Exhibit 4.2
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EXECUTION COPY
AAMES MORTGAGE INVESTMENT TRUST 2005-2, as Issuer
CWABS, INC., as Depositor
WELLS FARGO BANK, N.A., as Trust Administrator and Master Servicer
AAMES CAPITAL CORPORATION, as Servicer
AAMES INVESTMENT CORPORATION, as Seller
and
DEUTSCHE BANK NATIONAL TRUST COMPANY, as Indenture Trustee
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TRANSFER AND SERVICING AGREEMENT
Dated as of May 1, 2005
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AAMES MORTGAGE INVESTMENT TRUST 2005-2
MORTGAGE BACKED NOTES
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions........................................................................................3
Section 1.02. Calculations With Respect to the Mortgage Loans...................................................35
Section 1.03. Calculations With Respect to Accrued Interest.....................................................36
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Creation and Declaration of Trust Estate; Conveyance of Mortgage Loans............................36
Section 2.02. Acceptance of Trust Estate; Review of Documentation...............................................38
Section 2.03. Grant Clause......................................................................................40
Section 2.04. Option to Contribute Derivative Instrument........................................................42
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Depositor and the Seller....................................42
Section 3.02. Discovery of Breach...............................................................................44
Section 3.03. Repurchase, Purchase or Substitution of Mortgage Loans............................................45
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS BY THE SERVICER
Section 4.01. Seller's Engagement of Servicer to Perform Servicing Responsibilities.............................45
Section 4.02. Servicing of the Mortgage Loans...................................................................46
Section 4.03. Payments To the Master Servicer...................................................................60
Section 4.04. General Servicing Procedures......................................................................63
Section 4.05. Representations, Warranties and Agreements........................................................66
Section 4.06. The Servicer......................................................................................69
Section 4.07. Termination for Cause.............................................................................71
Section 4.08. Successor to Servicer, Miscellaneous Provisions...................................................72
Section 4.09. Sub-Servicers and Sub-Servicing Agreements........................................................74
Section 4.10. Miscellaneous Servicing Provisions................................................................75
i
Section 4.11. Advance Facility..................................................................................76
ARTICLE V
ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS<
BY THE MASTER SERVICER AND THE TRUST ADMINISTRATOR
Section 5.01. Duties of the Master Servicer; Representations and Warranties.....................................78
Section 5.02. Master Servicer Fidelity Bond and Master Servicer Errors and Omissions Insurance Policy...........80
Section 5.03. Master Servicer's Financial Statements and Related Information....................................81
Section 5.04. Power to Act; Procedures..........................................................................81
Section 5.05. Enforcement of Servicer's and Master Servicer's Obligations.......................................82
Section 5.06. [Reserved]........................................................................................83
Section 5.07. Collection Account................................................................................83
Section 5.08. Application of Funds in the Collection Account....................................................84
Section 5.09. Reports to Indenture Trustee and Noteholders......................................................86
Section 5.10. Termination of Servicer; Successor Servicers......................................................89
Section 5.11. Master Servicer Liable for Enforcement............................................................90
Section 5.12. Assumption of Master Servicing by Indenture Trustee...............................................90
Section 5.13. [Reserved]........................................................................................91
Section 5.14. Release of Mortgage Files.........................................................................91
Section 5.15. Documents, Records and Funds in Possession of Master Servicer To Be Held for Indenture Trustee....91
Section 5.16. Opinion...........................................................................................93
Section 5.17. [Reserved]........................................................................................93
Section 5.18. [Reserved]........................................................................................93
Section 5.19. [Reserved]........................................................................................93
Section 5.20. Indenture Trustee To Retain Possession of Certain Insurance Policies and Documents................93
Section 5.21. Compensation to the Master Servicer...............................................................93
Section 5.22. [Reserved]........................................................................................94
Section 5.23. Reports to the Indenture Trustee..................................................................94
Section 5.24. Annual Officer's Certificate as to Compliance.....................................................94
Section 5.25. Annual Independent Accountants' Servicing Report..................................................95
Section 5.26. Merger or Consolidation...........................................................................95
Section 5.27. Resignation of Master Servicer....................................................................96
Section 5.28. Assignment or Delegation of Duties by the Master Servicer.........................................96
Section 5.29. Limitation on Liability of the Master Servicer and Others.........................................96
Section 5.30. Indemnification; Third Party Claims...............................................................97
Section 5.31. Alternative Index.................................................................................97
Section 5.32. Transfer of Servicing.............................................................................98
ii
ARTICLE VI
DEPOSITS AND PAYMENTS TO HOLDERS
Section 6.01. The Collection Account............................................................................99
Section 6.02. Payments from the Collection Account..............................................................99
Section 6.03. [Reserved].......................................................................................104
Section 6.04. Control of the Trust Account and Deferred Interest...............................................104
Section 6.05. Advances by Master Servicer and Servicer.........................................................107
Section 6.06. The Interest Rate Cap Agreements.................................................................108
ARTICLE VII
ADMINISTRATION OF THE AGREEMENTS
Section 7.01. Duties of the Trust Administrator................................................................109
Section 7.02. Duties of the Trust Administrator With Respect to the Indenture, the Trust Agreement and this
Agreement.....................................................................................112
Section 7.03. Records..........................................................................................112
Section 7.04. Compensation.....................................................................................113
Section 7.05. Additional Information to be Furnished to the Issuer.............................................113
Section 7.06. Independence of the Trust Administrator..........................................................113
Section 7.07. No Joint Venture.................................................................................113
Section 7.08. Other Activities of Trust Administrator and the Depositor........................................113
Section 7.09. Resignation and Removal of Trust Administrator...................................................113
Section 7.10. Action upon Termination, Resignation or Removal of the Trust Administrator.......................114
ARTICLE VIII
MASTER SERVICER EVENTS OF DEFAULT
Section 8.01. Master Servicer Events of Default; Indenture Trustee To Act; Appointment of Successor............115
Section 8.02. Additional Remedies of Indenture Trustee Upon Event of Default...................................119
Section 8.03. Waiver of Defaults...............................................................................119
Section 8.04. Notification to Holders..........................................................................119
Section 8.05. Directions by Noteholders and Duties of Indenture Trustee During Master Servicer Event
of Default 119
Section 8.06. Action Upon Certain Failures of the Master Servicer and Upon Master Servicer Event of Default....120
Section 8.07. Preparation of Reports...........................................................................120
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ARTICLE IX
TERMINATION
Section 9.01. Termination......................................................................................121
Section 9.02. Termination Prior to Maturity Date; Optional Redemption..........................................121
Section 9.03. Certain Notices upon Final Payment...............................................................122
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Binding Nature of Agreement; Assignment.........................................................123
Section 10.02. Entire Agreement................................................................................123
Section 10.03. Amendment.......................................................................................123
Section 10.04. Acts of Noteholders.............................................................................124
Section 10.05. Recordation of Agreement........................................................................124
Section 10.06. Governing Law...................................................................................124
Section 10.07. Notices.........................................................................................124
Section 10.08. Severability of Provisions......................................................................126
Section 10.09. Indulgences; No Waivers.........................................................................126
Section 10.10. Headings Not To Affect Interpretation...........................................................126
Section 10.11. Benefits of Agreement...........................................................................127
Section 10.12. Special Notices to the Rating Agencies..........................................................127
Section 10.13. Counterparts....................................................................................127
Section 10.14. Execution by the Issuer.........................................................................127
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ATTACHMENTS
Exhibit A-1 Form of Initial Certification
Exhibit A-2 Form of Interim Certification
Exhibit A-3 Form of Final Certification
Exhibit A-4 Form of Endorsement
Exhibit B [Reserved]
Exhibit C Form of Lost Note Affidavit
Exhibit D Custodial Agreement
Exhibit E Custodial Account Letter Agreement
Exhibit F Escrow Account Letter Agreement
Exhibit G-1 Form of Monthly Remittance Advice
Exhibit G-1A Form of Monthly Remittance Advice
Exhibit G-2 Standard Layout For Monthly Defaulted Loan Report
Exhibit G-3 Form 332 Realized Loss Report
Exhibit H Form of Certification to be Provided to the Master
Servicer by the Servicer
Schedule A Mortgage Loan Schedule
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This TRANSFER AND SERVICING AGREEMENT, dated as of May 1, 2005 (the
"Agreement" or the "Transfer and Servicing Agreement"), is by and among AAMES
MORTGAGE INVESTMENT TRUST 2005-2, a Delaware statutory trust, as issuer (the
"Issuer"), CWABS, INC., a Delaware corporation, as depositor (the
"Depositor"), DEUTSCHE BANK NATIONAL TRUST COMPANY, as indenture trustee (the
"Indenture Trustee"), WELLS FARGO BANK, N.A., as trust administrator (the
"Trust Administrator") and master servicer (the "Master Servicer"), AAMES
CAPITAL CORPORATION, as servicer (the "Servicer"), and AAMES INVESTMENT
CORPORATION, as seller (the "Seller").
PRELIMINARY STATEMENT
WHEREAS, the Depositor has acquired all of the rights, title and interest
of the Seller in certain conventional, adjustable rate, residential mortgage
loans identified in Schedule A hereto (the "Mortgage Loans") on a
servicing-retained basis from the Seller pursuant to the Mortgage Loan
Purchase Agreement, and at the Closing Date is the owner of the Mortgage Loans
and the other property being conveyed by it to the Issuer hereunder for
inclusion in the Trust Estate;
WHEREAS, the Depositor has duly authorized the execution and delivery of
this Agreement to provide for the conveyance to the Issuer of the Mortgage
Loans and the other property constituting the Trust Estate;
WHEREAS, on the Closing Date, the Depositor will acquire the Notes and
the Ownership Certificate from the Issuer as consideration for its transfer to
the Issuer of the Mortgage Loans and the other property constituting the Trust
Estate;
WHEREAS, pursuant to the Indenture, the Issuer will pledge the Mortgage
Loans and the other property constituting the Trust Estate to the Indenture
Trustee as security for the Notes;
WHEREAS, the Seller desires that the Servicer service the Mortgage Loans
upon such transfer to the Issuer pursuant to this Agreement, and the Servicer
has agreed to do so;
WHEREAS, the Master Servicer shall be obligated under this Agreement,
among other things, to supervise the servicing of the Mortgage Loans on behalf
of the Issuer, and shall have the right, under certain circumstances, to
terminate the rights and obligations of the Servicer under this Agreement upon
the occurrence and continuance of a Servicer Event of Default as provided
herein;
WHEREAS, the parties hereto acknowledge and agree that, at the direction
of the Depositor, the Seller will assign all of its rights with respect to the
Mortgage Loans (other than the servicing rights) to the Indenture Trustee;
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes, including (i) the Depository Agreement and
(ii) the Indenture (the Depository Agreement, the Indenture, the Trust
Agreement and the Custodial Agreement being hereinafter referred to
collectively as the "Related Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer is required to
perform certain duties in connection with (a) the Notes and the collateral
therefor pledged pursuant to the
Indenture (the "Collateral") and (b) the undivided subordinate beneficial
ownership interest in the Issuer represented by the Ownership Certificate;
WHEREAS, the Issuer desires to have the Trust Administrator perform
certain of the duties of the Issuer referred to in the preceding clause, and
to provide such additional services consistent with the terms of this
Agreement and the Related Agreements as the Issuer or the Owner Trustee may
from time to time reasonably request; and
WHEREAS, the Trust Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer or the
Owner Trustee on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
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The following table sets forth (or describes) the Class designation,
Note Interest Rate, initial Class Principal Amount and minimum denomination
for each Class of Notes issued pursuant to the Indenture.
Class Initial
Designation Note Interest Rate Class Principal Amount Minimum Denominations
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Class 1A1 Variable (1) $ 143,042,000 $ 25,000
Class 1A2 Variable (1) $ 289,696,000 $ 25,000
Class 1A3 Variable (1) $ 17,300,000 $ 25,000
Class 2A1 Variable (1) $ 449,414,000 $ 25,000
Class M1 Variable (1) $ 40,542,000 $ 100,000
Class M2 Variable (1) $ 41,121,000 $ 100,000
Class M3 Variable (1) $ 24,325,000 $ 100,000
Class M4 Variable (1) $ 22,008,000 $ 100,000
Class M5 Variable (1) $ 19,113,000 $ 100,000
Class M6 Variable (1) $ 16,796,000 $ 100,000
Class M7 Variable (1) $ 18,533,000 $ 100,000
Class M8 Variable (1) $ 14,479,000 $ 100,000
Class M9 Variable (1) $ 13,321,000 $ 100,000
Class B1 Variable (1) $ 12,700,000 $ 100,000
Class B2 Variable (1) $ 5,833,000 $ 100,000
Class B3 Variable (1) $ 6,950,000 $ 100,000
Class B4 Variable (1) $ 9,264,000 $ 100,000
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(1) See the definition of "Note Interest Rate" herein.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accounts: Any or all of the Custodial Accounts, the Escrow Accounts, the
Collection Account, the Interest Rate Cap Account and any other accounts
created or maintained by the Trust Administrator or the Servicer pursuant to
this Agreement.
Accountant: A Person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.
Accrual Period: With respect to any Payment Date and the Notes, the
period beginning on the immediately preceding Payment Date (or, in the case of
the first Payment Date, beginning on the Closing Date) and ending on the day
immediately preceding the related Payment Date.
3
Advance: With respect to each Servicer Remittance Date and each Mortgage
Loan, an amount equal to the Scheduled Payment (with the interest portion of
such Scheduled Payment adjusted to the Mortgage Loan Remittance Rate, in the
case of the Servicer, or to the Net Mortgage Rate, in the case of the Master
Servicer) that was due on the Mortgage Loan on the Due Date in the related
Collection Period, and that (i) was delinquent at the close of business on the
related Determination Date and (ii) was not the subject of a previous Advance,
but only to the extent that such amount is expected, in the reasonable
judgment of the Servicer or Master Servicer, as applicable, to be recoverable
from collections or other recoveries in respect of such Mortgage Loan.
Advance Facility: As defined in Section 4.11(a) hereof.
Advance Facility Notice: As defined in Section 4.11(a) hereof.
Advancing Person: As defined in Section 4.11(a) hereof.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Collateral Balance: As of any date of determination, an amount
equal to the Aggregate Loan Balance.
Aggregate Loan Balance: As of any date of determination, an amount equal
to the aggregate of the Stated Principal Balances of the Mortgage Loans as of
such date.
Aggregate Overcollateralization Release Amount: With respect to any
Payment Date, the lesser of (x) the sum of the Principal Remittance Amount of
each Mortgage Pool for such Payment Date and (y) the amount, if any, by which
(1) the Overcollateralization Amount for such Payment Date (calculated for
this purpose on the basis of the assumption that 100% of the aggregate of the
Principal Remittance Amount of both Mortgage Pools for such Payment Date is
applied on such date in reduction of the aggregate of the Note Principal
Amounts of the related Notes) exceeds (2) the Targeted Overcollateralization
Amount for such Payment Date.
Agreement: This Transfer and Servicing Agreement and all amendments and
supplements hereto.
AIC: Aames Investment Corporation.
Ancillary Income: All income derived from the Mortgage Loans, excluding
Servicing Fees, Master Servicing Fees and Prepayment Premiums attributable to
the Mortgage Loans and other amounts treated as payment proceeds of the
Mortgage Loans, including but not limited to, late charges, fees received with
respect to checks or bank drafts returned by the related bank for
non-sufficient funds, assumption fees, optional insurance administrative fees
and all other incidental fees and charges.
4
Appraised Value: With respect to any Mortgage Loan, the amount set forth
in an appraisal made in connection with the origination of such Mortgage Loan
as the value of the related Mortgaged Property.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
assignment of the Mortgage to the Indenture Trustee for the benefit of
Noteholders, which assignment, notice of transfer or equivalent instrument may
be in the form of one or more blanket assignments covering the Mortgage Loans
secured by Mortgaged Properties located in the same jurisdiction, if permitted
by law; provided, however, that neither the Issuer nor the Indenture Trustee
shall be responsible for determining whether any such assignment is in
recordable form.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Issuer.
Bankruptcy: As to any Person, the making of an assignment for the benefit
of creditors, the filing of a voluntary petition in bankruptcy, adjudication
as a bankrupt or insolvent, the entry of an order for relief in a bankruptcy
or insolvency proceeding, the seeking of reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief, or
seeking, consenting to or acquiescing in the appointment of a trustee,
receiver or liquidator, dissolution, or termination, as the case may be, of
such Person pursuant to the provisions of either the United States Bankruptcy
Code of 1986, as amended, or any other similar state laws.
Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.
