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, any REMIC may hold REO Property
for a longer period without adversely affecting its REMIC status or causing
the imposition of a Federal or state tax upon any REMIC. If the Servicer has
received such an extension, then the Servicer shall continue to attempt to
sell the REO Property for its fair market value as determined in good faith by
the Servicer for such longer period as such extension permits (the "Extended
Period"). If the Servicer has not received such an extension and the Servicer
is unable to sell the REO Property within 33 months after its acquisition by
the Trust Fund or if the Servicer has received such an extension, and the
Servicer is unable to sell the REO Property within the period ending three
months before the close of the Extended Period, the Servicer shall, before the
end of the applicable period, (i) purchase such REO Property at a price equal
to the REO Property's fair market value as determined in good faith by the
Servicer or (ii) auction the REO Property to the highest bidder (which may be
the Servicer) in an auction reasonably designed to produce a fair price prior
to the expiration of the applicable period.
ARTICLE X
TERMINATION
Section 10.01. Termination.
(a) The respective obligations and responsibilities of the
Seller, the Servicer, the Depositor, the Trustee and the Certificate Registrar
created hereby (other than the obligation of the Trustee to make certain
payments to Certificateholders after the final Distribution Date and the
obligation of the Servicer to send certain notices as hereinafter set forth)
shall terminate
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upon notice to the Trustee upon the earliest of (i) the Distribution Date on
which the Certificate Principal Balance of each Class of Certificates
has been reduced to zero, (ii) the final payment or other liquidation
of the last Mortgage Loan in the Trust, and (iii) the optional purchase
by the Servicer (or any of its affiliates) of the Mortgage Loans in both
Loan Groups as described below. Notwithstanding the foregoing, in no
event shall the trust created hereby continue beyond the earlier of (i)
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 Latest Possible Maturity
Date.
On or after any Distribution Date upon which the benefits of
servicing the Mortgage Loans are outweighed by the burdens of servicing the
Mortgage Loans, the Servicer may, at its option, terminate the Mortgage Loans
in the Trust Fund and retire the Offered Certificates provided that, in no
event may such option be exercised before the Distribution Date upon which the
aggregate current Pool Balance is less than 10% of the aggregate Pool Balance
of the Mortgage Loans as of the Cut-off Date. The Servicer (or any of its
affiliates) may exercise such option by purchasing all of the outstanding (i)
Mortgage Loans in the Trust Fund at a price equal to the sum of the
outstanding Principal Balance of the Mortgage Loans and except to the extent
previously advanced by the Servicer, accrued and unpaid interest thereon at
the weighted average of the Mortgage Interest Rates through the end of the
Collection Period preceding the final Distribution Date plus unreimbursed
Servicing Advances, Advances and any unpaid Servicing Fees and Special
Servicing Fees allocable to such Mortgage Loans and (ii) REO Properties in the
Trust Fund at a price equal to their fair market value as determined in good
faith by the Servicer (the "Termination Price").
In connection with any such purchase pursuant to the
preceding paragraph, the Servicer shall deliver to the Trustee for deposit in
the Distribution Account all amounts then on deposit in the Collection Account
(less amounts permitted to be withdrawn by the Servicer pursuant to Section
3.07), which deposit shall be deemed to have occurred immediately following
such purchase.
Any such purchase shall be accomplished by delivery to the
Trustee for deposit into the Distribution Account as part of Available Funds
on the Determination Date before such Distribution Date of the Termination
Price.
(b) Notice of any termination, specifying the Distribution
Date (which shall be a date that would otherwise be a Distribution Date) upon
which the Certificateholders may surrender their Certificates to the Trustee
for payment of the final distribution and cancellation, shall be given
promptly by the Trustee upon the Trustee receiving notice of such date from
the Servicer, by letter to the Certificateholders mailed not earlier than the
15th day of the month preceding the month of such final distribution and not
later than the 15th day of the month of such final distribution specifying (1)
the Distribution Date upon which final distribution of the Certificates will
be made upon presentation and surrender of such Certificates at the office or
agency of the Trustee therein designated, (2) the amount of any such final
distribution and (3) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to the Holders of the Certificates on
the Distribution Date for such final
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distribution, in proportion to the Percentage Interests of their respective
Class and to the extent that funds are available for such purpose, an amount
equal to the amount required to be distributed to such Holders in accordance
with the provisions of Sections 4.01 and 4.02 for such Distribution Date.
(d) In the event that all Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before
such final Distribution Date, the Trustee shall promptly following such date
cause all funds in the Distribution Account not distributed in final
distribution to Certificateholders to be withdrawn therefrom and credited to
the remaining Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Certificateholders, and the Seller (if the
Seller has exercised its right to purchase the Mortgage Loans) or the Trustee
(in any other case) shall give a second written notice to the remaining
Certificateholders, to surrender their Certificates for cancellation and
receive the final distribution with respect thereto. If within nine months
after the second notice all the Certificates shall not have been surrendered
for cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject hereto and the Trustee
upon transfer of such funds shall be discharged of any responsibility for such
funds, and such Certificateholders shall look to the Class R
Certificateholders for payment.
Section 10.02. Additional Termination Requirements.
(a) In the event that the Servicer exercises its purchase
option as provided in Section 10.01, the Trust shall be terminated in
accordance with the following additional requirements, unless the Trustee
shall have been furnished with an Opinion of Counsel to the effect that the
failure of the Trust to comply with the requirements of this Section will not
(i) result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or (ii) cause any REMIC
constituting part of the Trust Fund to fail to qualify as a REMIC at any time
that any Certificates are outstanding:
(i) The Trustee shall designate a date within 90 days prior
to the final Distribution Date as the date of adoption of plans of
complete liquidation of each of REMIC 1, REMIC 2, REMIC 3 and REMIC 4
and shall specify such date in the final federal income tax return of
each REMIC;
(ii) After the date of adoption of such plans of complete
liquidation and at or prior to the final Distribution Date, the
Trustee shall sell all of the assets of the Trust to the Seller for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited in the following order of priority (A) to the
Holders of each of the Class A-1A, Class A-1F, Class A-2F, Class M-1,
Class M-2 and Class B Certificates, the related Certificate Principal
Balance, as applicable, plus one month's interest thereon at the
applicable Pass-Through Rate, (B) to the Class N-1, Class N-2 and
Class X Certificates in respect of the Class X/N Interest, the amount
of any remaining Monthly Excess Cash Flow Amounts not previously
distributed thereon, (C) to the remaining REMIC Regular Interests the
amounts allocable thereto pursuant to Section 4.08 and (D) to the
REMIC 1-3 Certificateholder or REMIC 4 Certificateholders, all cash
on hand in respect of the related REMIC or REMICs after
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such payment (other than cash retained to meet claims) and the Trust
shall terminate at such time.
(b) By their acceptance of Certificates, the Holders thereof
hereby agree to appoint the Trustee as their attorney in fact to: (i)
designate such date of adoption of plans of complete liquidation and (ii) to
take such other action in connection therewith as may be reasonably required
to carry out such plans of complete liquidation all in accordance with the
terms hereof.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
This Agreement may be amended from time to time by the
Seller, the Depositor, the Servicer and the Trustee; and without the consent
of the Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions herein which may be defective or inconsistent with
any other provisions herein or in the Prospectus Supplement, (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 or (iv) comply with any requirements imposed by the Code; provided
that, in the case of clause (iii), that amendment will not adversely affect in
any material respect the interests of any securityholders covered by the
Agreement as evidenced either by an Opinion of Counsel to that effect or the
delivery to the Trustee of written notification from each Rating Agency that
provides, at the request of the Depositor, a rating for the Offered
Certificates, of the related series to the effect that that amendment or
supplement will not cause that Rating Agency to lower or withdraw the then
current rating assigned to those Certificates.
In addition, this Agreement may be amended from time to time
by the Seller, the Depositor, the Servicer and the Trustee, with the consent
of the Majority Certificateholders 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 or waiver shall (x)
reduce in any manner the amount of, or delay the timing of, payments on the
Certificates which are required to be made on any Certificate without the
consent of the Holder of such Certificate, or (y) reduce the percentage of
Voting Rights required by this paragraph without the consent of the Holders of
all Certificates of such Class then outstanding. Upon approval of an
amendment, a copy of such amendment shall be sent to the Rating Agencies.
Prior to the execution of any amendment to this Agreement, the Trustee shall
be entitled to receive and rely upon an Opinion of Counsel (at the expense of
the Person seeking such amendment) stating that the execution of such
amendment is authorized or permitted by this Agreement. The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement.
Notwithstanding any provision of this Agreement to the
contrary, the Trustee shall not consent to any amendment to this Agreement
unless it shall have first received an Opinion of Counsel, delivered by (and
at the expense of) the Person seeking such Amendment, to the effect that such
amendment will not result in the imposition of a tax on any REMIC
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constituting part of the Trust Fund pursuant to the REMIC Provisions or cause
any REMIC constituting part of the Trust to fail to qualify as a REMIC at any
time that any Certificates are outstanding and that the amendment is being
made in accordance with the terms hereof.
Promptly after the execution of any such amendment, the
Trustee shall furnish, at the expense of the Person that requested the
amendment if such Person is the Seller or the Servicer (but in no event at the
expense of the Trustee), otherwise at the expense of the Trust, a copy of such
amendment and the Opinion of Counsel referred to in the immediately preceding
paragraph to the Servicer and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment; instead 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.
Section 11.02. 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 Servicer at the expense of the Trust, but only upon direction
of Certificateholders, 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
together constitute but one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
(i) operate to terminate this Agreement or the Trust, (ii) 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, or (iii) otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
Except as expressly provided for herein, no
Certificateholder shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth or contained in the terms
of the Certificates be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third 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
117
written notice of default and of the continuance thereof, as herein 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 whatever 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, which priority or preference is not otherwise provided
for herein, 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 11.03 each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 11.04. Governing Law; Jurisdiction.
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. With
respect to any claim arising out of this Agreement, each party irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York
and the United States District Court located in the Borough of Manhattan in
The City of New York, and each party irrevocably waives any objection which it
may have at any time to the laying of venue of any suit, action or proceeding
arising out of or relating hereto brought in any such courts, irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum and further irrevocably
waives the right to object, with respect to such claim, suit, action or
proceeding brought in any such court, that such court does not have
jurisdiction over such party, provided that service of process has been made
by any lawful means.