Basis Risk Shortfall: With respect to any Class of Notes and any Payment
Date, the amount by which (a) the amount of interest calculated at the Note
Interest Rate applicable to such Class for such date, determined without
regard to the applicable Net Funds Cap for such date (but with regard to the
Fixed Rate Cap) exceeds (b) the amount of interest calculated at the
applicable Net Funds Cap.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Owner
Trustee and the Certificate Registrar to the effect that any proposed transfer
of Certificates will not (i) cause the assets of the Trust Estate to be
regarded as plan assets for purposes of the Plan Asset Regulations or (ii)
give rise to any fiduciary duty on the part of the Depositor or the Indenture
Trustee.
Bloomberg Screen LIBO Page: The display designated as page "BBAM" on the
Bloomberg L.P. (or such other page as may replace the BBAM page on that
service for the purpose of displaying London interbank offered rates of major
banks).
Book-Entry Notes: As defined in the Indenture.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in New York, New York or, if other than New
York, the city in which the Corporate Trust Office of the Indenture Trustee is
located, or the States of California, Delaware, Maryland or Minnesota are
authorized or obligated by law or executive order to be closed.
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Cap Agreement Assignment Agreement: The Assignment Agreement dated as of
the Closing Date among Countrywide Home Loans, Inc., the Issuer and the Cap
Counterparty.
Cap Counterparty: Bear Stearns Financial Products Inc., as counterparty
under the Interest Rate Cap Agreements.
Certificate: The Ownership Certificate.
Certificate Registrar: As defined in the Trust Agreement, the initial
Certificate Registrar shall be the Trust Administrator.
Certificateholder: Any registered holder of the Ownership Certificate.
Civil Relief Act: The Servicemembers Civil Relief Act, as such may be
amended from time to time, and any similar state laws.
Class: All Notes bearing the same class designation.
Class A Notes: Collectively, the Class 1A1, Class 1A2, Class 1A3 and
Class 2A1 Notes.
Class B Notes: Collectively, the Class B1, Class B2, Class B3 and Class
B4 Notes.
Class M Notes: Collectively, the Class M1, Class M2, Class M3, Class M4,
Class M5, Class M6, Class M7, Class M8 and Class M9 Notes.
Class Principal Amount: With respect to each Class of Notes, the
aggregate of the Note Principal Amounts of all Notes of such Class at the date
of determination.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act, as amended. As of the Closing
Date, the Clearing Agency shall be The Depository Trust Company.
Closing Date: May 31, 2005.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collateral: As defined in the Indenture.
Collection Account: A separate account established and maintained by the
Trust Administrator for the benefit of the Indenture Trustee pursuant to
Section 5.07.
Collection Period: With respect to any Payment Date and Mortgage Loan,
the period commencing on the second day of the month immediately preceding the
month in which such Payment Date occurs and ending on the first day of the
month in which such Payment Date occurs.
6
Compensating Interest Payment: With respect to any Payment Date, an
amount equal to the lesser of (x) the aggregate Prepayment Interest Shortfall
Amount with respect to such Payment Date and (y) the Servicing Fee payable to
the Servicer in respect of such Payment Date.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.
Confirmation: Any of the Confirmations dated May 26, 2005 evidencing a
transaction between the Cap Counterparty and Countrywide Home Loans, Inc., an
affiliate of the Depositor, relating to the Interest Rate Cap Agreements.
Control: The meaning specified in Section 8-106 of the New York UCC.
Conventional Loan: A Mortgage Loan that is not insured by the United
States Federal Housing Administration or guaranteed by the United States
Department of Veterans Affairs.
Corporate Trust Office: With respect to (i) the Trust Administrator, the
principal corporate trust office of the Trust Administrator at which, at any
particular time, its corporate trust business shall be administered, which
office at the date of execution of this Agreement for purposes of transfers
and exchanges and for presentment and surrender of the Notes and for payment
thereof is located at Wells Fargo Bank, N.A., Sixth Street and Marquette
Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust Group (Aames
2005-2), and for all other purposes is located at Wells Fargo Bank, N.A., P.O.
Box 98, Columbia, Maryland 21046 (or for overnight deliveries, at 9062 Old
Annapolis Road, Columbia, Maryland 21045), Attention: Corporate Trust Group
(Aames 2005-2); (ii) the Certificate Registrar, the principal office of the
Certificate Registrar at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Agreement is located at the Corporate Trust Office of the Trust Administrator,
or at such other address as the Certificate Registrar may designate from time
to time by notice to the Noteholders and the Trust, or the principal corporate
trust office of any successor Certificate Registrar at the address designated
by such successor Certificate Registrar by notice to the Noteholders and the
Trust; and (iii) the Indenture Trustee, the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Agreement is
located at 1761 East Saint Andrew Place, Santa Ana, California 92705,
Attention: Trust Administration, AA0502, or at such other address as the
Indenture Trustee may designate from time to time by notice to the Noteholders
and the Trust, or the principal corporate trust office of any successor
Indenture Trustee at the address designated by such successor Indenture
Trustee by notice to the Noteholders and the Trust.
Cumulative Loss Trigger Event: A Cumulative Loss Trigger Event shall have
occurred with respect to any Payment Date if the fraction, expressed as a
percentage, obtained by dividing (x) the aggregate amount of Realized Losses
incurred on the Mortgage Loans from the Cut-off Date through the last day of
the related Collection Period by (y) the Cut-off Date Collateral Balance
exceeds the applicable percentages described below with respect to such
Payment Date:
7
Payment Date Required Loss Percentage
------------ ------------------------
June 2008 through May 2009................................ 4.00% with respect to June 2008, plus an additional
1/12th of 1.50% for each month thereafter
June 2009 through May 2010................................ 5.50% with respect to June 2009, plus an additional
1/12th of 1.00% for each month thereafter
June 2010 through May 2011................................ 6.50% with respect to June 2010, plus an additional
1/12th of 0.25% for each month thereafter
June 2011 and thereafter.................................. 6.75%
Current Interest: With respect to any Class of Notes and any Payment
Date, will equal the aggregate amount of interest accrued at the applicable
Note Interest Rate during the related Accrual Period on the Class Principal
Amount of such Class immediately prior to such Payment Date, provided,
however, that for any Class of Subordinate Notes and for any Payment Date,
Current Interest shall be reduced by the amount specified in clause (a) of the
definition of Deferred Interest, if any, for such Class and Payment Date.
Custodial Account: The separate custodial account (other than an Escrow
Account) established and maintained by the Servicer pursuant to Section
4.02(d) of this Agreement.
Custodial Agreement: The custodial agreement relating to the custody of
certain of the Mortgage Loans, substantially in the form attached as Exhibit D
hereto, among the Custodian, the Issuer and the Indenture Trustee, as
acknowledged by the Seller, the Depositor, the Master Servicer, the Trust
Administrator and the Servicer, dated as of May 1, 2005.
Custodian: The custodian appointed pursuant to the Custodial Agreement,
and any successor thereto. The initial Custodian is Deutsche Bank
National Trust Company.
Cut-off Date: May 1, 2005.
Cut-off Date Balance: The Aggregate Loan Balance as of the Cut-off Date.
Cut-off Date Collateral Balance: The Cut-off Date Balance.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction of
the Scheduled Payment that the related Mortgagor is obligated to pay on any
Due Date as a result of any proceeding under Bankruptcy law or any similar
proceeding.
Deferred Interest: For any Class of Subordinate Notes and any Payment
Date, the sum of (a) the aggregate amount of interest accrued at the
applicable Note Interest Rate during the related Accrual Period on the
Principal Deficiency Amount for the Class, (b) any amounts due pursuant to
clause (a) for such Class for prior Payment Dates that remain unpaid and (c)
interest
8
accrued during the Accrual Period related to such Payment Date on the
amount in clause (b) at the Note Interest Rate applicable to such Class.
Definitive Notes: As defined in the Indenture.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the Trust
Estate pursuant to the terms hereof or as to which one or more Qualifying
Substitute Mortgage Loans are substituted therefor.
Delinquency Rate: With respect to any calendar month, the fraction,
expressed as a percentage, the numerator of which is the aggregate outstanding
principal balance of all Mortgage Loans 60 or more days Delinquent (including
all foreclosures, bankruptcies and REO Properties) as of the close of business
on the last day of such month, and the denominator of which is the Aggregate
Collateral Balance as of the close of business on the last day of such month.
Delinquent: For reporting purposes, a Mortgage Loan is "delinquent" when
any payment contractually due thereon has not been made by the close of
business on the Due Date therefor. Such Mortgage Loan is "30 days Delinquent"
if such payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
payment was first due, or, if there is no such corresponding day (e.g., as
when a 30-day month follows a 31-day month in which a payment was due on the
31st day of such month), then on the last day of such immediately succeeding
month. Similarly for "60 days Delinquent" and the second immediately
succeeding month and "90 days Delinquent" and the third immediately succeeding
month.
Depositor: CWABS, Inc., a Delaware corporation having its principal place
of business in California, or its successors in interest.
Depository Agreement: The agreement dated May 31, 2005, among the Issuer
and The Depository Trust Company, as the initial Clearing Agency, relating to
the Book-Entry Notes.
Determination Date: With respect to each Payment Date, the 15th day of
the month in which such Payment Date occurs, or, if such 15th day is not a
Business Day, the next succeeding Business Day.
Due Date: The day of the calendar month on which the Scheduled Payment is
due on a Mortgage Loan, exclusive of any days of grace. Pursuant to Section
4.03(d), with respect to any Mortgage Loans for which payment from the
Mortgagor is due on a day other than the first day of the month, such Mortgage
Loans will be treated as if the Scheduled Payment is due on the first day of
the immediately succeeding month (other than with respect to the calculation
of the Repurchase Price).
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company that
complies with the definition of Eligible Institution or (ii) an account or
accounts the deposits in which are insured by the FDIC to the limits
established by such corporation, provided that any such deposits not so
insured shall be maintained in an account at a depository institution or trust
company whose commercial paper or
9
other short term debt obligations (or, in the case of a depository institution
or trust company which is the principal subsidiary of a holding company, the
commercial paper or other short term debt or deposit obligations of such
holding company or depository institution, as the case may be) have been rated
by each Rating Agency in its highest short-term rating category, or (iii) a
segregated trust account or accounts (which shall be a "special deposit
account") maintained with the Trust Administrator or any other federal or
state chartered depository institution or trust company, acting in its
fiduciary capacity, in a manner acceptable to the Rating Agencies. Eligible
Accounts may bear interest.
Eligible Institution: Any of the following:
(i) An institution whose:
(A) commercial paper, short-term debt obligations, or other
short-term deposits are rated at least "A-1+" or long-term
unsecured debt obligations are rated at least "AA-" by S&P
(or assigned comparable ratings by the other Rating
Agencies), if the amounts on deposit are to be held in the
account for no more than 365 days; or
(B) commercial paper, short-term debt obligations, demand
deposits, or other short-term deposits are rated at least
"A-2" by S&P (or assigned comparable ratings by the other
Rating Agencies), if the amounts on deposit are to be held
in the account for no more than 30 days and are not intended
to be used as credit enhancement. Upon the loss of the
required rating set forth in this clause (ii), the accounts
shall be transferred immediately to accounts which have the
required rating. Furthermore, commingling by the Servicer is
acceptable at the A-2 rating level if the Servicer is a
bank, thrift or depository and provided the Servicer has the
capability to immediately segregate funds and commence
remittance to an Eligible Account upon a downgrade; or
(ii) the corporate trust department of a federal depositor institution
or state-chartered depositor institution subject to regulations
regarding fiduciary funds on deposit similar to Title 12 of the
U.S. Code of Federal Regulation Section 9.10(b), which, in either
case, has corporate trust powers and is acting in its fiduciary
capacity.
Eligible Investments: Any one or more of the following obligations or
securities
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of
America or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and
credit of the United States of America ("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository
institution or trust company (including U.S. subsidiaries of
foreign depositories and the Indenture Trustee or the Trust
10
Administrator or any agent of the Indenture Trustee or the Trust
Administrator, acting in its respective commercial capacity)
incorporated or organized under the laws of the United States of
America or any state thereof and subject to supervision and
examination by federal or state banking authorities, so long as
at the time of investment or the contractual commitment providing
for such investment the commercial paper or other short term debt
obligations of such depository institution or trust company (or,
in the case of a depository institution or trust company which is
the principal subsidiary of a holding company, the commercial
paper or other short term debt or deposit obligations of such
holding company or deposit institution, as the case may be) have
been rated by each Rating Agency in its highest short-term rating
category or one of its two highest long-term rating categories;
(iii) repurchase agreements collateralized by Direct Obligations or
securities guaranteed by GNMA, Fannie Mae or FHLMC with any
registered broker/dealer subject to Securities Investors'
Protection Corporation jurisdiction or any commercial bank
insured by the FDIC, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed obligation rated by each
Rating Agency in its highest short-term rating category;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of
America or any state thereof which have a credit rating from each
Rating Agency, at the time of investment or the contractual
commitment providing for such investment, at least equal to one
of the two highest long term credit rating categories of each
Rating Agency; provided, however, that securities issued by any
particular corporation will not be Eligible Investments to the
extent that investment therein will cause the then outstanding
principal amount of securities issued by such corporation and
held as part of the Trust Estate to exceed 20% of the sum of the
Aggregate Loan Balance and the aggregate principal amount of all
Eligible Investments in the Collection Account; provided,
further, that such securities will not be Eligible Investments if
they are published as being under review with negative
implications from any Rating Agency;
(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 180 days after the date of
issuance thereof) rated by each Rating Agency in its highest
short-term rating category;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership interests
in future interest or principal payments on obligations of the
United States of America or its agencies or instrumentalities
(which obligations are backed by the full faith and credit of the
United States of America) held by a custodian in safekeeping on
behalf of the holders of such receipts; and
11
(viii) any other demand, money market, common trust fund or time deposit
or obligation, or interest bearing or other security or
investment (including those managed or advised by the Indenture
Trustee, the Master Servicer, the Trust Administrator, or any
Affiliate thereof), (A) rated in the highest rating category by
each Rating Agency or (B) that would not adversely affect the
then current rating assigned by each Rating Agency to any of the
Notes. Such investments in this subsection (viii) may include
money market mutual funds or common trust estates, including any
fund for which Wells Fargo Bank, N.A. (the "Bank") in its
capacity other than as the Master Servicer, the Trust
Administrator or an affiliate thereof serves as an investment
advisor, administrator, shareholder servicing agent, and/or
custodian or subcustodian, notwithstanding that (x) the Bank, the
Indenture Trustee, the Master Servicer or any affiliate thereof
charges and collects fees and expenses from such funds for
services rendered, (y) the Bank, the Indenture Trustee, the Trust
Administrator, the Master Servicer or any affiliate thereof
charges and collects fees and expenses for services rendered
pursuant to this Agreement, and (z) services performed for such
funds and pursuant to this Agreement may converge at any time.
The Bank or an affiliate thereof is specifically authorized to
charge and collect from the Issuer such fees as are collected
from all investors in such funds for services rendered to such
funds (but not to exceed investment earnings thereon);
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted investment" within the meaning of Section
860G(a)(5) of the Code.
Entitlement Holder: The meaning specified in Section 8-102(a)(7) of the
New York UCC.
Entitlement Order: The meaning specified in Section 8-102(a)(8) of the
New York UCC (i.e., generally, orders directing the transfer or redemption of
any Financial Asset).
Environmental Problem Property: A Mortgaged Property or REO Property that
is in violation of any environmental law, rule or regulation.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Errors and Omissions Insurance: Errors and Omissions Insurance to be
maintained by the Servicer in accordance with Section 4.02.
Errors and Omission Insurance Policy: Any Errors and Omission Insurance
policy required to be obtained by the Servicer satisfying the requirements of
this Agreement.
Escrow Account: The separate escrow account (other than a Custodial
Account) established and maintained by the Servicer pursuant to Section
4.02(f) of this Agreement.
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Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed
by the Mortgagor with the mortgagee pursuant to the Mortgage or any other
document.
Excess Group 1 Cap Amount: As defined in Section 6.06(c).
Excess Group 2 Cap Amount: As defined in Section 6.06(d).
Excess Subordinate Cap Amount: As defined in Section 6.06(e).
Exchange Act: The Securities Exchange Act of 1934, as amended.
Fannie Mae or FNMA: Fannie Mae, a federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, or any successor thereto.
FDIC: The 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 Regulations: Regulations promulgated by HUD under the National
Housing Act, codified in Title 24 of the Code of Federal Regulations, and
other HUD issuances relating to FHA Loans, including the related handbooks,
circulars, notices and mortgagee letters.
Fidelity Bond: Any fidelity bond to be maintained by the Servicer in
accordance with Section 4.02(m).
Financial Asset: The meaning specified in Section 8-102(a) of the New
York UCC.
Fixed Rate Cap: With respect to any Payment Date, a per annum rate equal
to 12.50%.
Freddie Mac or FHLMC: The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under
Title III of the Emergency Home Finance Act of 1970, as amended, or any
successor thereto.
Ginnie Mae or GNMA: The Government National Mortgage Association, a
wholly owned corporate instrumentality of the United States within HUD.
Group 1 Cap Agreement: The interest rate cap agreement transaction
evidenced by the related Confirmation (as assigned to the Trust pursuant to
the Cap Agreement Assigment Agreement), with respect to the Class 1A1, Class
1A2 and Class 1A3 Notes.
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Group 1 Cap Agreement Payment Date: With respect to the Group 1 Cap
Agreement, the Business Day immediately preceding the related Payment Date,
beginning with the Payment Date in June 2005 and ending with the Payment Date
in October 2007.
Group 1 Notes: The Class 1A1, Class 1A2 and Class 1A3 Notes.
Group 2 Cap Agreement: The interest rate cap agreement transaction
evidenced by the related Confirmation (as assigned to the Trust pursuant to
the Cap Agreement Assigment Agreement), with respect to the Class 2A1 Notes.
Group 2 Cap Agreement Payment Date: With respect to the Group 2 Cap
Agreement, the Business Day immediately preceding the related Payment Date,
beginning with the Payment Date in June 2005 and ending with the Payment Date
in October 2007.
Guidelines: As defined in Section 4.02(u).
Holder or Noteholder: The registered holder of any Note or Ownership
Certificate as recorded on the books of the Note Registrar or the Certificate
Registrar except that, solely for the purposes of taking any action or giving
any consent pursuant to this Agreement, any Note registered in the name of the
Depositor, the Master Servicer, the Servicer, the Seller, the Trust
Administrator or the Indenture Trustee or any Affiliate thereof (unless any
such Person owns 100% of a Class) shall be deemed not to be outstanding in
determining whether the requisite percentage necessary to effect any such
consent has been obtained, except that, in determining whether the Indenture
Trustee and Trust Administrator shall be protected in relying upon any such
consent, only Notes and an Ownership Certificate which a Responsible Officer
thereof has actual knowledge to be so held shall be disregarded. The Indenture
Trustee and Trust Administrator may request and conclusively rely on
certifications by the Depositor in determining whether any Note or Ownership
Certificate is registered to an Affiliate of the Depositor.
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.
Indenture: The Indenture dated as of May 1, 2005, among the Issuer, the
Trust Administrator and the Indenture Trustee, as such may be amended or
supplemented from time to time.
Indenture Event of Default: As defined in Section 5.01 of the Indenture.
Indenture Trustee: Deutsche Bank National Trust Company, not in its
individual capacity but solely as Indenture Trustee, or any successor in
interest.
Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and
Exchange Commission's Regulation S-X. When used with respect to any other
Person, a Person who (a) is in fact independent of another specified Person
and any Affiliate of such other Person, (b) does not have any material direct
financial interest in such other Person or any Affiliate of such other Person,
14
and (c) is not connected with such other Person or any Affiliate of such other
Person as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
Index: The index specified in the related Mortgage Note for calculation
of the Mortgage Rate thereof.
Insurance Policy: Any primary mortgage insurance policy, any standard
hazard insurance policy, flood insurance policy, earthquake insurance policy
or title insurance policy relating to the Mortgage Loans or the Mortgaged
Properties, to be in effect as of the Closing Date or thereafter during the
term of this Agreement.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged
Property, if applicable, including the proceeds of any hazard or flood
insurance policy reduced by expenses incurred by the Servicer in connection
with procuring such proceeds, applied to the restoration and repair of the
related mortgaged property or to be paid to the borrower pursuant to the
mortgage note or state law.
Interest Margin: For each Class of Notes and any Payment Date, the
applicable percentage set forth for such class in the following table:
Interest Interest
Class Margin (1) Margin (2)
------------------ -------------------- ---------
1A1............... 0.080% 0.160%
1A2............... 0.220% 0.440%
1A3............... 0.360% 0.720%
2A1............... 0.230% 0.460%
M1................ 0.450% 0.675%
M2................ 0.470% 0.705%
M3................ 0.500% 0.750%
M4................ 0.630% 0.945%
M5................ 0.660% 0.990%
M6................ 0.720% 1.080%
M7................ 1.200% 1.800%
M8................ 1.350% 2.025%
M9................ 1.850% 2.775%
B1................ 3.000% 4.500%
B2................ 3.000% 4.500%
B3................ 3.000% 4.500%
B4................ 3.000% 4.500%
(1) For any Payment Date occurring prior to the Stepup Date.
(2) For any Payment Date occurring on or after the Stepup Date.
Interest Rate Cap Account: A separate account established and maintained
by the Trust Administrator for the benefit of the Noteholders pursuant to
Section 6.06.
15
Interest Rate Cap Agreement: The Group 1 Cap Agreement, the Group 2 Cap
Agreement or the Subordinate Cap Agreement, as applicable.
Interest Rate Cap Agreement Payment Date: A Group 1 Cap Agreement Payment
Date, Group 2 Cap Agreement Payment Date or Subordinate Cap Agreement Payment
Date, as the case may be.
Interest Rate Cap Receipt: With respect to any Interest Rate Cap
Agreement Payment Date, any amount received by the Trust Administrator from
the Cap Counterparty under any Interest Rate Cap Agreement.
Interest Remittance Amount: With respect to each Mortgage Pool and any
Payment Date, (a) the sum of, without duplication, (1) all interest collected
(other than the interest portion of Payaheads) or advanced in respect of
Scheduled Payments on the Mortgage Loans in such Mortgage Pool during the
related Collection Period by the Servicer, the Master Servicer or the
Indenture Trustee (solely in its capacity as successor Master Servicer),
minus, (x) to the extent provided under Sections 4.02(e)(3) and (4) and
Sections 5.08(i) and (ii) herein, previously unreimbursed Advances due to the
Servicer, the Master Servicer or the Indenture Trustee (solely in its capacity
as successor Master Servicer), to the extent allocable to interest and the
allocable portion of previously unreimbursed Servicing Advances with respect
to the Mortgage Loans in such Mortgage Pool during the related Prepayment
Period, (y) the related Servicing Fee and the Master Servicing Fee with
respect to such Mortgage Loans in such Mortgage Pool and (z) all Prepayment
Premiums received with respect to such Mortgage Loans during the related
Prepayment Period, (2) any Compensating Interest Payments or payments in
respect of Prepayment Interest Shortfalls paid by the Servicer or the Master
Servicer pursuant to Section 5.21 with respect to the related Prepayment
Period with respect to the Mortgage Loans in such Mortgage Pool, (3) the
portion of any Purchase Price or Substitution Amount paid with respect to the
Mortgage Loans in such Mortgage Pool during the related Prepayment Period
allocable to interest, and (4) all Net Liquidation Proceeds, Insurance
Proceeds and any other recoveries collected with respect to the Mortgage Loans
in such Mortgage Pool during the related Prepayment Period, to the extent
allocable to interest, as reduced by (b) such Mortgage Pool's pro rata share
of any costs, expenses, fees or liabilities due to the Master Servicer, the
Servicer, the Indenture Trustee, the Custodian, the Owner Trustee or the Trust
Administrator to the extent provided in this Agreement, the Trust Agreement,
the Indenture and the Custodial Agreement.
Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.
Issuer: The Delaware statutory trust known as the "Aames Mortgage
Investment Trust 2005-2."
Issuer Order or Issuer Request: A written order or request signed in the
name of the Issuer by any one of its Authorized Officers and delivered to the
Indenture Trustee and the Trust Administrator.
LIBOR: (a) With respect to the first Accrual Period, the per annum rate
of 3.10%. With respect to each subsequent Accrual Period, a per annum rate
determined on the LIBOR
16
Determination Date in the following manner by the Trust Administrator on the
basis of the "Interest Settlement Rate" set by the British Bankers'
Association (the "BBA") for one-month United States dollar deposits, as such
rates appear on the Telerate Page 3750, as of 11:00 a.m. (London time) on such
LIBOR Determination Date.
(b) If on such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time),
or if the Telerate Page 3750 is not available on such date, the Trust
Administrator will determine such rate on the basis of the offered rates of
the Reference Banks for one-month United States dollar deposits, as such rates
appear on the Reuters Screen LIBO Page or the Bloomberg Screen LIBO Page, in
either case as of 11:00 a.m. (London time) on such LIBOR Determination Date.
(c) If LIBOR is determined under clause (b) above, on each LIBOR
Determination Date, LIBOR for the related Accrual Period for the Notes will be
established by the Trust Administrator as follows:
(1) If on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the related Accrual Period for
the Notes shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 0.03125%).
(2) If on such LIBOR Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Accrual
Period shall be the higher of (x) LIBOR as determined on the previous
LIBOR Determination Date and (y) the Reserve Interest Rate.
(d) The establishment of LIBOR by the Trust Administrator and the Trust
Administrator's subsequent calculation of the Note Interest Rate applicable to
each Class of Notes for the relevant Accrual Period, in the absence of
manifest error, will be final and binding.
LIBOR Business Day: Any day on which banks in London, England and The
City of New York are open for conducting transactions in foreign currency and
exchange.
LIBOR Determination Date: The second LIBOR Business Day immediately
preceding the commencement of each Accrual Period for any Notes.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Master Servicer or the Servicer, as applicable, has determined that all
amounts that it expects to recover from or on account of such Mortgage Loan
have been recovered (exclusive of any possibility of a deficiency judgment).
Liquidation Expenses: Expenses that are incurred by the Master Servicer
or the Servicer, as applicable, in connection with the liquidation of any
defaulted Mortgage Loan and are not recoverable under the applicable primary
mortgage insurance policy, if any, including, without limitation, foreclosure
and rehabilitation expenses, legal expenses and unreimbursed amounts, if any,
expended pursuant to Section 4.02(c), 4.02(k) or 4.02(p).
17
Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale, payment in full, discounted
payoff or otherwise, or the sale of the related REO Property, if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.
Majority Noteholders: Until such time as the sum of the Class Principal
Amounts of all Classes of Notes has been reduced to zero, the holder or
holders of in excess of 50% of the aggregate Class Principal Amount of all
Classes of Notes (accordingly, the holder of the Ownership Certificate shall
be excluded from any rights or actions of the Majority Noteholders during such
period); and thereafter, the holder of the Ownership Certificate.
Master Servicer: Wells Fargo Bank, N.A., or any successor in interest, or
if any successor master servicer shall be appointed as herein provided, then
such successor master servicer.
Master Servicer Event of Default: Any one of the conditions or
circumstances enumerated in Section 8.01(a).
Master Servicing Fee: As to any Payment Date and each Mortgage Loan, an
amount equal to the the product of (i) one-twelfth of the Master Servicing Fee
Rate and (ii) the Stated Principal Balance of such Mortgage Loan as of the
first day of the related Collection Period.
Master Servicing Fee Rate: 0.0125%.
Material Defect: With respect to any Mortgage Loan, as defined in Section
2.02(c) hereof.
Maturity Date: With respect to any Class of Notes, the Payment Date in
June 2035.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage,
or an Assignment of Mortgage, has been or will be recorded in the name of
MERS, as nominee for the holder from time to time of the Mortgage Note.
Monthly Excess Cashflow: For any Payment Date, the sum of (i) the Monthly
Excess Interest, (ii) the Aggregate Overcollateralization Release Amount and
(iii) any Principal Payment Amount remaining after application pursuant to
subclauses (i)(1)(A) through (C), subclauses (i)(2)(A) through (C) and
subclauses (ii)(1) and (2) of Section 6.02(e), in each case for such Payment
Date.
Monthly Excess Interest: With respect to a Payment Date, means any
Interest Remittance Amount remaining after application pursuant to subclauses
(i) through (iii) of Section 6.02(b), subclauses (i) through (iii) of Section
6.02(c) and subclauses (i) and (ii) of Section 6.02(d).
Moody's: Moody's Investors Service, Inc., or any successor in interest.
18
Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
simple interest in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan required to be delivered to the
Indenture Trustee (or the Custodian) pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy to be maintained by the Servicer in accordance with
Section 4.02(l).
Mortgage Loan: A mortgage loan that is conveyed to the Issuer pursuant to
this Agreement on the Closing Date, which mortgage loan includes, without
limitation, the mortgage loan documents, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
any related REO Property, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
mortgage loan. The Mortgage Loans subject to this Agreement are identified on
the Mortgage Loan Schedule annexed hereto as Schedule A and have an aggregate
Stated Principal Balance as of the Cut-off Date of $1,158,340,680.
Mortgage Loan Purchase Agreement: The mortgage loan purchase and
assignment agreement dated as of May 1, 2005, for the sale of the Mortgage
Loans by Seller to the Depositor.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
Mortgage Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which
shall identify each Mortgage Loan, as such schedule may be amended from time
to time to reflect the addition of Mortgage Loans to, or the deletion of
Mortgage Loans from, the Trust Estate. Such schedule shall set forth, among
other things, the following information with respect to each Mortgage Loan:
(i) the Mortgage Loan identifying number; (ii) the Mortgagor's name; (iii) the
street address of the Mortgaged Property including the city, state and zip
code; (iv) the original principal amount of the Mortgage Loan; (v) the
Mortgage Rate at origination; (vi) the Index; (vii) the first Mortgage Rate
adjustment date; (viii) the monthly payment of principal and interest at
origination; (ix) the Servicing Fee Rate; (x) the Master Servicer Fee Rate;
and (xi) whether such Mortgage Loan is subject to a Prepayment Premium for
voluntary prepayments by the Mortgagor, the term during which such Prepayment
Premiums are imposed and the method of calculation of the Prepayment Premium.
The Servicer shall be responsible for providing the Indenture Trustee, the
Custodian and the Master Servicer with all amendments to the Mortgage Loan
Schedule.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: Any of Pool 1 or Pool 2.
Mortgaged Property: The underlying real property securing a Mortgage
Loan.
19
Mortgage Rate: As to any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan, as determined under the related
Mortgage Note as reduced by the applications of the Civil Relief Act.
Mortgagor: The obligor on a Mortgage Note.
Net Funds Cap: With respect to any Payment Date, an an annual rate equal
to:
(i) in the case of the Group 1 Notes, the weighted average of the Net
Mortgage Rates of the Mortgage Loans in Pool 1 as of the first day of the
related Collection Period, adjusted to reflect the accrual of interest on an
actual/360 basis;
(ii) in the case of the Class 2A1 Notes, the weighted average of the Net
Mortgage Rates of the Mortgage Loans in Pool 2 as of the first day of the
related Collection Period, adjusted to reflect the accrual of interest on an
actual/360 basis; and
(iii) in the case of each class of Subordinate Notes, the weighted
average of (a) the weighted average of the Net Mortgage Rates of the Mortgage
Loans in Pool 1 as of the first day of the related Collection Period and (b)
the weighted average of the Net Mortgage Rates of the Mortgage Loans in Pool 2
as of the first day of the related Collection Period, weighted on the basis of
the excess of (x) in the case of clause (iii)(a), the excess of the Pool
Balance for Pool 1 as of the first day of the related Collection Period over
the aggregate of the Class Principal Amounts of the Group 1 Notes immediately
prior to that Payment Date and (y) in the case of clause (iii)(b), the excess
of the Pool Balance for Pool 2 as of the first day of the related Collection
Period over the Class Principal Amount of the Class 2A1 Notes immediately
prior to that Payment Date, and adjusted to reflect the accrual of interest on
an actual/360 basis.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
the related Liquidation Proceeds, Insurance Proceeds and Condemnation Proceeds
received and retained in connection with the liquidation of such Mortgage Loan
net of (i) Liquidation Expenses and (ii) any related unreimbursed Advances and
Servicing Advances, if any.
Net Mortgage Rate: With respect to any Mortgage Loan, the Mortgage Rate
thereof reduced by sum of the Servicing Fee Rate and the Master Servicing Fee
Rate.
New York UCC: The Uniform Commercial Code as in effect in the State of
New York.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.
Nonrecoverable Advance: Any Servicing Advance or Advance previously made
or proposed to be made in respect of a Mortgage Loan by the Servicer which, in
the reasonable discretion of the Servicer will not or, in the case of a
proposed Servicing Advance or Advance, would not, ultimately be recoverable by
the Servicer from the related Mortgagor, related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds or
otherwise. The determination by the Servicer that all or a portion of a
Servicing Advance or Advance would be a Nonrecoverable Advance shall be
evidenced by an Officer's Certificate delivered to the Master Servicer setting
forth such determination and a reasonable explanation thereof.