Section 11.05. Notices.
All directions, demands and notices hereunder 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 (a) in the case of the Seller, Credit-Based Asset Servicing and
Securitization LLC, 335 Madison Avenue, 19th Floor, New York, New York,
Attention: Director - Mortgage Finance (telecopy number (212) 850-7760), or
such other address or telecopy number as may hereafter be furnished to the
Depositor and the Trustee in writing by the Seller, (b) in the case of the
Trustee, U.S. Bank National Association, 180 East Fifth, St. Paul, Minnesota
55101, Attention: Structured Finance, C-BASS 2001-CB2, or such other address
as may hereafter be furnished to the Depositor, the Seller and the Servicer in
writing by the Trustee, (c) in the case of the Depositor, ACE Securities
Corp., 6525 Morrison Boulevard, Suite 318, Charlotte, North Carolina 28211
Attention: Douglas K. Johnson, or such other address as may be furnished to
the Seller, the Servicer and the Trustee in writing by the Depositor, and (e)
in the case of the Servicer, Litton Loan Servicing LP, 5373 W. Alabama, Suite
600, Houston, Texas 77056, Attention: Janice McClure, or such other address as
may be furnished to the Seller, the Depositor and the Trustee in writing by
the Servicer. Any notice
118
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Notice of any Servicer Event of Termination shall be
given by telecopy and by certified mail. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have duly been
given when mailed, whether or not the Certificateholder receives such notice.
A copy of any notice required to be telecopied hereunder shall also be mailed
to the appropriate party in the manner set forth above.
Section 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions
or terms of this Agreement shall for any reason whatsoever be 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 11.07. 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 11.08. Notice to the Rating Agencies.
(a) Each of the Trustee and the Servicer shall be obligated
to use its best reasonable efforts promptly to provide notice to the Rating
Agencies with respect to each of the following of which a Responsible Officer
of the Trustee or the Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Event of Termination
that has not been cured or waived;
(iii) the resignation or termination of the Servicer or the
Trustee;
(iv) the final payment to Holders of the Certificates of any
Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Servicer pursuant
to Section 7.02 hereof, any event that would result in the inability
of the Trustee to make Advances.
(vii) In addition, the Servicer shall promptly furnish to
each Rating Agency copies of the following:
(A) each annual statement as to compliance described in
Section 3.19 hereof;
(B) each annual independent public accountants' servicing
report described in Section 3.20 hereof; and
119
(C) each notice delivered pursuant to Section 7.01(a)
hereof which relates to the fact that the Servicer has not made
an Advance.
Any such notice pursuant to this Section 11.08 shall be in
writing and shall be deemed to have been duly given if personally delivered or
mailed by first class mail, postage prepaid, or by express delivery service to
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10005,
Attention: Managing Director, Residential Mortgage-Backed Securities; Fitch,
Inc., State Street Plaza, New York, New York 10004, Attention: Managing
Director, Residential Mortgage-Backed Securities; and Standard & Poor's
Ratings Services, 55 Water Street, New York, New York 10041, Attention:
Managing Director, Residential Mortgage-Backed Securities.
Section 11.09. Further Assurances.
Notwithstanding any other provision of this Agreement,
neither the Regular Certificateholders nor the Trustee shall have any
obligation to consent to any amendment or modification of this Agreement
unless they have been provided reasonable security or indemnity against their
out-of-pocket expenses (including reasonable attorneys' fees) to be incurred
in connection therewith.
Section 11.10. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed
or implied, shall give to any Person, other than the Certificateholders and
the parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.11. Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or
taken by the Certificateholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such
Certificateholders in person or by agent duly appointed in writing; and such
action shall become effective when such instrument or instruments are
delivered to the Trustee, the Seller and the Servicer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "act" of the Certificateholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section 11.11.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Whenever such execution is by a signer acting in a capacity other than his or
her individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action by any Certificateholder shall bind every
future Holder of such Certificate and the Holder of every Certificate issued
upon the registration of transfer thereof or in exchange
120
therefor or in lieu thereof, in respect of anything done, omitted or suffered
to be done by the Trustee or the Trust in reliance thereon, whether or not
notation of such action is made upon such Certificate.
121
IN WITNESS WHEREOF, the Seller, the Depositor, the Servicer
and the Trustee have caused their names to be signed hereto by their
respective officers thereunto duly authorized, all as of the day and year
first above written.
ACE SECURITIES CORP., as Depositor
By:____________________________
Name:
Title:
CREDIT-BASED ASSET SERVICING
AND SECURITIZATION LLC, as Seller
By:____________________________
Name:
Title:
LITTON LOAN SERVICING LP, as
Servicer
By:____________________________
General Partner
By:____________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Trustee for the 2001-CB2
Trust, C-BASS Mortgage Loan
Asset-Backed Certificates,
Series 2001-CB2
By:____________________________
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On the 14th day of March, 2001 before me, a notary public in
and for said State, personally appeared _______________ known to me to be a
___________________ of ACE Securities Corp., a Delaware corporation 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
2
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of June, 2001 before me, a notary public in
and for said State, personally appeared ______________ known to me to be a
_______________________ of Credit-Based Asset Servicing and Securitization
LLC, a limited liability company that executed the within instrument, and also
known to me to be the person who executed it on behalf of said limited
liability company, and acknowledged to me that such limited liability company
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
3
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of June, 2001 before me, a notary public in
and for said State, personally appeared _________________, known to me to be
______________________ of U.S. Bank 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 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
4
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of June, 2001 before me, a notary public in
and for said State, personally appeared _______________, known to me to be a
_____________________ of Litton Loan Servicing LP, a Delaware limited
partnership, that executed the within instrument, and also known to me to be
the person who executed it on behalf of said limited partnership, and
acknowledged to me that such limited partnership executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
Notary Public
5
EXHIBITS TO POOLING AND SERVICING AGREEMENT,
C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2001-CB2
EXHIBIT A-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS A-IO
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF 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").
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN
OR ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 2001-CB2, Class A-IO Notional Amount of the
Class A-IO Certificates as
of the Issue Date:
Pass-Through Rate: 2.000% $[__________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[__________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [_]
Issue Date: [_____________]
CUSIP: [12489WDE1]
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Notional Amount of the Class A-IO Certificates) in that certain
beneficial ownership interest evidenced by all the Class A-IO Certificates in
the Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), by and among ACE Securities Corp.
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer, the Seller and 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 last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from funds in the Distribution Account 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-IO 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 or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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-IO Certificates the
aggregate initial Notional Amount of which is in excess of $5,000,000, or 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,
provided that the Trustee may deduct a reasonable wire transfer fee from any
payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee
of the pendency of such distribution and only upon presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
2
The Pass-Through Rate on the Class A-IO Certificates on each
Distribution Date will be a rate per annum equal to the Class A-IO
Pass-Through Rate.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class A-IO Certificates.
The Class A-IO 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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.
Each transferee of a Class A-IO Certificate will be required or, in
the case of a Book-Entry Certificate, deemed to represent that (i) it is not a
Plan Investor, or (ii) the Class A-IO Certificate is rated at the time of
purchase not lower than AA- (or its equivalent) by a Rating Agency, or (iii)
it is an insurance company, the source of funds used to acquire and hold the
certificate or interest therein is an "insurance compoany general account," as
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and its
acquisition and holding of the Certificate satisfy the conditions for
exemptive relief under Sections I and III of PTCE 95-60. A transferee of a
Book-Entry Certificate that does not deliver an Opinion of Counsel as
described in (iii) above will be deemed, by its acceptance of an interest in
such Book-Entry Certificate, to make the representation in (i) or (ii) above.
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 Trustee 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
Trustee and the Certificate Registrar 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.
3
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 service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee 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 Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [______________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate
Registrar
By:_______________________________
Authorized Signatory
Date of authentication: [_____________]
5
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
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 Certificate Registrar 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
6
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.
7
EXHIBIT A-2
MORTGAGE LOAN ASSET-BACKED CERTIFICATES
SERIES 2001-CB2, CLASS A-1A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF 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").
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN
OR ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 2001-CB2, Class A-1A Initial
Class Principal
Balance of the
Class A-1A
Certificates as
of the Issue
Date:
Pass-Through Rate: Variable $[_________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[_________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
CUSIP: [12489WDJ0]
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
BELOW.
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal
Balance of the Class A-1A Certificates) in that certain beneficial ownership
interest evidenced by all the Class A-1A Certificates in the Trust Fund
created pursuant to a Pooling and Servicing Agreement, dated as specified
above (the "Agreement"), by and among ACE Securities Corp. (hereinafter called
the "Depositor," which term includes any successor entity under the
Agreement), the Servicer, the Seller and 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 Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
A-1A Certificates on such Distribution Date pursuant to the Agreement,
provided, however, that if any Class A-1A Certificate becomes a Definitive
Certificate (as defined herein), the Record Date for such Certificate will be
the last Business Day of the month immediately preceding the month in which
the related Distribution Date occurs.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A-1A Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
3
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Pass-Through Rate on the Class A-1A Certificates on each
Distribution Date after the first Distribution Date will be a rate per annum
equal to the lesser of (i) One-Month LIBOR plus the Class A-1A Certificate
Margin and (ii) the Class A-1A Net Funds Cap.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class A-1A Certificates.
The Class A-1A 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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.
Each transferee of a Class A-1A Certificate will be required or, in
the case of a Book-Entry Certificate, deemed to represent that (i) it is not a
Plan Investor, or (ii) the Class A-IO Certificate is rated at the time of
purchase not lower than AA- (or its equivalent) by a Rating Agency, or (iii)
it is an insurance company, the source of funds used to acquire and hold the
certificate or interest therein is an "insurance compoany general account," as
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and its
acquisition and holding of the Certificate satisfy the conditions for
exemptive relief under Sections I and III of PTCE 95-60. A transferee of a
Book-Entry Certificate that does not deliver an Opinion of Counsel as
described in (iii) above will be deemed, by its acceptance of an interest in
such Book-Entry Certificate, to make the representation in (i) or (ii) above.
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 Trustee 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
Trustee and the
4
Certificate Registrar 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 service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee 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 Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1A Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate
Registrar
By:_______________________________
Authorized Signatory
Date of authentication: [_____________]
6
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
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
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 Certificate Registrar 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
7
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.