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Note: Any Class 1A1, Class 1A2, Class 1A3, Class 2A1, Class M1, Class M2,
Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class M9, Class
B1, Class B2, Class B3 or Class B4 Note.
Note Interest Rate: With respect to each Class of Notes on any Payment
Date, the least of (1) LIBOR plus the Interest Margin for such Class and such
Payment Date, (2) the applicable Net Funds Cap for such Payment Date and (3)
the Fixed Rate Cap.
Note Principal Amount: With respect to any Note, the initial principal
amount thereof on the Closing Date, less the amount of all principal payments
previously paid with respect to such Note.
Note Register and Note Registrar: As defined in the Indenture.
Officer's Certificate: A certificate signed by the Chairman of the Board,
any Vice Chairman, the President, any Senior Vice President, any Vice
President or any Assistant Vice President of a Person.
Operative Agreements: The Trust Agreement, the Certificate of Trust of
the Issuer, this Agreement, the Mortgage Loan Purchase Agreement, the
Indenture, the Custodial Agreement, the Depository Agreement, each Interest
Rate Cap Agreement, the Cap Agreement Assignment Agreement and each other
document contemplated by any of the foregoing to which the Depositor, the
Seller, the Master Servicer, the Servicer, the Owner Trustee, the Trust
Administrator, the Indenture Trustee, the Custodian or the Issuer is a party.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable
in form and substance to the Seller, the Trust Administrator, the Indenture
Trustee and/or the Master Servicer, as applicable, and who may be in house or
outside counsel to the Seller, the Servicer, the Depositor, the Master
Servicer, the Trust Administrator or the Indenture Trustee but which must be
Independent outside counsel with respect to any such opinion of counsel
concerning federal income tax or ERISA matters.
Original Loan-to-Value Ratio: With respect to any Mortgage Loan, the
ratio of the principal balance of such Mortgage Loan at origination, or such
other date as is specified, to the Original Value of the related Mortgaged
Property.
Original Value: The lesser of (a) the Appraised Value of a Mortgaged
Property at the time the related Mortgage Loan was originated and (b) if the
Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor
at the time the related Mortgage Loan was originated.
Overcollateralization Amount: With respect to any Payment Date will be
equal to the amount, if any, by which (x) the Aggregate Collateral Balance for
such Payment Date exceeds (y) the aggregate Class Principal Amount of the
Notes, in each case after giving effect to payments on such Payment Date.
21
Overcollateralization Deficiency Amount: With respect to any Payment
Date, the excess, if any, of the Targeted Overcollateralization Amount for
that Payment Date over the Overcollateralization Amount for that Payment Date.
Ownership Certificate: An equity certificate representing a 100%
undivided beneficial ownership interest in the Trust, substantially in the
form attached as part of Exhibit A to the Trust Agreement.
Owner Trustee: Wilmington Trust Company, a Delaware banking corporation,
and any successor in interest, not in its individual capacity, but solely as
owner trustee under the Trust Agreement.
Owner Trustee Fee: The annual fee payable to the Owner Trustee by the
Trust Administrator pursuant to the Fee Letter Agreement specified in Section
7.03 of the Trust Agreement during the term of this Agreement.
Payahead: With respect to any Mortgage Loan and any Due Date therefor,
any Scheduled Payment received by the Servicer during any Collection Period in
addition to the Scheduled Payment due on such Due Date, intended by the
related Mortgagor to be applied on a subsequent Due Date or Due Dates.
Paying Agent: As defined in the Indenture. The initial Paying Agent shall
be the Trust Administrator.
Payment Date: The 25th day of each month or, if such 25th day is not a
Business Day, the next succeeding Business Day, commencing in June 2005.
Percentage Interest: The Percentage Interest evidenced thereby shall
equal (i) with respect to the Ownership Certificate, the Percentage Interest
on the face of such certificate; or (ii) with respect to any Note, the initial
Note Principal Amount thereof, divided by the initial Class Principal Amount
of all Notes of the same Class.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Plan: An employee benefit plan or other retirement arrangement which is
subject to Section 406 of ERISA and/or Section 4975 of the Code or any entity
whose underlying assets include such plan's or arrangement's assets by reason
of their investment in the entity.
Plan Asset Regulations: The Department of Labor regulations set forth in
29 C.F.R. 2510.3 101.
Pool 1: The portion of the Mortgage Pool identified as Pool 1.
Pool 1 Percentage: With respect to Pool 1 and any Payment Date, the
fraction, expressed as a percentage, the numerator of which is the Pool
Balance for Pool 1 for such date and the denominator of which is the Aggregate
Collateral Balance for such date.
22
Pool 1 Senior Priority: The priority of payments to the Pool 1 Senior
Notes described in clause (e)(i)(1)(A) in Section 6.02 herein for Pool 1.
Pool 2: The portion of the Mortgage Pool identified as Pool 2.
Pool 2 Percentage: With respect to Pool 2 and any Payment Date, the
fraction, expressed as a percentage, the numerator of which is the Pool
Balance for Pool 2 and the denominator of which is the Aggregate Collateral
Balance for such date.
Pool Balance: With respect to each Mortgage Pool and any Payment Date,
the aggregate of the Stated Principal Balances of the Mortgage Loans in such
Mortgage Pool.
Prepayment Interest Excess Amount: For any Servicer Remittance Date and
any Principal Prepayment received during the portion of the related Prepayment
Period occurring from and including the first day through the fifteenth day of
the calendar month in which such Servicer Remittance Date occurs, an amount
equal to interest (to the extent received) due in connection with such
Principal Prepayment.
Prepayment Interest Shortfall Amount: With respect to any voluntary
Principal Prepayment in full or in part by the Mortgagor on any Mortgage Loan
that is received during the period from the first day of the Prepayment Period
through the last day of the calendar month preceding the related Payment Date,
the amount, if any, by which one month's interest at the Mortgage Rate minus
the Servicing Fee, in the case of the Servicer, or at the Net Mortgage Rate,
in the case of the Master Servicer, for such Mortgage Loan on the amount of
such Principal Prepayment exceeds the amount of interest received from such
Mortgagor in respect of such Principal Prepayment.
Prepayment Period: With respect to any Payment Date, the period beginning
from and including the sixteenth day of the month preceding the month in which
such Payment Date occurs (or, in the case of the initial prepayment period,
beginning on the Cut-off Date) to and including the fifteenth day of the month
in which such Payment Date occurs.
Prepayment Premiums: Any prepayment fees and penalties to be paid by the
Mortgagor on a Mortgage Loan in the case of a full or partial voluntary
prepayment of such Mortgage Loan during the related Prepayment Period.
Prime Rate: The prime rate of the United States money center commercial
banks as published in The Wall Street Journal, Northeast Edition.
Principal Deficiency Amount: With respect to any class of Subordinate
Notes and any Payment Date, the lesser of (a) the excess, if any, of (1) the
Total Principal Deficiency Amount over (2) the aggregate of the Principal
Deficiency Amounts for the classes of Subordinate Notes, if any, that have a
lower priority of payment than the subject class and (b) the Class Principal
Amount of the subject class of Notes immediately prior to such Payment Date.
Principal Payment Amount: With respect to each Mortgage Pool for any
Payment Date, an amount equal to the Principal Remittance Amount for such
Mortgage Pool for such date
23
minus the Aggregate Overcollateralization Release Amount attributable to such
Mortgage Pool for such Payment Date.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan, including any payment or other recovery of principal in
connection with the repurchase of a Mortgage Loan by the Seller, the Servicer
or any other Person received in advance of such Mortgage Loan's scheduled Due
Date.
Principal Remittance Amount: With respect to any Payment Date and for
each Mortgage Pool, (a) the sum of (i) all principal collected (other than the
principal portion of Payaheads) or advanced in respect of Scheduled Payments
on the Mortgage Loans in such Mortgage Pool during the related Collection
Period whether by the Servicer, the Master Servicer or any successor Master
Servicer (less unreimbursed Advances due to the Master Servicer, the Servicer
or the Indenture Trustee as successor Master Servicer, or any other successor
Master Servicer, with respect to such Mortgage Pool, and any unreimbursed
Servicing Advances, in each case, to the extent allocable to principal and to
the extent provided under Sections 4.02(e)(3) and (4) and Sections 5.08(i) and
(ii)), (ii) all Principal Prepayments in full or in part received during the
related Prepayment Period on the Mortgage Loans in such Mortgage Pool, (iii)
the Stated Principal Balance of each Mortgage Loan in such Mortgage Pool that
was purchased from the Trust Estate during the related Prepayment Period, (iv)
the portion of any Substitution Amount paid with respect to any Deleted
Mortgage Loan relating to a Mortgage Loan in such Mortgage Pool during the
related Prepayment Period allocable to principal, (v) all Net Liquidation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and other Recoveries
collected with respect to such Mortgage Loans in such Mortgage Pool during the
related Prepayment Period, to the extent allocable to principal and (vi) all
other unscheduled collections and recoveries in respect of principal during
the related Prepayment Period, as reduced by (b) such Mortgage Pool's pro rata
share of: other costs, expenses, fees or liabilities reimbursable to the
Indenture Trustee, the Owner Trustee, the Custodian, the Trust Administrator,
the Master Servicer and the Servicer to the extent provided in this Agreement,
the Trust Agreement, the Indenture and the Custodial Agreement and to the
extent not reimbursed from the Interest Remittance Amount, or otherwise.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Property Charges: As defined in Section 4.02(i).
Prospectus: The Prospectus Supplement, together with the accompanying
prospectus dated October 25, 2004.
Prospectus Supplement: The prospectus supplement dated May 25, 2005
relating to the Notes.
Purchase Price: With respect to the purchase of a Mortgage Loan or
related REO Property pursuant to this Agreement, an amount equal to the sum of
(a) 100% of the unpaid principal balance of such Mortgage Loan, (b) accrued
interest thereon at the applicable Mortgage Rate, from the date as to which
interest was last paid to (but not including) the Due Date in the
24
Collection Period during which such Mortgage Loan or REO Property is being so
purchased; (c) if applicable, the fair market value of the REO Property and
all other property being purchased; (d) any unreimbursed Servicing Advances
with respect to such Mortgage Loan; and (e) any costs and damages incurred by
the Trust Estate associated with any violation of applicable federal, state or
local anti-predatory or anti-abusive lending laws with respect to the related
Mortgage Loan. The Master Servicer and the Servicer shall be reimbursed from
the Purchase Price for any Mortgage Loan or related REO Property for any
Advances made or other amounts advanced with respect to such Mortgage Loan
that are reimbursable to the Master Servicer or the Servicer under this
Agreement, together with any accrued and unpaid Servicing Fee and Master
Servicing Fee with respect to such Mortgage Loan.
Qualified GIC: A guaranteed investment contract or surety bond providing
for the investment of funds in the Collection Account and insuring a minimum,
fixed or floating rate of return on investments of such funds, which contract
or surety bond shall:
(i) be an obligation of an insurance company or other corporation
whose long term debt is rated by each Rating Agency in one of its two
highest rating categories or, if such insurance company has no long term
debt, whose claims paying ability is rated by each Rating Agency in one
of its two highest rating categories, and whose short-term debt is rated
by each Rating Agency in its highest rating category;
(ii) provide that the Trust Administrator on behalf of the Indenture
Trustee may exercise all of the rights under such contract or surety bond
without the necessity of taking any action by any other Person;
(iii) provide that if at any time the then current credit standing
of the obligor under such guaranteed investment contract is such that
continued investment pursuant to such contract of funds would result in a
downgrading of any rating of the Notes, the Trust Administrator shall
terminate such contract without penalty and be entitled to the return of
all funds previously invested thereunder, together with accrued interest
thereon at the interest rate provided under such contract to the date of
delivery of such funds to the Trust Administrator;
(iv) provide that the Indenture Trustee's interest therein shall be
transferable to any successor trustee hereunder; and
(v) provide that the funds reinvested thereunder and accrued
interest thereon be returnable to the Collection Account not later than
the Business Day prior to any Payment Date.
Qualified Insurer: An insurance company duly qualified as such under the
laws of the states in which the related Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided and whose claims paying ability
is rated by each Rating Agency in its highest rating category or whose
selection as an insurer will not adversely affect the rating of the Notes.
Qualified REIT Subsidiary: A direct or indirect 100% owned subsidiary of
a REIT that satisfies the requirements of Section 856(i) of the Code.
25
Qualifying Substitute Mortgage Loan: In the case of a Mortgage Loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this
Agreement, a Mortgage Loan that, on the date of such substitution, (i) has an
outstanding Stated Principal Balance (or in the case of a substitution of more
than one mortgage loan for a Deleted Mortgage Loan, an aggregate Stated
Principal Balance), after application of all Scheduled Payments due during or
prior to the month of substitution, not in excess of, and not more than 5%
less than, the outstanding Stated Principal Balance of the Deleted Mortgage
Loan as of the Due Date in the calendar month during which the substitution
occurs, (ii) has a Mortgage Rate not less than, and not more than 0.50% higher
than, the Mortgage Rate on the Deleted Mortgage Loan, (iii) if applicable, has
a maximum Mortgage Rate not less than the maximum Mortgage Rate on the Deleted
Mortgage Loan, (iv) has a minimum Mortgage Rate not less than the minimum
Mortgage Rate of the Deleted Mortgage Loan, (v) has a gross margin equal to or
greater than the gross margin of the Deleted Mortgage Loan, (vi) (a) has a
next adjustment date not later than the next adjustment date on the Deleted
Mortgage Loan, (b) has an initial periodic rate cap not less than the Deleted
Mortgage Loan and (c) has a subsequent periodic rate cap not less than the
Deleted Mortgage Loan, (vii) has the same Due Date as the Deleted Mortgage
Loan, (viii) has a remaining stated term to maturity not longer than 18 months
and not more than 18 months shorter than the remaining stated term to maturity
of the related Deleted Mortgage Loan, (ix) is current as of the date of
substitution, (x) has a Loan-to-Value Ratio as of the date of substitution
equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (xi) has been underwritten by the Seller in accordance with the
same underwriting criteria and guidelines as the Deleted Mortgage Loan, (xii)
has a risk grading determined by the Seller at least equal to the risk grading
assigned on the Deleted Mortgage Loan, (xiii) is secured by the same property
type as the Deleted Mortgage Loan, (xiv) conforms to each representation and
warranty applicable to the Deleted Mortgage Loan made in the Mortgage Loan
Purchase Agreement, (xv) has the same first lien position as the Deleted
Mortgage Loan, (xvi) is covered by a primary mortgage insurance policy if the
Deleted Mortgage Loan was so covered, (xvii) contains provisions covering the
payment of Prepayment Premium by the Mortgager for early prepayment of the
Mortgage Loan at least as favorable to the Trust as the Deleted Mortgage Loan,
(xviii) has a maturity date not later than the maturity date of the latest
maturing Mortgage Loan in the Mortgage Pool as of the Closing Date, (xix) has
the same Index as the Deleted Mortgage Loan, (xx) if originated on or after
November 27, 2003, is not a "high cost" loan subject to the New Jersey Home
Ownership Security Act of 2003 and (xxi) if originated on or after January 1,
2004 is not a "high-cost" loan subject to the New Mexico Home Loan Protection
Act. In the event that one or more mortgage loans are substituted for one or
more Deleted Mortgage Loans, the amounts described in clause (i) hereof shall
be determined on the basis of aggregate Stated Principal Balances, the
Mortgage Rates described in clause (ii) hereof shall be determined on the
basis of weighted average Mortgage Rates, the risk gradings described in
clause (xii) hereof shall be satisfied as to each such mortgage loan, the
terms described in clause (viii) hereof shall be determined on the basis of
weighted average remaining term to maturity, the Loan-to-Value Ratios
described in clause (x) hereof shall be satisfied as to each such mortgage
loan and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (xiv) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate,
as the case may be.
Rating Agency: Each of Moody's and S&P.
26
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
equal to (i) the unpaid principal balance of such Mortgage Loan as of the date
of liquidation, minus (ii) Liquidation Proceeds received, to the extent
allocable to principal, net of amounts that are reimbursable therefrom to the
Master Servicer or the Servicer with respect to such Mortgage Loan (other than
Advances of principal) including Liquidation Expenses. In determining whether
a Realized Loss is a Realized Loss of principal, Liquidation Proceeds shall be
allocated, first, to payment of Liquidation Expenses, then to accrued unpaid
interest and finally to reduce the principal balance of the Mortgage Loan.
Record Date: With respect to each Payment Date and each Class of Notes,
the Business Day prior to the related Payment Date, and with respect to any
Class of Definitive Notes, the last Business Day of the month immediately
preceding the month in which the Payment Date occurs (or, in the case of the
first Payment Date, the Closing Date).
Recovery: With respect to any Liquidated Mortgage Loan, an amount
received in respect of principal on such Mortgage Loan which has previously
been allocated as a Realized Loss to a Class or Classes of Notes net of
reimbursable expenses.
Redemption Date: The first Payment Date on which Aames Investment
Acceptance Corporation is permitted to exercise its right to purchase the
assets of the Trust pursuant to Section 9.02 hereof.
Reference Banks: Leading banks selected by the Trust Administrator and
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (1) with an established place of business in London, (2)
whose quotations appear on the Reuters Screen LIBO Page or the Bloomberg
Screen LIBO Page on the Determination Date in question, (3) which have been
designated as such by the Trust Administrator and (4) not controlling,
controlled by, or under common control with, the Depositor, the Indenture
Trustee, the Trust Administrator, the Master Servicer, the Servicer, the
Seller or any successor servicer.
REIT: A real estate investment trust within the meaning of section 856 of
the Code.
Related Senior Principal Payment Amount: With respect to each Mortgage
Pool and for any Payment Date, an amount equal to the lesser of (x) the
aggregate Class Principal Amounts of the Class 1A1, Class 1A2 and Class 1A3
Notes (with respect to Pool 1) or of the Class 2A1 Notes (with respect to Pool
2) immediately prior to that Payment Date and (y) the product of (a) the
Senior Principal Payment Amount and (b) the related Senior Proportionate
Percentage in each case for such date.
Relevant UCC: The Uniform Commercial Code as in effect in the applicable
jurisdiction.
REO Disposition: The final sale by the Servicer of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.02(p).
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed in lieu of foreclosure in connection with a defaulted
Mortgage Loan.
27
Reserve Interest Rate: The rate per annum that the Trust Administrator
determines to be either (1) the arithmetic mean (rounded upwards if necessary
to the nearest whole multiple of 0.03125%) of the one-month United States
dollar lending rates which New York City banks selected by the Trust
Administrator are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market or,
(2) in the event that the Trust Administrator can determine no such arithmetic
mean, the lowest one-month United States dollar lending rate which New York
City banks selected by the Trust Administrator are quoting on such LIBOR
Determination Date to leading European banks.
Responsible Officer: Any vice president, any assistant vice president,
any assistant secretary, any associate, any assistant treasurer, or any other
officer of the Indenture Trustee or the Trust Administrator, as applicable,
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 the Operative Agreements and also, with respect to a
particular matter, any other officer to whom such matter is referred because
of such officer's knowledge of and familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBOR01" on the
Reuters Monitor Money Rates Service (or such other page as may replace the
LIBOR01 page on that service for the purpose of displaying London interbank
offered rates of major banks).
Rolling Three Month Delinquency Rate: With respect to any Payment Date,
the average of the Delinquency Rates for each of the three (or one and two, in
the case of the first and second Payment Dates, respectively) immediately
preceding calendar months.
S&P: Standard & Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc., or any successor in interest.
Sarbanes Certifying Party: Any person who provides a certification
pursuant to the Sarbanes-Oxley Act of 2002 on behalf of the Trust.
Scheduled Payment: Each scheduled payment of principal and interest (or
of interest only, if applicable) to be paid by the Mortgagor on a Mortgage
Loan, as reduced (except where otherwise specified herein) by the amount of
any related Debt Service Reduction or pursuant to the Civil Relief Act
(excluding all amounts of principal and interest that were due on or before
the Cut-off Date whenever received) and, in the case of an REO Property, an
amount equivalent to the Scheduled Payment that would have been due on the
related Mortgage Loan if such Mortgage Loan had remained in existence.
Securities Intermediary: The Person acting as Securities Intermediary
under this Agreement (which is Wells Fargo Bank, N.A.), its successor in
interest, and any successor Securities Intermediary appointed pursuant to
Section 6.04.
Security Entitlement: The meaning specified in Section 8-102(a)(17) of
the New York UCC.
Seller: Aames Investment Corporation.
28
Seller Financial Covenant Termination Event: A Seller Financial Covenant
Termination Event shall have occurred with respect to any Payment Date if: (i)
the Seller's tangible net worth shall be less than $75,000,000 as of the last
day of the immediately preceding Collection Period, (ii) the Seller's total
liquidity shall be less than $17,500,000 as of the last day of the immediately
preceding Collection Period or (iii) the Seller's warehouse capacity shall be
less than $500,000,000 as of the last day of the immediately preceding
Collection Period.
Senior Enhancement Percentage: For any Payment Date, the fraction,
expressed as a percentage, the numerator of which is the sum of the aggregate
Class Principal Amounts of the Subordinate Notes and the Overcollateralization
Amount (which, for purposes of this definition only, shall not be less than
zero) in each case after giving effect to payments on such Payment Date and
the denominator of which is the Aggregate Collateral Balance for such Payment
Date.
Senior Note: Any Class 1A1, Class 1A2, Class 1A3 or Class 2A1 Note.
Senior Principal Payment Amount: With respect to any Payment Date and the
Senior Notes, an amount equal to (a) prior to the Stepdown Date or if a
Trigger Event is in effect with respect to such Payment Date, 100% of the
Principal Payment Amount for both Mortgage Pools and (b) on or after the
Stepdown Date and as long as a Trigger Event is not in effect with respect to
such Payment Date, the lesser of (x) the Principal Payment Amount for both
Mortgage Pools and (y) the amount, if any, by which (A) the aggregate Class
Principal Amount of the Senior Notes immediately prior to that Payment Date
exceeds (B) the Senior Target Amount.
Senior Proportionate Percentage: With respect to Pool 1 and any Payment
Date, the fraction, expressed as a percentage, the numerator of which is the
Principal Remittance Amount for Pool 1 for such Payment Date and the
denominator of which is the aggregate Principal Remittance Amount for Pool 1
and Pool 2 for such date. With respect to Pool 2 and any Payment Date, the
fraction, expressed as a percentage, the numerator of which is the Principal
Remittance Amount for Pool 2 for such Payment Date and the denominator of
which is the aggregate Principal Remittance Amount for Pool 1 and Pool 2 for
such date.
Senior Target Amount: With respect to any Payment Date, an amount equal
to the lesser of (a) the product of (i) 55.30% and (ii) the Aggregate
Collateral Balance for such Payment Date determined as of the last day of the
related Collection Period and (b) the amount, if any, by which (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Collection Period exceeds (ii) 0.50% of the Cut-off Date
Collateral Balance.
Servicer: Aames Capital Corporation, or its successor in interest or
assigns or any successor to the Servicer under this Agreement as herein
provided.
Servicer Event of Default: Any one of the conditions or circumstances
enumerated in Section 4.07 with respect to the Servicer.
Servicer Pipeline Losses: Servicer Pipeline Losses with respect to any
Payment Date shall be equal to (x) the product of (i) 50.00% and (ii) the sum
of (a) the product of (1) 20.00% and (2) the aggregate outstanding principal
balance of all Mortgage Loans 60 to 89 days Delinquent on the last day of the
related Collection Period, (b) the product of (1) 35.00% and (2) the aggregate
outstanding principal balance of all Mortgage Loans 90 or more days Delinquent
29
(but for which foreclosure proceedings have not been instituted) on the last
day of the related Collection Period, (c) the product of (1) 50.00% and (2)
the aggregate outstanding principal balance of all Mortgage Loans on the last
day of the related Collection Period for which foreclosure proceedings have
been instituted and (d) the product of (1) 90.00% and (2) the aggregate
outstanding principal balance of all REO Properties on the last day of the
related Collection Period, divided by (y) the Cut-off Date Collateral Balance.
Servicer Pipeline Loss Trigger Event: A Pipeline Loss Trigger Event shall
have occurred with respect to any Payment Date if the sum of (i) Servicer
Pipeline Losses for such Payment Date and (ii) a fraction, expressed as a
percentage, obtained by dividing (x) the aggregate amount of Realized Losses
incurred on the Mortgage Loans from the Cut-off Date through the last day of
the related Collection Period by (y) the Cut-off Date Collateral Balance,
exceeds the applicable percentages described below with respect to such
Payment Date:
Payment Date Required Loss Percentage
------------ ------------------------
June 2006 through May 2007.......... 2.25% with respect to June 2006, plus an
additional 1/12th of 1.00% for each month
thereafter
June 2007 through May 2008.......... 3.25% with respect to June 2007, plus an
additional 1/12th of 1.25% for each month
thereafter
June 2008 through May 2009.......... 4.50% with respect to June 2008, plus an
additional 1/12th of 1.75% for each month
thereafter
June 2009 through May 2010.......... 6.25% with respect to June 2009, plus an
additional 1/12th of 1.50% for each month
thereafter
June 2010 through May 2011.......... 7.75% with respect to June 2010, plus an
additional 1/12th of 1.25% for each month
thereafter
June 2011 through May 2012.......... 9.00% with respect to June 2011, plus an
additional 1/12th of 0.75% for each month
thereafter
June 2012 and thereafter............ 9.75%
Servicer Remittance Date: The Business Day prior to each Payment Date,
commencing in June 2005.
Servicer Termination Trigger Event: A Servicer Termination Trigger Event
shall have occurred with respect to any Payment Date if: (i) a Servicer
Pipeline Loss Trigger Event shall
30
have occurred or (ii) the Rolling Three Month Delinquency Rate as of the last
day of the immediately preceding Collection Period equals or exceeds 20.00%
for such Payment Date.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Advances (including reasonable
attorneys' fees and disbursements) incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (a)
the preservation, inspection, restoration and protection of the Mortgaged
Property, (b) any enforcement or administrative or judicial proceedings,
including foreclosures, (c) the management and liquidation of the Mortgaged
Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage, (d) taxes, assessments, water rates, sewer rents and other charges
which are or may become a lien upon the Mortgaged Property and fire and hazard
insurance coverage and (e) any losses sustained by the Servicer with respect
to the liquidation of the Mortgaged Property. Notwithstanding anything to the
contrary herein, in the event the Servicer determines in its reasonable
judgment that a Servicing Advance is a Nonrecoverable Advance, the Servicer
shall be under no obligation to make such Servicing Advance.
Servicing Fee: As to any Payment Date and each Mortgage Loan, an amount
equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b) the
Stated Principal Balance of such Mortgage Loan as of the first day of the
related Collection Period.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per annum.
Servicing File: The items pertaining to a particular Mortgage Loan
including, but not limited to, the computer files, data disks, books, records,
data tapes, notes, and all additional documents generated as a result of or
utilized in originating and/or servicing each Mortgage Loan, which are held in
trust for the Indenture Trustee by the Servicer.
Servicing Officer: Any officer of the Servicer involved in or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Servicer to the Master
Servicer upon request, as such list may from time to time be amended.
Servicing Standard: The servicing and administration of the Mortgage
Loans for which the Servicer is responsible hereunder (a) in the same manner
in which, and with the same care, skill, prudence and diligence with which,
the Servicer generally services and administers similar mortgage loans with
similar mortgagors (i) for other third parties, giving due consideration to
customary and usual standards of practice of prudent institutional residential
mortgage lenders servicing their own loans or (ii) held in the Servicer's own
portfolio, (b) with a view to the maximization of the recovery on such
Mortgage Loans on a net present value basis and the best interests of the
Trust or any Person to which the Mortgage Loans may be transferred by the
Trust, (c) without regard to (i) any relationship that the Servicer or any
affiliate thereof may have with the related Mortgagor or any other party to
the transactions, (ii) the right of the Servicer to receive compensation or
other fees for its services rendered pursuant to this Agreement, (iii) the
obligation of the Servicer to make Servicing Advances, (iv) the ownership,
servicing or management by the Servicer or any affiliate thereof for others of
any other mortgage loans or mortgaged properties, and (v) any debt the
Servicer or any affiliate of the Servicer has extended
31
to any mortgagor or any affiliate of such mortgagor and (d) in accordance with
the applicable state, local and federal laws, rules and regulations.
Stated Principal Balance: With respect to any Payment Date, either (a) in
the case of any Mortgage Loan, the principal balance of such Mortgage Loan at
the close of business on the Cut-off Date after giving effect to principal
payments due on or before the Cut-off Date, whether or not received, less an
amount equal to principal payments due after the Cut-off Date and on or before
the Due Date in the related Collection Period, whether or not received from
the Mortgagor or advanced by any Servicer or the Master Servicer, and all
amounts allocable to unscheduled principal payments (including Principal
Prepayments, Liquidation Proceeds, Insurance Proceeds and condemnation
proceeds, in each case to the extent identified and applied prior to or during
the related Prepayment Period), provided that the Stated Principal Balance of
any Liquidated Mortgage Loan shall be zero and (b) in the case of any REO
Property, the Stated Principal Balance of the related Mortgage Loan on the Due
Date immediately preceding the date of acquisition of such REO Property by or
on behalf of the Indenture Trustee (reduced by any amount applied as a
reduction of principal on the related Mortgage Loan).
Stepdown Date: The later to occur of (1) the Payment Date in June 2008
and (2) the first Payment Date on which on which the Senior Enhancement
Percentage (calculated for this purpose after giving effect to payments or
other recoveries in respect of the Mortgage Loans during the related
Collection Period, but before giving effect to payments on any Notes on such
Payment Date) is greater than or equal to 44.70%.
Stepup Date: The first Payment Date after the Payment Date on which the
Aggregate Collateral Balance is less than or equal to 20% of the sum of the
Aggregate Collateral Balance as of the Cut-off Date.
Subordinate Cap Agreement: The interest rate cap agreement transaction
evidenced by the related Confirmation (as assigned to the Trust pursuant to
the Cap Agreement Assigment Agreement), with respect to the Subordinate Notes.
Subordinate Cap Agreement Payment Date: With respect to the Subordinate
Cap Agreement, the Business Day immediately preceding the related Payment
Date, beginning with the Payment Date in June 2005 and ending with the Payment
Date in September 2007.
Subordinate Class Principal Payment Amount: With respect to any class of
Subordinate Certificates and any Payment Date on or after the Stepdown Date
and as long as a Trigger Event is not in effect with respect to such Payment
Date, the excess of (x) the sum of (i) the aggregate Class Principal Amount of
the Senior Notes after giving effect to payments to such classes on such
Payment Date, (ii) the aggregate Class Principal Amount of the classes of
Subordinate Notes, if any, that have a higher priority of payment than the
subject class of Subordinate Notes, after giving effect to payments to such
classes on such Payment Date and (iii) the Class Principal Amount of the
subject of class of Notes immediately prior to such Payment Date over (y) the
Subordinate Class Target Amount for the subject class for such Payment Date.
Subordinate Class Target Amount: With respect to any class of Subordinate
Notes and any Payment Date, an amount equal to the lesser of (a) the product
of (i) the target percentage set
32
forth for such class in the following table and (ii) the Aggregate Collateral
Balance for such Payment Date determined as of the last day of the related
Collection Period and (b) the excess of (i) the Aggregate Collateral Balance
for such Payment Date determined as of the last day of the related Collection
Period over (ii) 0.50% of the Cut-off Date Collateral Balance:
Target
Class Percentage
---------------------- --------------
M1................ 62.30%
M2................ 69.40%
M3................ 73.60%
M4................ 77.40%
M5................ 80.70%
M6................ 83.60%
M7................ 86.80%
M8................ 89.30%
M9................ 91.60%
B1................ 93.80%
B2................ 94.80%
B3................ 96.00%
B4................ 97.60%
Subordinate Note: Any Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9, Class B1, Class B2, Class B3 or Class
B4 Note.
Subordinate Priority: As defined in clause 6.02(d)(i).
Substitution Amount: The amount, if any, by which the Stated Principal
Balance of a Deleted Mortgage Loan exceeds the Stated Principal Balance of the
related Qualifying Substitute Mortgage Loan, or aggregate Stated Principal
Balance, if applicable, plus unpaid interest thereon, any related unpaid
Advances or Servicing Advances (including any interest on such unpaid Advances
or Servicing Advances), unpaid Servicing Fees and unpaid Master Servicing Fees
and the amount of any costs and damages incurred by the Trust Fund associated
with a violation of any applicable federal, state or local predatory or
abusive lending law in connection with the origination of such Deleted
Mortgage Loan.
Target Amount: With respect to any Payment Date, an amount equal to the
Aggregate Collateral Balance as of such Payment Date minus the Targeted
Overcollateralization Amount for such Payment Date.