8
EXHIBIT A-3
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS A-1F
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF 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").
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN
OR ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 2001-CB2, Class A-1F Initial
Class Principal
Balance of the
Class A-1F
Certificates as
of the Issue
Date:
Initial Pass-Through Rate: 5.102% $[_________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[_________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
CUSIP: [12489WDF8]
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
BELOW.
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal
Balance of the Class A-1F Certificates) in that certain beneficial ownership
interest evidenced by all the Class A-1F Certificates in the Trust Fund
created pursuant to a Pooling and Servicing Agreement, dated as specified
above (the "Agreement"), by and among ACE Securities Corp. (hereinafter called
the "Depositor," which term includes any successor entity under the
Agreement), the Servicer, the Seller and 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 applicable Record Date, from funds in the
Distribution Account 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-1F 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 or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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-1F Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
3
The Pass-Through Rate on the Class A-1F Certificates on each
Distribution Date after the first Distribution Date will be a rate per annum
equal to the lesser of (i) the Class A-1F Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class A-1F Certificates.
The Class A-1F 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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.
Each transferee of a Class A-1F Certificate will be required or, in
the case of a Book-Entry Certificate, deemed to represent that (i) it is not a
Plan Investor, or (ii) the Class A-IO Certificate is rated at the time of
purchase not lower than AA- (or its equivalent) by a Rating Agency, or (iii)
it is an insurance company, the source of funds used to acquire and hold the
certificate or interest therein is an "insurance compoany general account," as
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and its
acquisition and holding of the Certificate satisfy the conditions for
exemptive relief under Sections I and III of PTCE 95-60. A transferee of a
Book-Entry Certificate that does not deliver an Opinion of Counsel as
described in (iii) above will be deemed, by its acceptance of an interest in
such Book-Entry Certificate, to make the representation in (i) or (ii) above.
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 Trustee 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
Trustee and the Certificate Registrar 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.
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, 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 Trustee 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 Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1F Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate
Registrar
By:_______________________________
Authorized Signatory
Date of authentication: [_____________]
6
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
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 Certificate Registrar 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
7
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.
8
EXHIBIT A-4
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS A-2F
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF 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").
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN
OR ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 2001-CB2, Class A-2F Initial
Certificate
Principal Balance
of the Class A-1F
Certificates as
of the Issue
Date:
Initial Pass-Through Rate: 5.974% $[_________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[_________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
CUSIP: [12489WDG6]
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
BELOW.
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal
Balance of the Class A-2F Certificates) in that certain beneficial ownership
interest evidenced by all the Class A-2F Certificates in the Trust Fund
created pursuant to a Pooling and Servicing Agreement, dated as specified
above (the "Agreement"), by and among ACE Securities Corp. (hereinafter called
the "Depositor," which term includes any successor entity under the
Agreement), the Servicer, the Seller and 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 applicable Record Date, from funds in the
Distribution Account 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-2F 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 or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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-2F Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
3
The Pass-Through Rate on the Class A-2F Certificates on each
Distribution Date after the first Distribution Date will be a rate per annum
equal to the lesser of (i) the Class A-2F Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class A-2F Certificates.
The Class A-2F 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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.
Each transferee of a Class A-2F Certificate will be required or, in
the case of a Book-Entry Certificate, deemed to represent that (i) it is not a
Plan Investor, or (ii) the Class A-IO Certificate is rated at the time of
purchase not lower than AA- (or its equivalent) by a Rating Agency, or (iii)
it is an insurance company, the source of funds used to acquire and hold the
certificate or interest therein is an "insurance compoany general account," as
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and its
acquisition and holding of the Certificate satisfy the conditions for
exemptive relief under Sections I and III of PTCE 95-60. A transferee of a
Book-Entry Certificate that does not deliver an Opinion of Counsel as
described in (iii) above will be deemed, by its acceptance of an interest in
such Book-Entry Certificate, to make the representation in (i) or (ii) above.
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 Trustee 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
Trustee and the Certificate Registrar 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.
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, 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 Trustee 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 Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2F Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate
Registrar
By:_______________________________
Authorized Signatory
Date of authentication: [_____________]
6
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
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 Certificate Registrar 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
7
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.
8
EXHIBIT A-5
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS A-3F
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF 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").
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN
OR ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 2001-CB2, Class A-3F Initial
Certificate
Principal Balance
of the Class A-3F
Certificates as
of the Issue
Date:
Initial Pass-Through Rate: 7.122% $[_________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[_________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
CUSIP: [12489WDH4]
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
BELOW.
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal
Balance of the Class A-3F Certificates) in that certain beneficial ownership
interest evidenced by all the Class A-3F Certificates in the Trust Fund
created pursuant to a Pooling and Servicing Agreement, dated as specified
above (the "Agreement"), by and among ACE Securities Corp. (hereinafter called
the "Depositor," which term includes any successor entity under the
Agreement), the Servicer, the Seller and 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 applicable Record Date, from funds in the
Distribution Account 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-3F 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 or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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-3F Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
3
The Pass-Through Rate on the Class A-3F Certificates on each
Distribution Date after the first Distribution Date will be a rate per annum
equal to the lesser of (i) the Class A-3F Pass-Through Rate and (ii) the Pool
Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class A-3F Certificates.
The Class A-3F 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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.
Each transferee of a Class A-3F Certificate will be required or, in
the case of a Book-Entry Certificate, deemed to represent that (i) it is not a
Plan Investor, or (ii) the Class A-IO Certificate is rated at the time of
purchase not lower than AA- (or its equivalent) by a Rating Agency, or (iii)
it is an insurance company, the source of funds used to acquire and hold the
certificate or interest therein is an "insurance compoany general account," as
defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and its
acquisition and holding of the Certificate satisfy the conditions for
exemptive relief under Sections I and III of PTCE 95-60. A transferee of a
Book-Entry Certificate that does not deliver an Opinion of Counsel as
described in (iii) above will be deemed, by its acceptance of an interest in
such Book-Entry Certificate, to make the representation in (i) or (ii) above.
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 Trustee 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
Trustee and the Certificate Registrar 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.
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, 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 Trustee 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 Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3F Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate
Registrar
By:_______________________________
Authorized Signatory
Date of authentication: [_____________]
6
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
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 Certificate Registrar 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
7
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.
8
EXHIBIT B-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS M-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
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").
Series 2001-CB2, Class M-1 Initial
Certificate
Principal Balance
of the Class M-1
Certificates as
of the Issue
Date:
Initial Pass-Through Rate: 7.479% $[_________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[_________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
CUSIP: [12489WDK7]
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 BELOW.
THIS CLASS M-1 CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
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 IN THE POOLING AND SERVICING
AGREEMENT.
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first and second mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of
this Certificate by the Original Class Certificate Principal Balance of the
Class M-1 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), by and among ACE Securities Corp. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement),
the Servicer, the Seller and 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 last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in
the Distribution Account 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 the Class M-1 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 or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee 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 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose as provided in the Agreement.
The Pass-Through Rate on the Class M-1 Certificates on each Distribution
Date will be the lesser of (i) the Class M-1 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class M-1 Certificates.
The Class M-1 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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.
Each transferee of a Class M-1 Certificate will be required to deliver
(i) a representation that it is not a Plan Investor, or (ii) a representation
that it sis an insurance company, the source of funds used to acquire and hold
the certificate or interest therein is an "insurance company general account,"
as defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and its
acquisition and holding of the certificate satisfy the conditions for
exemptive relief under Sections I and III of PTCE 95-60 or (iii) an Opinion of
Counsel that its purchase and holding of the Certificate will not result in
the assets of the trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Certificate Registrar to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement or to any liability. A
transferee of a B00k-Entry Certificate that does not deliver an Opinion of
Counsel as described in (iii) aboe will be deemed, by its acceptance of an
interest in such Book-Entry Certificate, to make the representation in (i) or
(ii) above.
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 Trustee 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 Trustee and the
2
Certificate Registrar 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 service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee 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 Servicer, the Seller, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
-------------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate Registrar
By:
-----------------------------------
Authorized Signatory
Date of authentication: [_____________]
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
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 Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately available funds
to
---------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
for the account of _______________________________, account number
-----------------------------------------------,
or, if mailed by check, to
---------------------------------------------------------------------------------------.
Applicable statements should be mailed to
------------------------------------------------------------------------
This information is provided by
----------------------------------------------------------------------------------,
the assignee named above, or ________________________________________, as its agent.
EXHIBIT B-2
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS M-2
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
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").
Series 2001-CB2, Class M-2 Initial
Certificate
Principal Balance
of the Class M-2
Certificates as
of the Issue
Date:
Initial Pass-Through Rate: 7.897% $[_________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[_________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
CUSIP: [12489WDL5]
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 BELOW.
2
THIS CLASS M-2 CERTIFICATE IS SUBORDINATE TO THE CLASS A AND CLASS M-1
CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
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 IN THE POOLING AND SERVICING
AGREEMENT.
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first and second mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of
this Certificate by the Original Class Certificate Principal Balance of the
Class M-2 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), by and among ACE Securities Corp. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement),
the Servicer, the Seller and 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 last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in
the Distribution Account 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 the Class M-1 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 or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee 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-2 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose as provided in the Agreement.
The Pass-Through Rate on the Class M-2 Certificates on each Distribution
Date will be the lesser of (i) the Class M-2 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class M-2 Certificates.
The Class M-2 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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.
Each transferee of a Class M-2 Certificate will be required to deliver
(i) a representation that it is not a Plan Investor, or (ii) a representation
that it sis an insurance company, the source of funds used to acquire and hold
the certificate or interest therein is an "insurance company general account,"
as defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and its
acquisition and holding of the certificate satisfy the conditions for
exemptive relief under Sections I and III of PTCE 95-60 or (iii) an Opinion of
Counsel that its purchase and holding of the Certificate will not result in
the assets of the trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Certificate Registrar to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement or to any liability. A
transferee of a B00k-Entry Certificate that does not deliver an Opinion of
Counsel as described in (iii) aboe will be deemed, by its acceptance of an
interest in such Book-Entry Certificate, to make the representation in (i) or
(ii) above.
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 Trustee 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 Trustee and the
Certificate Registrar 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 service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee 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 Servicer, the Seller, the Trustee and the Certificate
Registrar and any agent of the Depositor, any Servicer, the Seller, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
-------------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate Registrar
By:
-------------------------------------------
Authorized Signatory
Date of authentication: [_____________]
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
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 Certificate Registrar 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 C-1
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS B-1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
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").
Series 2001-CB2, Class B-1 Initial
Certificate
Principal Balance
of the Class B-1
Certificates as
of the Issue
Date:
Initial Pass-Through Rate: 8.509% $[_________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[_________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
CUSIP: [12489WDM3]
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 BELOW.
THIS CLASS B-1 CERTIFICATE IS SUBORDINATE TO THE CLASS A, CLASS M-1 AND
CLASS M-2 CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
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 IN THE POOLING AND SERVICING
AGREEMENT.
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first and second mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Cede & Co. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of
this Certificate by the Original Class Certificate Principal Balance of the
Class B-1 Certificates) in that certain beneficial ownership interest
evidenced by all the Class B-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), by and among ACE Securities Corp. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement),
the Servicer, the Seller and 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 Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account
in an amount equal to product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of the
Class B-1 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 or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-1 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this
3
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Trustee for that purpose as provided
in the Agreement.
The Pass-Through Rate on the Class B-1 Certificates on each Distribution
Date will be the lesser of (i) the Class B-1 Pass-Through Rate and (ii) the
Pool Cap on such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class B-1 Certificates.
The Class B-1 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 may be made from time to
time for purposes other than distribution s to Holders, such purposes
including reimbursement fo 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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.
Each transferee of a Class M-1 Certificate will be required to deliver
(i) a representation that it is not a Plan Investor, or (ii) a representation
that it sis an insurance company, the source of funds used to acquire and hold
the certificate or interest therein is an "insurance company general account,"
as defined in Prohibited Transaction Class Exemption ("PTCE") 95-60, and its
acquisition and holding of the certificate satisfy the conditions for
exemptive relief under Sections I and III of PTCE 95-60 or (iii) an Opinion of
Counsel that its purchase and holding of the Certificate will not result in
the assets of the trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Certificate Registrar to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement or to any liability. A
transferee of a B00k-Entry Certificate that does not deliver an Opinion of
Counsel as described in (iii) aboe will be deemed, by its acceptance of an
interest in such Book-Entry Certificate, to make the representation in (i) or
(ii) above.
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 Trustee as
4
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 Trustee and the Certificate Registrar 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 service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee 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 Servicer, the Seller, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate
Registrar
By:
----------------------------------------
Authorized Signatory
Date of authentication: [_____________]
6
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
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 Certificate Registrar 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
7
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.
8
EXHIBIT C-2
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS B-2
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").
Series 2001-CB2, Class B-2 Initial Certificate Principal Balance of the Class B-2
Certificates as of the Issue Date:
Initial Pass-Through Rate: 9.000% $[_________]
Date of Pooling and Servicing Agreement and Cut-off Date: Denomination: $[_________]
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
CUSIP: [12489WDN1]
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 BELOW.
THIS CLASS B-2 CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS B-2 CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY
IN A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION
AND IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
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.
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first and second mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Sigler & Co. is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
Original Class Certificate Balance of the Class B-2 Certificates) in that
certain beneficial ownership interest evidenced by all the Class B-2
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), by and among ACE
Securities Corp. (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement), the Servicer, the Seller and 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 Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account
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 the
Class B-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 or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B-2 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$5,000,000, or 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, provided that the Trustee may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and
3
only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose as provided in the Agreement.
The Pass-Through Rate on the Class B-2 Certificates on each Distribution
Date after the first Distribution Date will be a rate per annum equal to the
lesser of (i) the Class B-2 Pass-Through Rate and (ii) the Pool Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class B-2 Certificates.
The Class B-2 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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 Trustee 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 Trustee and the
Certificate Registrar 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.
4
<Page>
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee 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 Servicer, the Seller, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
-----------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-2 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Certificate
Registrar
By:
-------------------------------------------
Authorized Signatory
Date of authentication: [_____________]
6
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
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
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 Certificate Registrar 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
7
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.
8
EXHIBIT C-3
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS X
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 CLASS X CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS X CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS X CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY
IN A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION
AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
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.
EACH HOLDER OF A CLASS X CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF SECTION 5.02(d) OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT
IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
OWNERSHIP OF THIS CLASS X CERTIFICATE.
Series 2001-CB2, Class X Percentage Interest of the Class X Certificates as of
the Issue Date: 100%
Date of Pooling and Servicing Agreement and Cut-off Date:
May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
Percentage Interest: 100%
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that Credit-Based Asset Servicing and Securitization
LLC is the registered owner of a Percentage Interest set forth above in that
certain beneficial ownership interest evidenced by all the Class X
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), by and among ACE
Securities Corp. (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement), the Servicer, the Seller and 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 last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in
the Distribution Account 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 X 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 or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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 X Certificates the
having a Percentage Interest which is in excess of a 66% Percentage Interest
of the Class X Certificates, or 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, provided that the Trustee may deduct a reasonable
wire transfer fee from any payment made by wire transfer. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the
3
<Page>
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing the
Percentage Interest specified on the face hereof.
The Class X 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. 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 Trustee 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
Trustee and the Certificate Registrar 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 that transfer
is made pursuant to an effective registration statement under 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 a transfer is to be made without
4
registration or qualification, the Trustee and the Certificate Registrar shall
require, in order to assure compliance with such laws, either (i) that the
Certificateholder desiring to effect the transfer and such Certificateholder's
prospective transferee each execute a representation letter in the form
described by the Agreement certifying to the Trustee and the Certificate
Registrar the facts surrounding the transfer, or (ii) that the Trustee and the
Certificate Registrar shall require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification,
which Opinion of Counsel shall not be an expense of the Depositor, the Trustee
or the Certificate Registrar, in their respective capacities as such. None of
the Depositor, the Certificate Registrar nor the Trustee 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 such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify
the Trustee, the Depositor and the Certificate Registrar 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.
Except as otherwise set forth in the next succeeding paragraph, no
transfer of a Certificate or any interest therein may be made to employee
benefit plans and certain other retirement plans and arrangements, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who
is directly or indirectly purchasing the Certificate or interest therein on
behalf of, as named fiduciary of, as trustee of, or with assets of a Plan,
unless the prospective transferee provides the Trustee with an opinion of
counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or cause the Servicer or Trustee to be deemed a fiduciary of such Plan or
result in the imposition of an excise tax under Section 4975 of the Code. In
the absence of its having received the opinion of counsel contemplated by the
preceding sentence, the Trustee shall (unless the next succeeding paragraph
applies) require the prospective transferee of any Certificate to certify that
it is neither (i) a Plan nor (ii) a Person who is directly or indirectly
purchasing such Certificate on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan (including any insurance company using funds in
its general or separate accounts that may constitute "plan assets").
The Holder of this Certificate, by its acceptance hereof, shall be
deemed for all purposes to have consented to the provisions of Section 5.02 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 the REMIC Trust to cease to qualify as a REMIC or cause the imposition
of a tax upon the REMIC Trust.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other
5
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
The Depositor, the Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, any Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class X Certificates referred to in the
within-mentioned Agreement.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as Certificate
Registrar
By:_______________________________
Authorized Signatory
7
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
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 Certificate Registrar 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
8
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.
9
EXHIBIT C-4
C-BASS MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS N-1
THIS CERTIFICATE REPRESENTS AN OBLIGATION OF THE CLASS X CERTIFICATE AND
DOES NOT REPRESENT AN INTEREST IN THE REMIC.
THIS CLASS N-1 CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS N-1 CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH
TIME AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CLASS N-1 CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY
IN A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION
AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
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.
EACH HOLDER OF A CLASS N-1 CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF SECTION 5.02(d) OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT
IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
OWNERSHIP OF THIS CLASS N-1 CERTIFICATE.
Series 2001-CB2, Class N-1 Initial Notional Amount of the Class N-1 Certificates:
$[---------]
Pass-Through Rate: 8.000%
Servicer: Litton Loan Servicing LP
Date of Pooling and Servicing Agreement May 1, 2001
Trustee: U.S. Bank National Association
Cut-off Date: May 1, 2001
Issue Date: [_____________]
First Distribution Date: June 25, 2001
Certificate No. [__]
Percentage Interest: [___]%
2
C-BASS MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES.
This certifies that German American Capital Corporation is the
registered owner of a Percentage Interest set forth above in that certain
beneficial ownership interest evidenced by all the Class N-1 Certificates in
the Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among ACE Securities Corp. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Seller, the Servicer and 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 last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in
the Distribution Account 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 N-1 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 or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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 N-1 Certificates the
aggregate initial Notional Amount of which is in excess of $5,000,000, or 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,
provided that the Trustee may deduct a reasonable wire transfer fee from any
payment made by wire transfer. Notwithstanding the above, the final
distribution on this
3
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Trustee for that purpose as provided
in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and
representing the Percentage Interest specified on the face hereof.
The Class N-1 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee 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 Trustee 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
Trustee and the Certificate Registrar 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 that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or
4
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that a transfer is to be made without registration or qualification, the
Trustee and the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Trustee and the Certificate Registrar the facts surrounding
the transfer, or (ii) that the Trustee and the Certificate Registrar shall
require an Opinion of Counsel satisfactory to them that such transfer may be
made without such registration or qualification, which Opinion of Counsel
shall not be an expense of the Depositor, the Trustee or the Certificate
Registrar, in their respective capacities as such. None of the Depositor, the
Certificate Registrar nor the Trustee 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 such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor and the
Certificate Registrar 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.
Except as otherwise set forth in the next succeeding paragraph, no
transfer of a Certificate or any interest therein may be made to employee
benefit plans and certain other retirement plans and arrangements, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who
is directly or indirectly purchasing the Certificate or interest therein on
behalf of, as named fiduciary of, as trustee of, or with assets of a Plan,
unless the prospective transferee provides the Trustee with an opinion of
counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or cause the Servicer or Trustee to be deemed a fiduciary of such Plan or
result in the imposition of an excise tax under Section 4975 of the Code. In
the absence of its having received the opinion of counsel contemplated by the
preceding sentence, the Trustee shall (unless the next succeeding paragraph
applies) require the prospective transferee of any Certificate to certify that
it is neither (i) a Plan nor (ii) a Person who is directly or indirectly
purchasing such Certificate on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan (including any insurance company using funds in
its general or separate accounts that may constitute "plan assets").