Targeted Overcollateralization Amount: With respect to any Payment Date
prior to the Stepdown Date, will be equal to 1.20% of the Cut-off Date
Collateral Balance; with respect to any Payment Date on or after the Stepdown
Date and with respect to which a Trigger Event is not in effect, will be equal
to 2.40% of the Aggregate Collateral Balance as of the end of the related
Collection Period, subject to a floor equal to 0.50% of the Cut-Off Date
Collateral Balance; and with respect to any Payment Date on or after the
Stepdown Date and with respect
33
to which a Trigger Event has occurred and is continuing, the Targeted
Overcollateralization Amount for the immediately preceding Payment Date
Telerate Page 3750: The display currently so designated as "Page 3750" on
the Moneyline Telerate Service (or such other page selected by the Master
Servicer as may replace Page 3750 on that service for the purpose of
displaying daily comparable rates on prices).
Termination Price: The sum, as calculated by the Servicer, of (a) 100% of
the aggregate outstanding principal balance of the Mortgage Loans, plus
accrued interest thereon at the applicable Mortgage Rate, (b) any costs and
damages incurred by the Trust associated with a violation of any applicable
federal, state or local predatory or abusive lending law, (c) the fair market
value of the REO Property and all other property being purchased, (d) any
unreimbursed Servicing Advances, (e) any Basis Risk Shortfall and Unpaid Basis
Risk Shortfall amounts and (f) all other amounts to be paid or reimbursed to
the Master Servicer, the Trust Administrator, the Indenture Trustee, the Owner
Trustee and the Custodian.
Title Insurance Policy: A title insurance policy maintained with respect
to a Mortgage Loan.
Total Remittance Amount: With respect to any Payment Date, the sum of (i)
the Interest Remittance Amount for both Mortgage Pools for such Payment Date
and (ii) Principal Remittance Amount for both Mortgage Pools for such Payment
Date.
Total Principal Deficiency Amount: With respect to any Payment Date, the
excess, if any, of the aggregate Class Principal Amount of the Notes after
giving effect to payments on such Payment Date over the Aggregate Collateral
Balance as of the last day of the related Collection Period.
Trigger Event: A Trigger Event shall have occurred with respect to any
Payment Date if (i) the Rolling Three Month Delinquency Rate as of the last
day of the immediately preceding month equals or exceeds 35.75% of the Senior
Enhancement Percentage for such Payment Date, (ii) a Cumulative Loss Trigger
Event shall have occurred or (iii) a Principal Deficiency Amount exists for
such Payment Date.
Trust or Trust Fund: The Issuer.
Trust Account Property: The Trust Account, all amounts and investments
held from time to time in the Trust Account (whether in the form of deposit
accounts, physical property, book-entry securities, uncertificated securities,
securities entitlements, investment property or otherwise) and all proceeds of
the foregoing.
Trust Account: The Collection Account.
Trust Agreement: The trust agreement dated May 26, 2005, between the
Depositor and the Owner Trustee, as amended and restated on May 31, 2005,
among the Depositor, the Trust Administrator and the Owner Trustee, as such
may be amended or supplemented from time to time.
34
Trust Estate: The assets of the Issuer and pledged by the Issuer to the
Indenture Trustee under the Indenture, which assets consist of all accounts,
accounts receivable, contract rights, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit,
goods, notes, drafts, letters of credit, advices of credit, investment
property, uncertificated securities and rights to payment of any and every
kind consisting of, arising from or relating to any of the following: (a) the
Mortgage Loans listed in the Mortgage Loan Schedule, and principal due and
payable after the Cut-off Date, but not including interest and principal due
and payable on any Mortgage Loans on or before the Cut-off Date, together with
the Mortgage Files relating to such Mortgage Loans; (b) any Insurance
Proceeds, REO Property, Liquidation Proceeds, REO Disposition Proceeds and
other recoveries (in each case, subject to clause (a) above), (c) the
Collection Account, any Custodial Account, any Escrow Account, the Interest
Rate Cap Account and all amounts deposited therein pursuant to the applicable
provisions of this Agreement, (d) any Insurance Policies, (e) the rights of
the Depositor under the Mortgage Loan Purchase Agreement, (f) the rights of
the Trust under each Interest Rate Cap Agreement and (g) all income, revenues,
issues, products, revisions, substitutions, replacements, profits, rents and
all cash and non-cash proceeds of the foregoing.
UCC: The Uniform Commercial Code as enacted in the relevant jurisdiction.
Underwriters: Countrywide Securities Corporation, Citigroup Global
Markets Inc., Bear Stearns & Co. Inc., Credit Suisse First Boston LLC,
Friedman, Billings, Ramsey & Co., Inc., Greenwich Capital Markets, Inc.,
Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated.
Unpaid Basis Risk Shortfall: With respect to any Payment Date and any
Class of Notes, the aggregate of all Basis Risk Shortfalls with respect to
such Class remaining unpaid from all previous Payment Dates, plus interest
accrued thereon at the applicable Note Interest Rate (calculated without
giving effect to the applicable Net Funds Cap).
Voting Interests: The portion of the voting rights of all the Notes that
is allocated to any Note for purposes of the voting provisions of this
Agreement. At all times during the term of this Agreement, 99% of all voting
rights will be allocated among the holders of the Notes as provided below. The
portion of such voting rights allocated to any Class of Notes will be based on
the fraction, expressed as a percentage, the numerator of which is the Class
Principal Amount of such Class as of the date of determination and the
denominator of which is the aggregate Class Principal Amount of the Notes as
of such date. At all times during the term of the Indenture and this
Agreement, the holders of the Ownership Certificate will be allocated 1% of
the voting rights for so long as the Class remains outstanding. The voting
rights allocation to any Class of Notes or the Ownership Certificate will be
allocated among all holders of each such Class or Ownership Certificate in
proportion to their respective Note Principal Amounts of such Notes or
Percentage Interests of the Ownership Certificate.
Section 1.02. Calculations With Respect to the Mortgage Loans.
Calculations required to be made pursuant to this Agreement with respect to
any Mortgage Loan in the Trust Estate shall be made based upon current
information as to the terms of the Mortgage Loans and reports of payments
received from the Mortgagor on such Mortgage Loans provided by the Servicer to
the Master Servicer. Payments to be made by the Trust Administrator shall be
based on information provided by the Master Servicer. The Trust Administrator
shall not be required to
35
recompute, verify or recalculate the information supplied to it by the Master
Servicer or the Servicer.
Section 1.03. Calculations With Respect to Accrued Interest. Accrued
interest, if any, on any Note shall be calculated based upon a 360-day year
and the actual number of days in each Accrual Period.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Creation and Declaration of Trust Estate; Conveyance of
Mortgage Loans.
(a) Mortgage Loans. As of the Closing Date, in consideration of the
Issuer's delivery of the Notes and the Ownership Certificate to the Depositor
or its designee, and concurrently with the execution and delivery of this
Agreement, the Depositor does hereby transfer, assign, set over, deposit with
and otherwise convey to the Issuer, without recourse, subject to Section 3.01,
in trust, all the right, title and interest of the Depositor in and to the
Mortgage Loans. Such conveyance includes, without limitation, the right to all
payments of principal and interest received on or with respect to the Mortgage
Loans on and after the Cut-off Date (other than payments of principal and
interest due on or before such date), and all such payments due after such
date but received prior to such date and intended by the related Mortgagors to
be applied after such date together with all of the Depositor's right, title
and interest in any REO Property and the proceeds thereof, the Depositor's
rights under any Insurance Policies related to the Mortgage Loans, the
Depositor's security interest in any collateral pledged to secure the Mortgage
Loans, including the Mortgaged Properties and any proceeds of the foregoing,
to have and to hold, in trust; and the Indenture Trustee declares that,
subject to the review provided for in Section 2.02, it has received and shall
hold the Trust Estate, as Indenture Trustee, in trust, for the benefit and use
of the Noteholders and for the purposes and subject to the terms and
conditions set forth in this Agreement, and, concurrently with such receipt,
the Issuer has issued and delivered the Notes and the Ownership Certificate to
or upon the order of the Depositor, in exchange for the Mortgage Loans and the
other property of the Trust Estate.
Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby assign to the Issuer all of its rights and interest
under the Mortgage Loan Purchase Agreement but without delegation of any of
its obligations thereunder. The Issuer hereby accepts such assignment, and
shall be entitled to exercise all the rights of the Depositor under the
Mortgage Loan Purchase Agreement as if, for such purpose, it were the
Depositor. Upon the issuance of the Notes, ownership in the Trust Estate shall
be vested in the Issuer, subject to the lien created by the Indenture in favor
of the Indenture Trustee, for the benefit of the Noteholders. The foregoing
sale, transfer, assignment, set-over, deposit and conveyance does not and is
not intended to result in creation or assumption by the Indenture Trustee of
any obligation of the Depositor, the Seller, or any other Person in connection
with the Mortgage Loans or any other agreement or instrument relating thereto
except as specifically set forth herein.
The Depositor further agrees to cause Countrywide Home Loans, Inc. to
assign all of its right, title and interest in and to the interest rate
corridor transaction evidenced by each
36
Confirmation to the Issuer, and all such right, title and interest shall be
deemed to have been assigned by Countrywide Home Loans, Inc. to the Depositor
and by the Depositor to the Issuer.
(b) In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, or cause to be delivered to and deposited
with, the Indenture Trustee, and/or the Custodian acting on the Indenture
Trustee's behalf, the following documents or instruments with respect to each
Mortgage Loan (each a "Mortgage File") so transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank or (B)
in the form of the Form of Endorsement set forth in Exhibit A-4 hereto
(or Exhibit B-6 to the Custodial Agreement), or with respect to any lost
Mortgage Note, an original Lost Note Affidavit, in the form set forth in
Exhibit C hereto (or Exhibit B-5 to the Custodial Agreement), stating
that the original Mortgage Note was lost, misplaced or destroyed,
together with a copy of the related Mortgage Note;
(ii) the original of any guarantee executed in connection with the
Mortgage Note, assigned to the Indenture Trustee;
(iii) 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 by an Officer's
Certificate of the Depositor to be a true and complete copy of the
original submitted for recording;
(iv) with respect to each Non-MERS Mortgage Loan, an original
Assignment of Mortgage, in form and substance acceptable for recording.
The Mortgage shall be assigned either (A) in blank, without recourse, or
(B) so long as Deutsche Bank National Trust Company is the Indenture
Trustee, to "Deutsche Bank National Trust Company, as Indenture Trustee
of the Aames Mortgage Investment Trust 2005-2", without recourse or (C)
to the order of the Indenture Trustee;
(v) an original copy of any intervening assignment of Mortgage
showing a complete chain of assignments or, in the case of an intervening
assignment that has been lost, a written Opinion of Counsel for the
Seller that such original intervening assignment is not required to
enforce the Indenture Trustee's interest in the Mortgage Loans;
(vi) the original or a certified copy of lender's title insurance
policy (or, in lieu thereof, a commitment to issue such title insurance
policy, with an original or a certified copy of such title insurance
policy to follow as soon after the Closing Date as reasonably
practicable) or attorney's opinion of title and abstract of title;
(vii) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any, or as to any such
agreement which cannot be delivered prior to the Closing Date because of
a delay caused by the public recording office where such assumption,
modification or substitution agreement has been delivered for
37
recordation, a photocopy of such assumption, modification or substitution
agreement, pending delivery of the original thereof, together with an
Officer's Certificate of the Depositor certifying that the copy of such
assumption, modification or substitution agreement delivered to the
Custodian is a true copy and that the original of such agreement has been
forwarded to the public recording office; and
(viii) the original of any security agreement or equivalent
instrument executed in connection with the Mortgage or as to any security
agreement or equivalent instrument that cannot be delivered on or prior
to the Closing Date because of a delay caused by the public recording
office where such document has been delivered for recordation, a
photocopy of such document, pending delivery of the original thereof,
together with an Officer's Certificate of the Depositor certifying that
the copy of such security agreement, chattel mortgage or their equivalent
delivered to the Custodian is a true copy and that the original of such
document has been forwarded to the public recording office.
The Depositor and the Seller acknowledge and agree that the form of
endorsement attached hereto as Exhibit A-4 is intended to effect the transfer
to the Indenture Trustee, for the benefit of the Noteholders, of the Mortgage
Notes and the Mortgages.
(c) Assignments of Mortgage with respect to each Non-MERS Mortgage Loan
shall be recorded; provided, however, that such Assignments need not be
recorded if, on or prior to the Closing Date, the Seller delivers an Opinion
of Counsel (which must be Independent counsel) acceptable to the Rating
Agencies, to the effect that recording in such states is not required to
protect the Indenture Trustee's interest in the related Non-MERS Mortgage
Loans.
(d) In instances where a Title Insurance Policy is required to be
delivered to the Indenture Trustee or the Custodian on behalf of the Indenture
Trustee under clause (b)(vi) above and is not so delivered, the Seller will
provide a copy of such Title Insurance Policy to the Indenture Trustee, or to
the Custodian on behalf of the Indenture Trustee, as promptly as practicable
after the execution and delivery hereof, but in any case within 180 days of
the Closing Date.
(e) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, herewith delivers to the Indenture Trustee, or
to the Custodian on behalf of the Indenture Trustee, an Officer's Certificate
which shall include a statement to the effect that all amounts received in
connection with such prepayment that are required to be deposited in the
Collection Account pursuant to Section 5.07 have been so deposited. All
original documents that are not delivered to the Indenture Trustee or the
Custodian on behalf of the Indenture Trustee shall be held by the Servicer in
trust for the benefit of the Indenture Trustee and the Noteholders.
Section 2.02. Acceptance of Trust Estate; Review of Documentation.
(a) Subject to the provisions of Section 2.01, the Issuer acknowledges
receipt of the assets transferred by the Depositor of the assets included in
the Trust Estate and has directed that the documents referred to in Section
2.01 and all other assets included in the definition of "Trust Estate" be
delivered to the Indenture Trustee (or the Custodian) on its behalf.
38
The Indenture Trustee, by execution and delivery hereof, acknowledges
receipt by it or by the applicable Custodian on its behalf of the Mortgage
Files pertaining to the Mortgage Loans listed on the Mortgage Loan Schedule,
subject to review thereof by the Indenture Trustee, or by the Custodian on
behalf of the Indenture Trustee, under this Section 2.02. The Indenture
Trustee, or the Custodian on behalf of the Indenture Trustee, will execute and
deliver to the Depositor, the Master Servicer, the Servicer (and the Indenture
Trustee if delivered by the Custodian) on the Closing Date an Initial
Certification in the form annexed hereto as Exhibit A-1 (or in the form
annexed to the Custodial Agreement as Exhibit B-1, as applicable).
(b) Within 45 days after the Closing Date, the Indenture Trustee or the
Custodian on behalf of the Indenture Trustee, will, for the benefit of
Noteholders, review each Mortgage File to ascertain that all required
documents set forth in Section 2.01 have been received and appear on their
face to contain the requisite signatures by or on behalf of the respective
parties thereto, and shall deliver to the Depositor, the Master Servicer and
the Servicer (and the Indenture Trustee if delivered by the Custodian) an
Interim Certification in the form annexed hereto as Exhibit A-2 (or in the
form annexed to the Custodial Agreement as Exhibit B-2, as applicable) to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan prepaid in full or any specifically identified
in such certification as not covered by such certification), (i) all of the
applicable documents specified in Section 2.01(b) are in its possession and
(ii) such documents have been reviewed by it and appear to relate to such
Mortgage Loan. The Indenture Trustee, or the Custodian on behalf of the
Indenture Trustee, shall determine whether such documents are executed and
endorsed, but shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that the same are valid, binding, legally effective, properly
endorsed, genuine, enforceable or appropriate for the represented purpose or
that they have actually been recorded or are in recordable form or that they
are other than what they purport to be on their face. Neither the Indenture
Trustee nor the Custodian shall have any responsibility for verifying the
genuineness or the legal effectiveness of or authority for any signatures of
or on behalf of any party or endorser or for the perfection or priority of any
document.