The Holder of this Certificate, by its acceptance hereof, shall be
deemed for all purposes to have consented to the provisions of Section 5.02 of
the Agreement in so far as they relate to the Class N-1 Certificates.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee 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.
5
The Depositor, the Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-Off Date Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class N-1 Certificates referred to in the
within-mentioned Agreement.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Authorized Signatory
7
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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 Mortgage Loan
Asset-Backed 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 Certificate Registrar 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
8
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.
9
EXHIBIT C-5
C-BASS MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS N-2
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS OWNERSHIP OF 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 CLASS N-2 CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES
OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS N-2 CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL
SUCH TIME AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CLASS N-2 CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE
SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES NOT REQUIRE
SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
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 CLASS N-2
CERTIFICATE MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1)
AN AFFIDAVIT TO THE CERTIFICATE REGISTRAR AND THE TRUSTEE THAT SUCH
TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B-1)
ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521
OF THE CODE) WHICH 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, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING
CLAUSES (A), (B-1) OR (C) BEING HEREINAFTER REFERRED TO AS A
"DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH TRANSFEREE SATISFIES
CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF
THIS CLASS N-2 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 A CLASS N-2 CERTIFICATE BY ACCEPTANCE OF
THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS
OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(d) OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT
IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING
BENEFICIAL OWNERSHIP OF THIS CLASS N-2 CERTIFICATE.
2
Series 2001-CB2, Class N-2 Initial Principal Amount of the Class N-2
Certificates: $[_________]
Pass-Through Rate: 8.000%
Servicer: Litton Loan Servicing LP
Date of Pooling and Servicing Agreement May 1, 2001
Trustee: U.S. Bank National Association
Cut-off Date: May 1, 2001
Issue Date: [_____________]
First Distribution Date: June 25, 2001
Certificate No. [__]
C-BASS MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of FHA, VA and conventional one- to four-family
first mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ACE SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF
THEIR AFFILIATES.
This certifies that Sigler & Co. is the registered owner of a
Percentage Interest set forth above in that certain beneficial ownership
interest evidenced by all the Class N-2 Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among ACE Securities Corp. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Seller, the
Servicer and 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 last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in
the Distribution Account 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 N-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 or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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 N-2 Certificates the
aggregate initial Notional Amount of which is in excess of $5,000,000, or 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,
provided that the Trustee may deduct a reasonable wire transfer fee from any
payment made by wire transfer. Notwithstanding the above, the final
distribution on this
4
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Trustee for that purpose as provided
in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and
representing the Percentage Interest specified on the face hereof.
The Class N-2 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 Servicer, the Seller, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee 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 Trustee 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
Trustee and the Certificate Registrar 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 that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or
5
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that a transfer is to be made without registration or qualification, the
Trustee and the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Trustee and the Certificate Registrar the facts surrounding
the transfer, or (ii) that the Trustee and the Certificate Registrar shall
require an Opinion of Counsel satisfactory to them that such transfer may be
made without such registration or qualification, which Opinion of Counsel
shall not be an expense of the Depositor, the Trustee or the Certificate
Registrar, in their respective capacities as such. None of the Depositor, the
Certificate Registrar nor the Trustee 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 such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor and the
Certificate Registrar 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.
Except as otherwise set forth in the next succeeding paragraph, no
transfer of a Certificate or any interest therein may be made to employee
benefit plans and certain other retirement plans and arrangements, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who
is directly or indirectly purchasing the Certificate or interest therein on
behalf of, as named fiduciary of, as trustee of, or with assets of a Plan,
unless the prospective transferee provides the Trustee with an opinion of
counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or cause the Servicer or Trustee to be deemed a fiduciary of such Plan or
result in the imposition of an excise tax under Section 4975 of the Code. In
the absence of its having received the opinion of counsel contemplated by the
preceding sentence, the Trustee shall (unless the next succeeding paragraph
applies) require the prospective transferee of any Certificate to certify that
it is neither (i) a Plan nor (ii) a Person who is directly or indirectly
purchasing such Certificate on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan (including any insurance company using funds in
its general or separate accounts that may constitute "plan assets").
The Holder of this Certificate, by its acceptance hereof, shall be
deemed for all purposes to have consented to the provisions of Section 5.02 of
the Agreement in so far as they relate to the Class N-2 Certificates.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee 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.
6
The Depositor, the Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-Off Date Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class N-2 Certificates referred to in the
within-mentioned Agreement.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Authorized Signatory
8
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)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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 Mortgage Loan
Asset-Backed 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 Certificate Registrar 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
8
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.
10
EXHIBIT C-6
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS R1-3
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL 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 CLASS R CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES
OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH
TIME AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE
SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES NOT REQUIRE
SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
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 CLASS R CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN AFFIDAVIT
TO THE CERTIFICATE REGISTRAR AND THE TRUSTEE THAT SUCH TRANSFEREE IS
NOT (A) THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION
THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (B-1) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF
THE CODE) WHICH 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, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING
CLAUSES (A), (B-1) OR (C) BEING HEREINAFTER REFERRED TO AS A
"DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH TRANSFEREE SATISFIES
CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF
THIS CLASS R 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 A CLASS R CERTIFICATE BY ACCEPTANCE OF
THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS
OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(d) OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT
IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING
BENEFICIAL OWNERSHIP OF THIS CLASS R CERTIFICATE.
Series 2001-CB2, Class R1-3 Percentage Interest of the Class R1-3
Certificates as of the Issue
Date: [__]%
Date of Pooling and Servicing Agreement
and Cut-off Date: May 1, 2001
Servicer: Litton Loan Servicing LP
First Distribution Date: June 25, 2001
Trustee: U.S. Bank National
Association
No. [__]
Issue Date: [_____________]
Percentage Interest: [__]%
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional one- to four-family first and
second mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ACE SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF
THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.
This certifies that CMI Investors 2, L.P. is the registered
owner of a Percentage Interest set forth above in that certain beneficial
ownership interest evidenced by all the Class R Certificates in the Trust Fund
created pursuant to a Pooling and Servicing Agreement, dated as specified
above (the "Agreement"), by and among ACE Securities Corp. (hereinafter called
the "Depositor," which term includes any successor entity under the
Agreement), the Servicer, the Seller and 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 last Business Day of the
month immediately preceding the month of such distribution (the "Record
Date"), from funds in the Distribution Account 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 or on behalf of the Trustee
by wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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 the
aggregate Percentage Interest of which is in excess of a 66% Percentage
Interest of the Class R Certificates, or 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, provided that the Trustee may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the
3
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Loan Asset Backed Certificates of the
Series specified on the face hereof (herein called the "Certificates") and
representing the Percentage Interest specified on the face hereof.
The Class R 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 Servicer, the Seller, the Trustee and the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Seller and the Trustee with the consent of the
Holders of Certificates entitled to the Voting Rights identified in the
agreement. 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 Trustee
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 Trustee and the Certificate Registrar 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 that
transfer is made pursuant to an effective registration statement under 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 a transfer is to be made
without
4
registration or qualification, the Trustee and the Certificate Registrar
shall require, in order to assure compliance with such laws, either
(i) that the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee each execute a representation
letter in the form described by the Agreement certifying to the Trustee and
the Certificate Registrar the facts surrounding the transfer, or (ii) that the
Trustee and the Certificate Registrar shall require an Opinion of Counsel
satisfactory to them that such transfer may be made without such registration
or qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar nor the
Trustee 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 such
Certificateholder desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Depositor and the Certificate Registrar
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.
Except as otherwise set forth in the next succeeding
paragraph, no transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the Code ("Plans") or
any person who is directly or indirectly purchasing the Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless the prospective transferee provides the Trustee with
an opinion of counsel which establish to the satisfaction of the Trustee that
such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or cause the Servicer or Trustee to be deemed a
fiduciary of such Plan or result in the imposition of an excise tax under
Section 4975 of the Code. In the absence of its having received the opinion of
counsel contemplated by the preceding sentence, the Trustee shall (unless the
next succeeding paragraph applies) require the prospective transferee of any
Certificate to certify that it is neither (i) a Plan nor (ii) a Person who is
directly or indirectly purchasing such Certificate on behalf of, as named
fiduciary of, as trustee of, or with assets of a Plan (including any insurance
company using funds in its general or separate accounts that may constitute
"plan assets").
The Holder of this Certificate, by its acceptance hereof,
shall be deemed for all purposes to have consented to the provisions of
Section 5.02 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 the REMIC Trust to cease to qualify as a REMIC or cause
the imposition of a tax upon the REMIC Trust.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other
5
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
The Depositor, the Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, any Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from the Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Date Aggregate Principal
Balance.
The recitals contained herein shall be taken as statements
of the Depositor and the Trustee assumes no responsibility for their
correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
-------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: _________________________________
Authorized Signatory
7
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
Floating Rate 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 Certificate Registrar 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
8
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.
9
EXHIBIT C-7
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 2001-CB2, CLASS R-4
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL 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 CLASS R CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES
OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH
TIME AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE
SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES NOT REQUIRE
SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
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 CLASS R CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN AFFIDAVIT
TO THE CERTIFICATE REGISTRAR AND THE TRUSTEE THAT SUCH TRANSFEREE IS
NOT (A) THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION
THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (B-1) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF
THE CODE) WHICH 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, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING
CLAUSES (A), (B-1) OR (C) BEING HEREINAFTER REFERRED TO AS A
"DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH TRANSFEREE SATISFIES
CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF
THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF
THIS CLASS R 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 A CLASS R CERTIFICATE BY ACCEPTANCE OF
THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS
OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION 5.02(d) OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT
IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING
BENEFICIAL OWNERSHIP OF THIS CLASS R CERTIFICATE.
Series 2001-CB2, Class R-4 Percentage Interest of the Class R-4
Certificates as of the Issue
Date: [___]%
Date of Pooling and Servicing
Agreement and Cut-off
Date: May 1, 2001 Servicer: Litton Loan Servicing LP
First Distribution
Date: June 25, 2001
Trustee: U.S. Bank National Association
No. [__]
Issue Date: [_____________]
Percentage Interest: [___]%
2
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional one- to four-family first and
second mortgage loans formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ACE SECURITIES CORP., THE SERVICER, THE SELLER, THE TRUSTEE OR ANY OF
THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.
This certifies that Elizabeth Grace Folk is the registered
owner of a Percentage Interest set forth above in that certain beneficial
ownership interest evidenced by all the Class R Certificates in the Trust Fund
created pursuant to a Pooling and Servicing Agreement, dated as specified
above (the "Agreement"), by and among ACE Securities Corp. (hereinafter called
the "Depositor," which term includes any successor entity under the
Agreement), the Servicer, the Seller and 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 last Business Day of the
month immediately preceding the month of such distribution (the "Record
Date"), from funds in the Distribution Account 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 or on behalf of the Trustee
by wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee 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 the
aggregate Percentage Interest of which is in excess of a 66% Percentage
Interest of the Class R Certificates, or 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, provided that the Trustee may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the
3
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Loan Asset Backed Certificates of the
Series specified on the face hereof (herein called the "Certificates") and
representing the Percentage Interest specified on the face hereof.
The Class R 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 Servicer, the Seller, the Trustee and the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Servicer, the Seller and the Trustee with the consent of the
Holders of Certificates entitled to the Voting Rights identified in the
agreement. 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 Trustee
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 Trustee and the Certificate Registrar 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 that
transfer is made pursuant to an effective registration statement under 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 a transfer is to be made
without
4
registration or qualification, the Trustee and the Certificate Registrar
shall require, in order to assure compliance with such laws, either
(i) that the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee each execute a representation
letter in the form described by the Agreement certifying to the Trustee and
the Certificate Registrar the facts surrounding the transfer, or (ii) that the
Trustee and the Certificate Registrar shall require an Opinion of Counsel
satisfactory to them that such transfer may be made without such registration
or qualification, which Opinion of Counsel shall not be an expense of the
Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar nor the
Trustee 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 such
Certificateholder desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Certificate Registrar and the Depositor
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.
Except as otherwise set forth in the next succeeding
paragraph, no transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the Code ("Plans") or
any person who is directly or indirectly purchasing the Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless the prospective transferee provides the Trustee with
an opinion of counsel which establish to the satisfaction of the Trustee that
such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or cause the Servicer or Trustee to be deemed a
fiduciary of such Plan or result in the imposition of an excise tax under
Section 4975 of the Code. In the absence of its having received the opinion of
counsel contemplated by the preceding sentence, the Trustee shall (unless the
next succeeding paragraph applies) require the prospective transferee of any
Certificate to certify that it is neither (i) a Plan nor (ii) a Person who is
directly or indirectly purchasing such Certificate on behalf of, as named
fiduciary of, as trustee of, or with assets of a Plan (including any insurance
company using funds in its general or separate accounts that may constitute
"plan assets").
The Holder of this Certificate, by its acceptance hereof,
shall be deemed for all purposes to have consented to the provisions of
Section 5.02 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 the REMIC Trust to cease to qualify as a REMIC or cause
the imposition of a tax upon the REMIC Trust.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other
5
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
The Depositor, the Servicer, the Seller, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Servicer, the
Seller, the Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Depositor, the Servicer, the Seller, the Trustee, the Certificate
Registrar 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 or on behalf of the Trustee 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 the Trust Fund, and (ii) the purchase by the party
designated in the Agreement at a price determined as provided in the Agreement
from the Trust Fund of all 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 the Trust Fund all 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 Principal Balance of the Mortgage Loans at the
time of purchase being 10% or less of the Cut-off Aggregate Principal Balance.
The recitals contained herein shall be taken as statements
of the Depositor and the Trustee assumes no responsibility for their
correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
--------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
------------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
Dated: [_____________]
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By:
---------------------------------------
Authorized Signatory
7
ABBREVIATIONS
--------------
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
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
Floating Rate 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 Certificate Registrar 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
8
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.
_________________________, as its agent.
9
EXHIBIT D
MORTGAGE LOAN SCHEDULE
[Attached to Initial Certification of the Custodian]
D-1
EXHIBIT E
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
To: [Address]
Re: Custodial Agreement, dated as of May 1, 2001, among
U.S. Bank National Association, as Trustee, Litton Loan
Servicing LP, as Servicer, and Bank One Trust Company
N.A., as Custodian.
--------------------------------------------------------
In connection with the administration of the Mortgage Loans held by
you as the Custodian on behalf of the Trustee, we request the release, and
acknowledge receipt, of the (Custodial File/[specify documents]) for the
Mortgage Loan described below, for the reason indicated.
Mortgagor's Name Address & Zip Code:
- -----------------------------------
Mortgage Loan Number:
- --------------------
Reason for Requesting Documents (check one)
- -------------------------------------------
____ 1. Mortgage Loan Paid in Full. (The Servicer hereby certifies that
all amounts received in connection therewith have been credited to
the account of the Trustee.)
____ 2. Mortgage Loan Liquidated By ____________________________
(The Servicer hereby certifies that all proceeds of
foreclosure, insurance, condemnation or other liquidation
have been finally received and credited to the account of
the Trustee.)
____ 3. Mortgage Loan in Foreclosure
____ 4. Other (explain)
If box 1 or 2 above is checked, and if all or part of the Custodial
File was previously released to us, please release to us our previous request
and receipt on file with you, as well as any additional documents in your
possession relating to the specified Mortgage Loan.
If box 3 or 4 above is checked, upon our return of all of the above
documents to you as the Custodian, please acknowledge your receipt by signing
in the space indicated below, and returning this form.
LITTON LOAN SERVICING L.P.
as
E-1
By:____________________________________
Name:
Title:
Acknowledgment of Documents returned to the Custodian:
BANK ONE TRUST COMPANY N.A.
as Custodian
By:_______________________________________
Name:
Title:
Date: _____________________________________
E-2
EXHIBIT F-1
TRUST RECEIPT AND INITIAL CERTIFICATION
Trust Receipt #__________
Cut-off Date Principal Balance $__________
[To be addressed to the Trustee of record]
Re: Custodial Agreement, dated as of May 1, 2001, among
U.S. Bank National Association, as Trustee, Litton Loan
Servicing LP, as Servicer, and Bank One Trust Company
N.A., as Custodian.
-------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 6 of the
above-referenced Custodial Agreement, the undersigned, as the Custodian,
hereby certifies that as to each Mortgage Loan listed on the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attachment hereto) it has reviewed the Custodial Files and has
determined that (i) all documents required to be delivered to it pursuant to
Sections 2(a)(i)-(ix) of the Custodial Agreement are in its possession; (ii)
such documents have been reviewed by it and have not been mutilated, damaged
or torn and relate to such Mortgage Loan; (iii) based on its examination and
only as to the foregoing, the information set forth in the Mortgage Loan
Schedule that corresponds to items (1), (2), (3), (5), (13) and (26) (in the
case of (26), only as to whether there is a prepayment penalty) of the
Mortgage Loan Schedule accurately reflects information set forth in the
Mortgage File; (iv) all Assignments of Mortgage or intervening assignments of
mortgage, as applicable, have been submitted for recording in the
jurisdictions in which recording is necessary; and (v) each Mortgage Note has
been endorsed as provided in Section 2(a)(i) of the Custodial Agreement and
each Mortgage has been assigned in accordance with Section 2(a)(iii) of the
Custodial Agreement. The Custodian makes no representations as to (i) the
validity, legality, enforceability, sufficiency, due authorization or
genuineness of any of the documents contained in each Custodial File or of any
of the Mortgage Loans or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.
The Custodian hereby confirms that it is holding each such Custodial
File as agent and bailee of, and custodian for the exclusive use and benefit,
and subject to the sole direction, of Trustee pursuant to the terms and
conditions of the Custodial Agreement.
This Trust Receipt and Initial Certification is not divisible or
negotiable.
F-1-1
The Custodian will accept and act on instructions with respect to the
Mortgage Loans subject hereto upon surrender of this Trust Receipt and Final
Certification at its office at 2220 Chemsearch Blvd., Suite 150, Irving, Texas
75062, Attention: Document Custodian.
Capitalized terms used herein shall have the meaning ascribed to them
in the Custodial Agreement.
BANK ONE TRUST COMPANY N.A.
as Custodian
By:_______________________________________
Name:
Title:
F-1-2
EXHIBIT F-2
TRUST RECEIPT AND FINAL CERTIFICATION
Trust Receipt #__________
Cut-off Date Principal Balance $__________
[To be addressed to the Trustee of record]
Re: Custodial Agreement, dated as of May 1, 2001, among
U.S. Bank National Association, as Trustee, Litton Loan
Servicing LP, as Servicer, and Bank One Trust Company
N.A., as Custodian.
--------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 6(b) of the Custodial Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on Schedule I hereto) it received confirmation from the
Custodian that the Custodian has received the applicable documents listed in
Section 2(a) of the Custodial Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed
on Schedule I hereto, it has reviewed the documents listed above and has
determined that each such document appears to be complete and, based on an
examination of such documents, the information set forth in the Mortgage Loan
Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Custodial Agreement. This Certificate is
qualified in all respects by the terms of said Custodial Agreement.
BANK ONE TRUST COMPANY N.A.
as Custodian
By:_______________________________________
Name:
Title:
F-2-1
EXHIBIT F-3
ACKNOWLEDGMENT OF RECEIPT
[___________]
U.S. Bank National Association,
as Trustee for the 2001-CB2 Trust,
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2001-CB2
- ----------------------
- ----------------------
Re: Custodial Agreement, dated as of May 1, 2001, among
U.S. Bank National Association, as Trustee, Litton
Loan Servicing LP, as Servicer, and Bank One Trust
Company N.A., as Custodian.
-----------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 4 of the
above-referenced Custodial Agreement, the undersigned, as the Custodian,
hereby certifies as to each Mortgage Loan in the Mortgage Loan Schedule that
(i) it has received an original Mortgage Note or Lost Note Affidavit with
respect to each Mortgage Loan identified on the Mortgage Loan Schedule
attached hereto as Exhibit A and (ii) such Mortgage Note or Lost Note
Affidavit has been reviewed by it and appears regular on its face and relates
to such Mortgage Loan. The Custodian makes no representations as to (i) the
validity, legality, enforceability, sufficiency, due authorization or
genuineness of any of the documents contained in each Custodial File or of any
of the Mortgage Loans or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.