(c) If in the course of the review described in paragraph (b) above the
Indenture Trustee or the Custodian discovers any document or documents
constituting a part of a Mortgage File that is missing, does not appear
regular on its face (i.e., is mutilated, damaged, defaced, torn or otherwise
physically altered) or appears to be unrelated to the Mortgage Loans
identified in the Mortgage Loan Schedule, as applicable (each, a "Material
Defect"), the Indenture Trustee, or the Custodian on behalf of the Indenture
Trustee, discovering such Material Defect shall identify the Mortgage Loan to
which such Material Defect relates in the Interim Certification delivered to
the Depositor and the Master Servicer. Within 90 days of its receipt of such
notice, the Seller shall be required to cure such Material Defect (and, in
such event, the Seller shall provide the Indenture Trustee with an Officer's
Certificate confirming that such cure has been effected). If the Seller does
not so cure such Material Defect, if a loss has been incurred with respect to
such Mortgage Loan that would, if such Mortgage Loan were not purchased from
the Trust Estate, constitute a Realized Loss, and such loss is attributable to
the failure of the Seller to cure such Material Defect, the Seller shall
repurchase the related Mortgage Loan from the Trust Estate at the Purchase
Price. A loss shall be deemed to be attributable to the failure of the Seller
to cure a Material Defect if, as determined by the Seller acting in good
faith, absent such Material Defect, such loss would not have been incurred.
The Seller may, in lieu of repurchasing a Mortgage
39
Loan pursuant to this Section 2.02, substitute for such Mortgage Loan a
Qualifying Substitute Mortgage Loan subject to the provisions of Section 3.03.
The failure of the Indenture Trustee or the Custodian to deliver the Interim
Certification within 45 days after the Closing Date shall not affect or
relieve the Seller of its obligation to repurchase any Mortgage Loan pursuant
to this Section 2.02 or any other Section of this Agreement requiring the
repurchase of Mortgage Loans from the Trust Estate.
(d) Within 180 days following the Closing Date, the Indenture Trustee, or
the Custodian, shall deliver to the Depositor, the Master Servicer and the
Servicer (and the Indenture Trustee if delivered by the Custodian) a Final
Certification substantially in the form attached as Exhibit A-3 (or in the
form annexed to the Custodial Agreement as Exhibit B-3, as applicable)
evidencing the completeness of the Mortgage Files in its possession or
control, with any exceptions noted thereto.
(e) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Estate, the Indenture Trustee, the Custodian or the
Noteholders of any unsatisfied duty, claim or other liability on any Mortgage
Loan or to any Mortgagor.
(f) Notwithstanding anything to the contrary contained herein, each of
the parties hereto acknowledges that the Custodian shall perform the
applicable review of the Mortgage Loans and respective certifications thereof
as provided in the Custodial Agreement.
(g) Upon execution of this Agreement, the Depositor hereby delivers to
the Indenture Trustee and the Indenture Trustee acknowledges a receipt of the
Mortgage Loan Purchase Agreement.
(h) For purposes of the determinations required to be made by the
Indenture Trustee or the Custodian pursuant to paragraphs (a) through (d) of
this Section 2.02, the Indenture Trustee or the Custodian, as applicable,
shall be entitled to conclusively rely upon the diskette, tape or other
electronic media provided by or on behalf of the Seller with respect to the
Mortgage Loans as to whether (i) any guarantee was executed in connection with
any Mortgage Loan, (ii) any assumption, modification or substitution agreement
was executed in connection with any Mortgage Loan, (iii) primary mortgage
guaranty insurance is required with respect to any Mortgage Loan or (iv) any
security agreement or equivalent instrument was executed in connection with
any Mortgage Loan.
Section 2.03. Grant Clause.
(a) It is intended that the conveyance by the Depositor to the Issuer of
the Mortgage Loans, as provided for in Section 2.01, be construed as a sale by
the Depositor to the Issuer of the Mortgage Loans and other assets in the
Trust Estate for the benefit of the Noteholders. Further, it is not intended
that any such conveyance be deemed to be a pledge of the Mortgage Loans by the
Depositor to the Issuer to secure a debt or other obligation of the Depositor.
However, in the event that the Mortgage Loans are held to be property of the
Depositor or if for any reason this Agreement is held or deemed to create a
security interest in the Mortgage Loans and other assets in the Trust Estate,
then it is intended that (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York UCC
40
(or the Relevant UCC if not the New York UCC); (b) the conveyances provided
for in Section 2.01 shall be deemed to be (1) a grant by the Depositor to the
Issuer of a security interest in all of the Depositor's right (including the
power to convey title thereto), title and interest, whether now owned or
hereafter acquired, in and to (A) the Mortgage Loans, including the Mortgage
Notes, the Mortgages, any related insurance policies and all other documents
in the related Mortgage Files, (B) all amounts payable pursuant to the
Mortgage Loans in accordance with the terms thereof and (C) any and all
general intangibles consisting of, arising from or relating to any of the
foregoing, and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all Liquidation Proceeds, all Insurance Proceeds, all
amounts from time to time held or invested in the Collection Account, whether
in the form of cash, instruments, securities or other property and (2) an
assignment by the Depositor to the Issuer of any security interest in any and
all of the Depositor's right (including the power to convey title thereto),
title and interest, whether now owned or hereafter acquired, in and to the
property described in the foregoing clauses (1)(A) through (C); (c) the
possession by the Indenture Trustee or any other agent of the Issuer of
Mortgage Notes, and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party," or possession by a purchaser or a person designated by
such secured party, for purposes of perfecting the security interest pursuant
to the New York UCC and any other Relevant UCC (including, without limitation,
Section 9-313, 8-313 or 8-321 thereof); and (d) notifications to persons
holding such property, and acknowledgments, receipts or confirmations from
persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Issuer for the purpose of perfecting
such security interest under applicable law.
(b) The Depositor and, at the Depositor's direction, the Issuer shall, to
the extent consistent with this Agreement, take such reasonable actions as may
be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Mortgage Loans and the other property of the Trust
Estate, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of this Agreement. Without limiting the generality of the
foregoing, the Depositor shall prepare and file any UCC financing statements
that are necessary to perfect the Indenture Trustee's security interest in or
lien on the Mortgage Loans, as evidenced by an Officer's Certificate of the
Depositor, and furnish a copy of each such filed financing statement to the
Trust Administrator. The Trust Administrator shall prepare and file, at the
expense of the Issuer, all filings necessary to maintain the effectiveness of
any original filings necessary under the Relevant UCC to perfect the Indenture
Trustee's security interest in or lien on the Mortgage Loans, including
without limitation (x) continuation statements, and (y) to the extent that a
Responsible Officer of the Trust Administrator has received written notice of
such change or transfer, such other statements as may be occasioned by (1) any
change of name of the Seller, the Depositor or the Issuer, (2) any change of
location of the place of business or the chief executive office of the Seller
or the Depositor or (3) any transfer of any interest of the Seller or the
Depositor in any Mortgage Loan.
Neither the Depositor nor the Issuer shall organize under the law of any
jurisdiction other than the State under which each is organized as of the
Closing Date (whether changing its jurisdiction of organization or organizing
under an additional jurisdiction) without giving 30 days' prior written notice
of such action to its immediate and mediate transferee, including the
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Indenture Trustee. Before effecting such change, each of the Depositor or the
Issuer proposing to change its jurisdiction of organization shall prepare and
file in the appropriate filing office any financing statements or other
statements necessary to continue the perfection of the interests of its
immediate and mediate transferees, including the Indenture Trustee, in the
Mortgage Loans. In connection with the transactions contemplated by this
Agreement and the Indenture, each of the Depositor and the Issuer authorizes
its immediate or mediate transferee to file in any filing office any initial
financing statements, any amendments to financing statements, any continuation
statements, or any other statements or filings described in this Section
2.03(b).
(c) The Depositor shall not take any action inconsistent with the sale by
the Depositor of all of its right, title and interest in and to the Trust
Estate and shall indicate or shall cause to be indicated in its records and
records held on its behalf that ownership of each Mortgage Loan and the other
property of the Issuer is held by the Issuer. In addition, the Depositor shall
respond to any inquiries from third parties with respect to ownership of a
Mortgage Loan or any other property of the Trust Estate by stating that it is
not the owner of such Mortgage Loan and that ownership of such Mortgage Loan
or other property of the Trust Estate is held by the Issuer on behalf of the
Noteholders.
Section 2.04. Option to Contribute Derivative Instrument.
At any time on or after the Closing Date, the Seller shall have the right
to contribute to, and deposit into, the Trust a derivative contract or
comparable instrument (a "Derivative Instrument"). The Derivative Instrument
may have a notional amount in excess of the sum of the beneficial interests in
the Trust. Any such instrument shall constitute a fully prepaid agreement. The
Trust Administrator shall have no tax reporting duties with respect to any
such Derivative Instrument.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Depositor and the
Seller.
(a) The Depositor hereby represents and warrants to the Issuer, the
Indenture Trustee for the benefit of Noteholders, the Trust Administrator, the
Master Servicer, the Seller and the Servicer as of the Closing Date or such
other date as is specified, that:
(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 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 transfer by the Depositor to the Trust
Estate of each Mortgage Loan, the Depositor had good and equitable title
to each Mortgage Loan (insofar as such title was conveyed to it by the
Seller) subject to no prior lien, claim,
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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 and interest in the Mortgage Loans to the Trust Estate;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trust Estate with any intent to hinder, delay or defraud any of its
creditors;
(v) The Depositor has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with full power and authority to own its assets and conduct its business
as presently being conducted; and
(b) The Seller hereby represents and warrants to the Issuer, the
Indenture Trustee for the benefit of Noteholders, the Trust Administrator, the
Master Servicer and the Depositor as of the Closing Date or such other date as
is specified, that:
(i) the Seller is a Maryland corporation, duly organized validly
existing and in good standing under the laws of the State of Maryland,
and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Seller is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
any properties owned or leased by it requires such qualification and in
which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or other) of
the Seller;
(ii) the Seller has the corporate power and authority to make,
execute, deliver and perform this Agreement and all of the transactions
contemplated under the Agreement, and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute
the legal, valid and binding obligation of the Seller enforceable in
accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies;
(iii) the Seller 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 consent, license,
approval or authorization, or registration or declaration, 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 violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Seller
or any provision of the articles of incorporation or bylaws of the
Seller, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Seller is a party or by which
the Seller may be bound;
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(v) no litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Seller threatened, against the Seller or any of its
properties or with respect to this Agreement which in the opinion of the
Seller has a reasonable likelihood of resulting in a material adverse
effect on the transactions contemplated by this Agreement; and
(vi) the Seller has been organized in conformity with the
requirements for qualification as a REIT; the Seller has filed an
election to be treated as a REIT for federal income tax purposes; and the
Seller currently qualifies as, and it proposes to operate in a manner
that will enable it to continue to qualify as, a REIT.
(c) The Seller hereby represents and warrants to the Issuer, the
Indenture Trustee for the benefit of Noteholders, the Trust Administrator, the
Master Servicer and the Depositor as of the Closing Date or such other date as
is specified, with respect to the Mortgage Loans, the representations and
warranties set forth in Schedule II of the Mortgage Loan Purchase Agreement.
(d) To the extent that any fact, condition or event with respect to a
Mortgage Loan constitutes a breach of a representation or warranty of the
Seller under subsection (c) above or the Mortgage Loan Purchase Agreement, the
only right or remedy of the Indenture Trustee or any Certificateholder
hereunder shall be their rights to enforce the obligations of the Seller under
any applicable representation or warranty made by it. The Indenture Trustee on
behalf of the Issuer acknowledges that the Depositor shall have no obligation
or liability with respect to any breach of any representation or warranty with
respect to the Mortgage Loans (except as set forth in Section 3.01(a)(ii))
under any circumstances.
Section 3.02. Discovery of Breach. It is understood and agreed that the
representations and warranties (i) of the Depositor set forth in Section
3.01(a), (ii) of the Seller set forth in Section 3.01(b) and (c) and (iii) of
the Servicer pursuant to Section 4.05 of this Agreement, shall each survive
delivery of the Mortgage Files and the Assignment of Mortgage of each Mortgage
Loan to the Indenture Trustee and shall continue throughout the term of this
Agreement. With respect to the representations and warranties which are made
to the best of the Seller's knowledge, if it is discovered by the Depositor,
the Seller, the Trust Administrator, the Indenture Trustee, the Master
Servicer, the Underwriters or the Servicer that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the Mortgage Loans or the interests of the
Noteholders or the Indenture Trustee therein, notwithstanding such Seller's
lack of knowledge with respect to the substance of such representation or
warranty, remedies for breach will apply to such inaccuracy. Any breach of the
representation and warranty set forth in clauses (g), (ss), (tt) and (vv) of
Schedule II of the Mortgage Loan Purchase Agreement shall be deemed to
materially and adversely affect the interest of the Trust in that Mortgage
Loan, notwithstanding the Seller's lack of knowledge with respect to the
substance of such representation and warranty. Upon discovery by any of the
Depositor, the Master Servicer, the Trust Administrator or the Indenture
Trustee of a breach of any of such representations and warranties made by the
Seller that adversely and materially affects the value of the related Mortgage
Loan, the party discovering such breach shall give prompt written notice to
the other parties. Within 60 days of the discovery by the Seller of a breach
of any representation or warranty given to the Indenture Trustee by the Seller
or the
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Seller's receipt of written notice of such a breach, the Seller shall either
(a) cure such breach in all material respects, (b) repurchase such Mortgage
Loan or any property acquired in respect thereof from the Indenture Trustee at
the Purchase Price or (c) substitute a Qualifying Substitute Mortgage Loan for
the affected Mortgage Loan.
Section 3.03. Repurchase, Purchase or Substitution of Mortgage Loans.
(a) With respect to any Mortgage Loan repurchased by the Seller pursuant
to Section 3.02(b) of this Agreement, the principal portion of the funds in
respect of such repurchase of a Mortgage Loan will be considered a Principal
Prepayment and the Purchase Price shall be deposited in the Collection
Account. Upon receipt by the Trust Administrator of the full amount of the
Purchase Price for a Deleted Mortgage Loan and notification thereof has been
made to the Indenture Trustee, or upon receipt of notification from the
Custodian that it had received the Mortgage File for a Qualifying Substitute
Mortgage Loan substituted for a Deleted Mortgage Loan (and any applicable
Substitution Amount), the Indenture Trustee shall release or cause to be
released and reassign to the Depositor or the Seller, as applicable, the
related Mortgage File for the Deleted Mortgage Loan and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as shall be necessary to vest in such
party or its designee or assignee title to any Deleted Mortgage Loan released
pursuant hereto, free and clear of all security interests, liens and other
encumbrances created by this Agreement and the Indenture, which instruments
shall be prepared by the Servicer and the Indenture Trustee shall have no
further responsibility with respect to the Mortgage File relating to such
Deleted Mortgage Loan.
(b) With respect to each Qualifying Substitute Mortgage Loan to be
delivered to the Indenture Trustee (or its custodian) in exchange for a
Deleted Mortgage Loan: (i) the Depositor or the Seller, as applicable, must
deliver to the Indenture Trustee (or a Custodian) the Mortgage File for the
Qualifying Substitute Mortgage Loan containing the documents set forth in
Section 2.01(b) along with a written certification certifying as to the
delivery of such Mortgage File and containing the granting language set forth
in Section 2.01(a); and (ii) the Seller and the Depositor will be deemed to
have made, with respect to such Qualifying Substitute Mortgage Loan, each of
the representations and warranties made by it with respect to the related
Deleted Mortgage Loan. As soon as practicable after the delivery of any
Qualifying Substitute Mortgage Loan hereunder, the Indenture Trustee, at the
expense of the Depositor and at the direction and with the cooperation of the
Servicer shall (i) with respect to a Qualifying Substitute Mortgage Loan that
is a Non-MERS Mortgage Loan, cause the Assignment of Mortgage to be recorded
by the Servicer if required pursuant to Section 2.01(c), or (ii) with respect
to a Qualifying Substitute Mortgage Loan that is a MERS Mortgage Loan, cause
to be taken such actions as are necessary to cause the Indenture Trustee (on
behalf of the Issuer) to be clearly identified as the owner of each such
Mortgage Loan on the records of MERS if required pursuant to Section 2.01(c).
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE
MORTGAGE LOANS BY THE SERVICER
Section 4.01. Seller's Engagement of Servicer to Perform Servicing
Responsibilities.
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(a) Contract for Servicing; Possession of Servicing Files. The Seller, as
the owner of the servicing rights, by execution and delivery of this
Agreement, does hereby contract with the Servicer for the servicing of the
Mortgage Loans for the benefit of the Issuer and the Indenture Trustee. The
Servicer shall maintain a Servicing File with respect to each Mortgage Loan in
order to service such Mortgage Loans pursuant to this Agreement and each
Servicing File delivered to the Servicer shall be held in trust by the
Servicer for the benefit of the Issuer and the Indenture Trustee; provided,
however, that the Servicer shall not have any liability for any Servicing
Files (or portions thereof) not delivered by the Seller. The Servicer's
possession of any portion of the Mortgage Loan documents shall be at the will
of the Indenture Trustee for the sole purpose of facilitating servicing of the
related Mortgage Loan pursuant to this Agreement, and such retention and
possession by the Servicer shall be in a custodial capacity only. The
ownership of each Mortgage Note, Mortgage, and the contents of the Servicing
File shall be vested in the Indenture Trustee and the ownership of all records
and documents with respect to the related Mortgage Loan prepared by or which
come into the possession of the Servicer shall immediately vest in the
Indenture Trustee and shall be retained and maintained, in trust, by the
Servicer at the will of the Indenture Trustee in such custodial capacity only.