The Custodian hereby confirms that it is holding each such Mortgage
Note or Lost Note Affidavit as agent and bailee of, and custodian for the
exclusive use and benefit, and subject to the sole direction, of the Trustee
pursuant to the terms and conditions of the Custodial Agreement.
This Acknowledgment of Receipt is not divisible or negotiable.
The Custodian will accept and act on instructions with respect to the
Mortgage Loans subject hereto upon surrender of this Trust Receipt and Initial
Certification at its office at 2220 Chemsearch Blvd., Suite 150, Irving, Texas
75062, Attention: Document Custodian.
Capitalized terms used herein shall have the meaning ascribed to them
in the Custodial Agreement.
BANK ONE TRUST COMPANY N.A.
as Custodian
By:_______________________________________
Name:
Title:
F-3-1
EXHIBIT G
[Reserved]
G-1
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
---------------------------
Personally appeared before me the undersigned authority to administer
oaths, ______________________ who first being duly sworn deposes and says:
Deponent is ______________________ of Credit-Based Asset Servicing and
Securitization LLC or its successor entity ("Seller") and who has personal
knowledge of the facts set out in this affidavit.
On _______________, _____________ did execute and deliver a
promissory note in the principal amount of $__________.
That said note has been misplaced or lost through causes unknown and
is presently lost and unavailable after diligent search has been made.
Seller's records show that an amount of principal and interest on said note is
still presently outstanding, due, and unpaid, and Seller is still owner and
holder in due course of said lost note.
Seller executes this Affidavit for the purpose of inducing The Chase
Manhattan Bank, as trustee on behalf of C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2001-CB2, to accept the transfer of the above described
loan from Seller.
Seller agrees to indemnify The Chase Manhattan Bank, ACE Securities
Corp., Deutsche Banc Alex. Brown Inc., and First Union Securities, Inc.
harmless for any losses incurred by such parties resulting from the above
described promissory note has been lost or misplaced.
By: __________________________________
__________________________________
STATE OF )
) SS:
COUNTY OF )
On this ____ day of _______, 20__, before me, a Notary Public, in and
for said County and State, appeared ________________________, who acknowledged
the extension of the foregoing and who, having been duly sworn, states that
any representations therein contained are true.
Witness my hand and Notarial Seal this ____ day of _______, 20__.
- ------------------------------
- ------------------------------
My commission expires _______________.
H-1
EXHIBIT I
FORM OF ERISA REPRESENTATION LETTER
ACE Securities Corp.
One New York Plaza
14th Floor
New York, New York 10292
Re: C-BASS Mortgage Loan Asset-Backed Certificates,
Series 2001-CB2
-----------------------------------------------
Ladies and Gentlemen:
1. The undersigned is the ______________________ of (the
"Transferee") a [corporation duly organized] and existing under the laws of
__________, on behalf of which he makes this affidavit.
2. The Transferee either (x) is not an employee benefit plan
subject to Section 406 or Section 407 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"), the Trustee of any such plan or
a person acting on behalf of any such plan nor a person using the assets of
any such plan or (2) if the Transferee is an insurance company, such
Transferee is purchasing such Certificates with funds contained in an
"Insurance Company General Account" (as such term is defined in Section V(e)
of the Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that
the purchase and holding of such Certificates are covered under PTCE 95-60; or
(y) shall deliver to the Trustee and the Depositor an opinion of counsel (a
"Benefit Plan Opinion") satisfactory to the Trustee and the Depositor, and
upon which the Trustee and the Depositor shall be entitled to rely, to the
effect that the purchase or holding of such Certificate by the Transferee will
not result in the assets of the Trust Fund being deemed to be plan assets and
subject to the prohibited transaction provisions of ERISA or the Code and will
not subject the Trustee or the Depositor to any obligation in addition to
those undertaken by such entities in the Pooling and Servicing Agreement,
which opinion of counsel shall not be an expense of the Trustee or the
Depositor.
3. The Transferee hereby acknowledges that under the terms
of the Pooling and Servicing Agreement (the "Agreement") by and among ACE
Securities Corp., as Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller (the "Seller"), Litton Loan Servicing LP, as
Servicer (the "Servicer"), and The Chase Manhattan Bank, as Trustee (the
"Trustee"), no transfer of the ERISA-Restricted Certificates shall be
permitted to be made to any person unless the Depositor and Trustee have
received a certificate from such transferee in the form hereof.
I-1
IN WITNESS WHEREOF, the Transferee has executed this
certificate.
---------------------------------
[Transferee]
By:______________________________
Name:
Title:
I-2
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
____________, 20__
ACE Securities Corp.
One New York Plaza
14th Floor
New York, New York 10292
The Chase Manhattan Bank
450 West 33rd Street
14th Floor
New York, New York 10001
Attention: Capital Markets Fiduciary Services
Re: C-BASS Mortgage Loan Asset-Backed Certificates,
Series 2001-CB2
----------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we are an "accredited investor," as defined in Regulation D under
the Act, and have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments
in the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Certificates
and all matters relating thereto or any additional information deemed
necessary to our decision to purchase the Certificates, (d) we are not an
employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, or a plan that is subject to Section 4975 of
the Internal Revenue Code of 1986, as amended, nor are we acting on behalf of
any such plan, (e) we are acquiring the Certificates for investment for our
own account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of
the Certificates in accordance with clause (g) below), (f) we have not offered
or sold any Certificates to, or solicited offers to buy any Certificates from,
any person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of
Section 5 of the Act, and (g) we will not sell, transfer or otherwise dispose
of any Certificates unless (1) such sale, transfer or other disposition is
made pursuant to an effective registration statement under the Act or is
exempt from such registration requirements, and if requested, we will at our
expense provide an opinion of counsel satisfactory to the addressees of this
Certificate that such sale, transfer or other disposition may be made pursuant
to an exemption from the Act, (2) the purchaser or transferee of such
Certificate has executed and delivered to you a certificate to substantially
the same effect as this certificate, and
J-1
(3) the purchaser or transferee has otherwise complied with any conditions for
transfer set forth in the Pooling and Servicing Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:
-------------------------------
Authorized Officer
J-2
FORM OF RULE 144A INVESTMENT LETTER
____________, 20__
ACE Securities Corp.
One New York Plaza
14th Floor
New York, New York 10292
The Chase Manhattan Bank
450 West 33rd Street
14th Floor
New York, New York 10001
Attention: Capital Markets Fiduciary Services
Re: C-BASS Mortgage Loan Asset-Backed Certificates,
Series 2001-CB2
-----------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates
we certify that (a) we understand that the Certificates are not being
registered under the Securities Act of 1933, as amended (the "Act"), or any
state securities laws and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (c) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or
a plan that is subject to Section 4975 of the Internal Revenue Code of 1986,
as amended, nor are we acting on behalf of any such plan, (d) we have not, nor
has anyone acting on our behalf offered, transferred, pledged, sold or
otherwise disposed of the Certificates, any interest in the Certificates or
any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates
or any other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other manner,
or taken any other action, that would constitute a distribution of the
Certificates under the Securities Act or that would render the disposition of
the Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(e) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are
aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge
or transfer is being made in
J-3
reliance on Rule 144A, or (ii) pursuant to another exemption from registration
under the Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:
---------------------------------
Authorized Officer
J-4
ANNEX 1 TO EXHIBIT J
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
---------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
i. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of
the Buyer.
ii. In connection with purchases by the Buyer, the Buyer is
a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer
owned and/or invested on a discretionary basis $ 1 in securities (except for
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation
(other than a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or
banking institution organized under the laws of any State,
territory or the District of Columbia, the business of which
is substantially confined to banking and is supervised by
the State or territorial banking commission or similar
official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements, a
copy of which is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings
and loan association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a State or
Federal authority having supervision over any such
institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of
at least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934.
- ----------------------------
1 Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that
case, Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
J-5
___ Insurance Company. The Buyer 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 Buyer is a plan
established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State
or its political subdivisions, for the benefit of its
employees.
___ ERISA Plan. The Buyer is an employee benefit
plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment
advisor registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a
small business investment company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a
business development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940.
iii. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Buyer, (ii) securities
that are part of an unsold allotment to or subscription by the Buyer, if the
Buyer is a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned
but subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
iv. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Buyer may have included securities
owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in accordance
with generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Buyer's direction. However, such securities
were not included if the Buyer is a majority-owned, consolidated subsidiary of
another enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
v. The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule 144A.
J-6
vi. Until the date of purchase of the Rule 144A Securities,
the Buyer will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
_________________________________
Print Name of Buyer
By:
------------------------------
Name:
Title:
Date:
----------------------------
J-7
ANNEX 2 TO EXHIBIT J
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
---------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A
under the Securities Act of 1933, as amended ("Rule 144A") because Buyer is
part of a Family of Investment Companies (as defined below), is such an
officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment Companies,
the cost of such securities was used, except (i) where the Buyer or the
Buyer's Family of Investment Companies reports its securities holdings in its
financial statements on the basis of their market value, and (ii) no current
information with respect to the cost of those securities has been published.
If clause (ii) in the preceding sentence applies, the securities may be valued
at market.
___ The Buyer owned $ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment
Companies which owned in the aggregate $ in securities
(other than the excluded securities referred to below) as of
the end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
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 Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed
by the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii)
currency, interest rate and commodity swaps.
J-8
5. The Buyer is familiar with Rule 144A and understands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
-------------------------------
Print Name of Buyer or Adviser
By:
------------------------------
Name:
Title:
IF AN ADVISER:
--------------------------------
Print Name of Buyer
Date:
-----------------------------
J-9
EXHIBIT K
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
PURSUANT TO SECTION 5.02(d)
C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2001-CB2
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of __________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Certificates, by and among ACE
Securities Corp., as Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller (the "Seller"), Litton Loan Servicing LP, as
Servicer, and The Chase Manhattan Bank, as Trustee (the "Trustee").
Capitalized terms used, but not defined herein or in Exhibit 1 hereto, shall
have the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii)
as nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit.
The Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
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5. The Transferee has reviewed the provisions of Section 5.02(d) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit K to the Agreement (a "Transferor Certificate") to
the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect
to the Certificate.
8. The Transferee's taxpayer identification number is ________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor are we acting
on behalf of such a plan.
K-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this day of , 20 .
[NAME OF TRANSFEREE]
By:
--------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
- ------------------------
[Assistant] Secretary
Personally appeared before me the above-named ________, known or
proved to me to be the same person who executed the foregoing instrument and
to be the ___________ of the Transferee, and acknowledged that he executed the
same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this day of , 20 .
----- --------- --
-----------------------
NOTARY PUBLIC
My Commission expires the __ day
of _________________, 20__.
K-3
EXHIBIT 1 to EXHIBIT K
Certain Definitions
-------------------
"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.
"Permitted Transferee": Any transferee of a Residual Certificate
other than a Disqualified Organization or a Non-U.S. Person.
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company,
unincorporated organization or government or any agency or political
subdivision thereof.
K-4
EXHIBIT 2 to EXHIBIT K
Section 5.02(d) of the Agreement
---------------------------------
(d) Except with respect to the initial transfer of the Private
Certificates by the Depositor, no transfer, sale, pledge or other disposition
of any Private Certificate shall be made unless such disposition is exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "1933 Act"), and any applicable state securities laws or is made in
accordance with the 1933 Act and laws. In the event of any such transfer, (i)
unless such transfer is made in reliance upon Rule 144A (as evidenced by the
investment letter delivered to the Trustee, in substantially the form attached
hereto as Exhibit J) under the 1933 Act, the Trustee and the Depositor shall
require a written Opinion of Counsel (which may be in-house counsel)
acceptable to and in form and substance reasonably satisfactory to the Trustee
and the Depositor that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the 1933 Act
or is being made pursuant to the 1933 Act, which Opinion of Counsel shall not
be an expense of the Trustee or the Depositor or (ii) the Trustee shall
require the transferor to execute a transferor certificate (in substantially
the form attached hereto as Exhibit L) and the transferee to execute an
investment letter (in substantially the form attached hereto as Exhibit J)
acceptable to and in form and substance reasonably satisfactory to the
Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which investment letter shall not be an
expense of the Trustee or the Depositor. The Holder of a Private Certificate
that is also a Class N Certificate desiring to effect a transfer of a such
Class N Certificate shall not make such transfer to a Non-U.S. Person. The
Holder of any Private Certificate desiring to effect a transfer shall, and
does hereby agree to, indemnify the Trustee and the Depositor against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Depositor, (such requirement is satisfied
only by the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit I hereto, as appropriate), to the effect
that such transferee is not an employee benefit plan or arrangement subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code, nor a
person acting on behalf of any such plan or arrangement nor using the assets
of any such plan or arrangement to effect such transfer or (ii) (except in the
case of a Class R, Class X or Class N Certificate) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that the
purchase and holding of such Certificates are covered under Sections I and III
of PTCE 95-60 or (iii) (except in the case of a Class R, Class X or Class N
Certificate) in the case of any such ERISA-Restricted Certificate presented
for registration in the name of an employee benefit plan subject to ERISA or a
plan or arrangement subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan or arrangement or using such
plan's or arrangement's assets, an Opinion of Counsel satisfactory to the
Trustee which Opinion of Counsel shall not be an expense
K-5
of either the Trustee or the Trust, addressed to the Trustee, to the
effect that the purchase or holding of such ERISA-Restricted Certificate will
not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and
will not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. For purposes of clause (i)
of the preceding sentence, such representation shall be deemed to have been
made to the Trustee by the acceptance by a Certificate Owner of the beneficial
interest in any such Class of ERISA-Restricted Certificates, unless the
Trustee shall have received from the transferee an alternative representation
acceptable in form and substance to the Depositor. Notwithstanding anything
else to the contrary herein, any purported transfer of an ERISA-Restricted
Certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Depositor or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly
subject to the following provisions:
Each Person holding or acquiring any Ownership Interest in a Class R
Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided interest.
In connection with any proposed transfer of any Ownership Interest in
a Class R Certificate, the Trustee shall as a condition to registration of the
transfer, require delivery to it, in form and substance satisfactory to it, of
each of the following:
A. an affidavit in the form of Exhibit K hereto from the proposed
transferee to the effect that, among other things, such transferee is a
Permitted Transferee and that it is not acquiring its Ownership Interest in
the Class R Certificate that is the subject of the proposed transfer as a
nominee, trustee or agent for any Person who is not a Permitted Transferee;
and
B. a covenant of the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Class R Certificates.
Any attempted or purported transfer of any Ownership Interest in a
Class R Certificate in violation of the provisions of this Section shall be
absolutely null and void and shall vest no rights in the purported transferee.
If any purported transferee shall, in violation of the provisions of this
Section, become a Holder of a Class R Certificate, then the prior Holder of
such Class R Certificate that is a Permitted Transferee shall, upon discovery
that the registration of transfer of such Class R Certificate was not in fact
permitted by this Section, be restored to all rights as
K-6
Holder thereof retroactive to the date of registration of transfer of
such Class R Certificate. The Trustee shall be under no liability to any
Person for any registration of transfer of a Class R Certificate that is in
fact not permitted by this Section or for making any distributions due on such
Class R Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
Trustee received the documents specified in clause (iii). The Trustee shall be
entitled to recover from any Holder of a Class R Certificate that was in fact
not a Permitted Transferee at the time such distributions were made all
distributions made on such Class R Certificate. Any such distributions so
recovered by the Trustee shall be distributed and delivered by the Trustee to
the prior Holder of such Class R Certificate that is a Permitted Transferee.
If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the restrictions
in this Section, then the Trustee shall have the right but not the obligation,
without notice to the Holder of such Class R Certificate or any other Person
having an Ownership Interest therein, to notify the Depositor to arrange for
the sale of such Class R Certificate. The proceeds of such sale, net of
commissions (which may include commissions payable to the Depositor or its
affiliates in connection with such sale), expenses and taxes due, if any, will
be remitted by the Trustee to the previous Holder of such Class R Certificate
that is a Permitted Transferee, except that in the event that the Trustee
determines that the Holder of such Class R Certificate may be liable for any
amount due under this Section or any other provisions of this Agreement, the
Trustee may withhold a corresponding amount from such remittance as security
for such claim. The terms and conditions of any sale under this clause (v)
shall be determined in the sole discretion of the Trustee and it shall not be
liable to any Person having an Ownership Interest in a Class R Certificate as
a result of its exercise of such discretion.
If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the restrictions
in this Section, then the Trustee will provide to the Internal Revenue
Service, and to the persons specified in Sections 860E(e)(3) and (6) of the
Code, information needed to compute the tax imposed under Section 860E(e)(5)
of the Code on transfers of residual interests to disqualified organizations.
The Trustee shall be entitled to reasonable compensation for providing such
information from the person to whom it is provided.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
Transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause any REMIC hereunder to fail to qualify
as a REMIC.
No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar 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.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to
its standard procedures.
K-7
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
______________, 20__
ACE Securities Corp.
One New York Plaza
14th Floor
New York, New York 10292
Re: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2001-CB2
---------------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being
disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner
that would be deemed, or taken any other action which would result in, a
violation of Section 5 of the Act, (c) to the extent we are disposing of a
Class [ ] Certificate, we have no knowledge the Transferee is not a Permitted
Transferee and (d) no purpose of the proposed disposition of a Class [ ]
Certificate is to impede the assessment or collection of tax.
Very truly yours,
[__________________]
By: ______________________________
L-1
EXHIBIT M
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
Date last paid
Date of foreclosure
Date of REO
Date of REO Disposition
Property Sale Price/Estimated Market Value at disposition
2. Liquidation Proceeds
Principal Prepayment $____________
Property Sale Proceeds ____________
Insurance Proceeds ____________
Other (itemize) ____________
Total Proceeds $____________
3. Liquidation Expenses
Servicing Advances $____________
Delinquency Advances ____________
Monthly Advances ____________
Servicing Fees ____________
Other Servicing Compensation ____________
Total Advances $____________
4. Net Liquidation Proceeds $____________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $____________
6. Loss, if any (Item 5 minus Item 4) $____________
L-1
EXHIBIT N
[Reserved]
N-1
EXHIBIT O
[Reserved]
O-1
EXHIBIT P
[Reserved]
EXHIBIT Q
FORM OF OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
Officer's Certificate
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2001-CB2
__________, 20__
Via Facsimile
The Chase Manhattan Bank
450 West 33rd Street
14th Floor
New York, New York 10001
Attention: Capital Markets Fiduciary Services,
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2001-CB2
Re: Pre-Payments
Dear Sir or Madam:
__________________ hereby certifies that he/she is an officer of the
Servicer, holding the office set forth beneath his/her name and hereby further
certifies as follows:
With respect to the Mortgage Loans, as the term is defined in the
Pooling and Servicing Agreement, set forth in the attached schedule:
1. A Principal Prepayment in full was received during the related Collection
Period;
2. Any prepayment penalty due under the terms of the Mortgage Note with
respect to such Principal Prepayment in full was received from the
mortgagor and deposited in the Collection Account; ____ Yes ____ No
3. As to each Mortgage Loan so noted on the attached schedule, all or part
of the prepayment penalty required in connection with the Principal
Prepayment in full was waived based upon (Circle one): (i) the Servicer's
determination that such waiver would maximize recovery of Liquidation
Proceeds for such Mortgage Loan, taking into account the value of such
prepayment penalty, or (ii)(A) the enforceability thereof be limited (1)
by bankruptcy insolvency, moratorium, receivership, or other similar law
relating to creditors' rights generally or (2) due to acceleration in
connection with a foreclosure or other involuntary payment, or (B) the
enforceability is otherwise limited or prohibited by applicable law;
4. We certify that all amounts due in connection with the waiver of a
prepayment penalty inconsistent with number 3 above which are required to
be deposited by the Servicer pursuant to Section 3.01 of the Pooling and
Servicing Agreement, have been or will be so deposited.
LITTON LOAN SERVICING LP
By:______________________
Name
Title:_____________________
EXHIBIT R
[Reserved]
EXHIBIT S
INELIGIBLE FORECLOSURE PROPERTY LOAN SCHEDULE
[TO BE PROVIDED BY SELLER]
M-1