The Servicing File retained by the Servicer pursuant to this Agreement shall
be identified in accordance with the Servicer's file tracking system to
reflect the ownership of the related Mortgage Loan by the Indenture Trustee.
The Servicer shall release from its custody the contents of any Servicing File
retained by it only in accordance with this Agreement.
(b) Books and Records. All rights arising out of the Mortgage Loans shall
be vested in the Indenture Trustee, subject to the Servicer's rights to
service and administer the Mortgage Loans hereunder in accordance with the
terms of this Agreement. All funds received on or in connection with a
Mortgage Loan, other than the Master Servicing Fee, the Servicing Fee and
other compensation and reimbursement to which the Servicer and the Master
Servicer are entitled as set forth herein, including but not limited to
Section 4.04(c), Section 5.07(e) and Section 5.21 shall be received and held
by them in trust for the benefit of the Indenture Trustee pursuant to the
terms of this Agreement.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 4.02(a) within one week
of their execution; provided, however, that the Servicer shall provide the
Custodian with a Servicer certified true copy of any such document submitted
for recordation within one week of its execution, and shall provide the
original of any document submitted for recordation or a copy of such document
certified by the appropriate public recording office to be a true and complete
copy of the original within 120 days of its submission for recordation.
Section 4.02. Servicing of the Mortgage Loans.
(a) Servicer to Service. The Servicer, acting directly or through one or
more sub-servicers as provided in Section 4.09 shall service and administer
the Mortgage Loans from and after the Closing Date and, except where prior
consent or approval of the Master Servicer is required under this Agreement,
shall have full power and authority, acting alone, to do any and all things in
connection with such servicing and administration which the Servicer may deem
46
necessary or desirable, consistent with the terms of this Agreement and with
the Servicing Standard.
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, including (i) waiving any late payment charge and (ii) extending
the due dates for payments due on a Mortgage Note for a period not greater
than 120 days; provided, however, that the maturity of any Mortgage Loan shall
not be extended past the date on which the final payment is due on the latest
maturing Mortgage Loan as of the Cut-off Date. Such waiver, modification,
postponement or indulgence may be made if in the Servicer's reasonable and
prudent determination such waiver, modification, postponement or indulgence is
not materially adverse to the interests of the Issuer, the Indenture Trustee
and the Noteholders; provided, however, that unless the Servicer has obtained
the prior written consent of the Master Servicer, the Servicer shall not
permit any modification with respect to any Mortgage Loan that would change
the Mortgage Rate, defer or forgive the payment of principal or interest,
reduce or increase the outstanding principal balance (except for actual
payments of principal) or change the final maturity date on such Mortgage
Loan, other than as provided in clauses (i) and (ii) of the immediately
preceding sentence. In the event of any such modification which permits the
deferral of interest or principal payments on any Mortgage Loan, the Servicer
shall, on the Business Day immediately preceding the Servicer Remittance Date
in any month in which any such principal or interest payment has been
deferred, make an Advance in accordance with Section 4.03(c) in an amount
equal to the difference between (a) such month's principal and one month's
interest at the Mortgage Loan Remittance Rate on the unpaid principal balance
of such Mortgage Loan and (b) the amount paid by the Mortgagor. The Servicer
shall be entitled to reimbursement for such advances to the same extent as for
all other Advances made pursuant to Section 4.03. 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, the
Issuer and the Indenture 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 Properties. The Indenture Trustee shall execute and deliver to
the Servicer powers of attorney (on the standard form used by the Indenture
Trustee) and other documents, furnished to it by the Servicer and reasonably
satisfactory to the Indenture Trustee, necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement; provided that the Indenture Trustee shall not be liable for the
actions of the Servicer under any such powers of attorney. Promptly after the
execution of any assumption, modification, consolidation or extension of any
Mortgage Loan, the Servicer shall forward to the Master Servicer copies of any
documents evidencing such assumption, modification, consolidation or
extension.
In servicing and administering the Mortgage Loans, the Servicer shall
adhere to the Servicing Standard. Notwithstanding the appointment of any
sub-servicer pursuant to Section 4.09, the Servicer shall remain liable for
the performance of all of the servicing obligations and responsibilities under
this Agreement.
(b) Servicer Discretion. In managing the liquidation of defaulted
Mortgage Loans, the Servicer will have sole discretion, subject to the terms
of this Agreement, to sell defaulted Mortgage Loans; provided, however, that
the Servicer shall not take any action that is
47
inconsistent with or prejudices the interests of the Noteholders in any
Mortgage Loan or the rights and interests of the Depositor, the Indenture
Trustee and the Noteholders under this Agreement.
(c) Collection and Liquidation of Mortgage Loans. Continuously from the
Closing Date, until the date each Mortgage Loan ceases to be subject to this
Agreement, the Servicer shall proceed diligently to collect all payments due
under each of the Mortgage Loans when the same shall become due and payable
and shall take special care in ascertaining and estimating Escrow Payments and
all other charges that will become due and payable with respect to the
Mortgage Loans and each related Mortgaged Property, to the end that the
installments payable by the Mortgagors will be sufficient to pay such charges
as and when they become due and payable.
The Servicer shall use its best efforts, consistent with the Servicing
Standard to foreclose upon or otherwise comparably convert the ownership of
such Mortgaged Properties as come into and continue in default and as to which
no satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 4.02(a). The Servicer shall use its best efforts to
realize upon defaulted Mortgage Loans in such a manner as will maximize the
receipt of principal and interest by the Trust, taking into account, among
other things, the timing of foreclosure proceedings. The foregoing is subject
to the provisions that, in any case in which Mortgaged Property shall have
suffered damage, the Servicer shall not be required to expend its own funds
toward the restoration of such property unless it shall determine in its
discretion (i) that such restoration will increase the proceeds of liquidation
of the related Mortgage Loan to the Issuer after reimbursement to itself for
such expenses, and (ii) that such expenses will be recoverable by the Servicer
through Insurance Proceeds or Liquidation Proceeds from the related Mortgaged
Property. In the event that any payment due under any Mortgage Loan and not
otherwise postponed, deferred or waived pursuant to Section 4.02 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 (1) shall be consistent with the Servicing Standard and (2) the
Servicer shall determine prudently to be in the best interest of the Issuer,
the Indenture Trustee and the Noteholders. In the event that any payment due
under any Mortgage Loan is not otherwise postponed, deferred or waived
pursuant to Section 4.02(a) and remains delinquent for a period of 105 days or
any other default continues for a period of 105 days beyond the expiration of
any grace or cure period, the Servicer shall commence foreclosure proceedings.
The Servicer shall notify the Master Servicer in writing of the commencement
of foreclosure proceedings on a monthly basis no later than the fifth Business
Day of each month (which notification may be included within the monthly
reports submitted to the Master Servicer under Section 4.03(b) this
Agreement). In such connection, the Servicer shall be responsible for all
costs and expenses incurred by it in any such proceedings; provided, however,
that it shall be entitled to reimbursement thereof from the related Mortgaged
Property, as contemplated in Sections 4.02(e) and 4.02(p) or as otherwise
provided in Section 4.02(e)(4).
Notwithstanding the generality of the preceding paragraph, the Servicer
shall take such actions generally in accordance with the Servicer's
established default timeline and in accordance with the Servicing Standard
with respect to each Mortgage Loan and Mortgagor for
48
which there is a delinquency until such time as the related Mortgagor is
current with all payments due under the Mortgage Loan.
(d) Establishment of and Deposits to Custodial Account.
(i) The Servicer shall segregate and hold all funds collected and
received pursuant to the Mortgage Loans separate and apart from any of
its own funds and general assets and shall initially establish and
maintain one or more Custodial Accounts, in the form of time deposit or
demand accounts, each of which accounts shall be titled "Aames Capital
Corporation in trust for Deutsche Bank National Trust Company, as
Indenture Trustee, for Aames Mortgage Investment Trust 2005-2 Mortgage
Backed Notes, Series 2005-2" and referred to herein as a "Custodial
Account." Each Custodial Account shall be an Eligible Account. Any funds
deposited in the Custodial Account may be invested in Eligible
Investments subject to the provisions of Section 4.02(j) hereof. Funds
deposited in the Custodial Account may be drawn on by the Servicer in
accordance with Section 4.02(e) hereof. The creation of any Custodial
Account shall be evidenced by a letter agreement in the form of Exhibit E
hereto. A copy of such certification or letter agreement shall be
furnished to the Indenture Trustee, the Master Servicer and, upon
request, to any subsequent owner of the Mortgage Loans. The Servicer
shall deposit or cause to be deposited into the Custodial Account, no
later than the Business Day following the Closing Date, any amounts
received with respect to the Mortgage Loans representing Scheduled
Payments on the Mortgage Loans due after the Cut-off Date and unscheduled
payments received on or after the Cut-off Date and on or before the
Closing Date.
(ii) The Servicer shall deposit in the Custodial Account on a daily
basis, but not more than two (2) Business Days after receipt by the
Servicer and retain therein, the following collections received by the
Servicer and payments made by the Servicer after the related Cut-off Date
(other than scheduled payments of principal and interest due on or before
the related Cut-off Date), as applicable:
(1) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments and all Prepayment Premiums;
(2) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(3) all Liquidation Proceeds (net of Liquidation Expenses);
(4) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 4.02(k) (other than proceeds to be
held in the Escrow Account and applied to the restoration and repair
of the Mortgaged Property or released to the Mortgagor in accordance
with Section 4.02(k));
(5) all Condemnation Proceeds that are not applied to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with Section 4.02(o);
49
(6) with respect to each Principal Prepayment in full or in
part, the Prepayment Interest Shortfall Amount, if any, for the
month of payment. Such deposit shall be made from the Servicer's own
funds, without reimbursement therefor, up to a maximum amount per
month in the aggregate of the Servicing Fee, actually received for
such month for the Mortgage Loans;
(7) all Advances made by the Servicer pursuant to Section
4.03(c);
(8) any amounts received from the Seller, the Depositor or any
other person giving representations and warranties with respect to
the Mortgage Loans, in connection with the repurchase of any
Mortgage Loan;
(9) any amounts required to be deposited by the Servicer
pursuant to Section 4.02(k) in connection with the deductible clause
in any blanket hazard insurance policy;
(10) any amounts received with respect to or related to any REO
Property or REO Disposition Proceeds pursuant to Section 4.02(p);
and
(11) any other amounts required to be deposited in the
Custodial Account pursuant to this Agreement.
The foregoing requirements for deposit into the Custodial Account
shall be exclusive, it being understood and agreed that, without limiting
the generality of the foregoing, payments in the nature of the Servicing
Fee, Prepayment Interest Excess Amounts and Ancillary Income need not be
deposited by the Servicer into the Custodial Account. Any interest paid
on funds deposited in the Custodial Account by the depository institution
maintaining such account shall accrue to the benefit of the Servicer and
the Servicer shall be entitled to retain and withdraw such interest from
the Custodial Account pursuant to Section 4.02(e). Additionally, any
other benefit derived from the Custodial Account associated with the
receipt, disbursement and accumulation of principal, interest, taxes,
hazard insurance, mortgage insurance, etc. shall accrue to the Servicer.
(iii) The Servicer agrees that it shall not create, incur or subject
any Mortgage Loans, or any funds that are deposited in any Custodial
Account or Escrow Account, or any funds that otherwise are or may become
due or payable to or for the benefit of the Indenture Trustee, to any
claim, lien, security interest, judgment, levy, writ of attachment or
other encumbrance, nor assert by legal action or otherwise any claim or
right of setoff against any Mortgage Loan or any funds collected on, or
in connection with, a Mortgage Loan.
(iv) The Servicer shall be responsible for reviewing and reconciling
each Custodial Account and Escrow Account in accordance with industry
standards of prudent residential mortgage loan servicers, and shall act
promptly to resolve any discrepancies in any such account. The Servicer
shall be responsible and liable for all expenses incurred by the other
parties hereto resulting from, and all consequences for, the Servicer's
failure to properly and promptly reconcile each such account.
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(e) Permitted Withdrawals from Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(1) to make payments to the Master Servicer in the amounts and in
the manner provided for in Section 4.03(a);
(2) in the event the Servicer has elected not to retain the
Servicing Fee out of any Mortgagor payments on account of interest or
other recovery of interest with respect to a particular Mortgage Loan
(including late collections of interest on such Mortgage Loan, or
interest portions of Insurance Proceeds, Liquidation Proceeds or
Condemnation Proceeds) prior to the deposit of such Mortgagor payment or
recovery into the Custodial Account, to pay to itself the related
Servicing Fee from all such Mortgagor payments on account of interest or
other such recovery for interest with respect to that Mortgage Loan;
(3) to reimburse itself for unreimbursed Advances and Servicing
Advances, the Servicer's right to reimburse itself pursuant to this
subclause (3) with respect to any Mortgage Loan being limited to related
Liquidation Proceeds (net of Liquidation Expenses), Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and other amounts
received in respect of the related REO Property, and such other amounts
as may be collected by the Servicer from the Mortgagor or otherwise
relating to such Mortgage Loan, it being understood that, in the case of
any such reimbursement, the Servicer's right thereto shall be prior to
the rights of the Noteholders;
(4) to reimburse itself for any previously unreimbursed Advances or
Servicing Advances that it determines are Nonrecoverable Advances, it
being understood, in the case of each such reimbursement, that the
Servicer's right thereto shall be prior to the rights of the Noteholders;
(5) to pay itself investment earnings on funds deposited in the
Custodial Account;
(6) to transfer funds to another Eligible Account in accordance with
Section 4.02(j) hereof;
(7) to invest funds in certain Eligible Investments in accordance
with Section 4.02(d)(i) and Section 4.02(j) hereof;
(8) to withdraw funds deposited in error;
(9) to clear and terminate the Custodial Account upon the
termination of this Agreement; and
(10) to pay itself any Prepayment Interest Excess Amount.
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(f) Establishment of and Deposits to Escrow Account. The Servicer shall
segregate and hold all funds collected and received pursuant to a Mortgage
Loan constituting 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, titled "Aames
Capital Corporation in trust for Deutsche Bank National Trust Company, as
Indenture Trustee, for Aames Mortgage Investment Trust 2005-2." The Escrow
Accounts shall be established with an Eligible Institution. Nothing herein
shall require the Servicer to compel a Mortgagor to establish an Escrow
Account in violation of applicable law. Funds deposited in the Escrow Account
may be drawn on by the Servicer in accordance with Section 4.02(g). The
creation of any Escrow Account shall be evidenced by a letter agreement in the
form of Exhibit F hereto. A copy of such certification or letter agreement
shall be furnished to the Master Servicer.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, 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 amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 4.02(g). The Servicer shall be entitled to retain any interest
earnings 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. To the extent required by law, the Servicer shall pay
interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account may be non-interest bearing or the interest earnings paid thereon are
insufficient for such purposes.
(g) Permitted Withdrawals from Escrow Account. Withdrawals from the
Escrow Account or Accounts may be made by the Servicer only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to reimburse the Servicer for any Servicing Advance of an
Escrow Payment made by the Servicer with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan which
represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of
the amounts required to be escrowed under the terms of the related
Mortgage Loan;
(iv) to the extent permitted by applicable law, for transfer to the
Custodial Account and application to reduce the principal balance of the
Mortgage Loan in accordance with the terms of the related Mortgage and
Mortgage Note;
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(v) for application to restoration or repair of the Mortgaged
Property in accordance with Section 4.02(o);
(vi) to pay to the Servicer, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account;
and
(vii) to clear and terminate the Escrow Account on the termination
of this Agreement.
The Servicer will be responsible for the administration of the Escrow
Accounts and will be obligated to make Servicing Advances to the Escrow
Account in respect of its obligations under this 4.02(g), reimbursable from
the Escrow Accounts or Custodial Account to the extent not collected from the
related Mortgagor, anything to the contrary notwithstanding, when and as
necessary to avoid the lapse of insurance coverage on the Mortgaged Property,
or which the Servicer knows, or in servicing the Mortgage Loans in accordance
with the Servicing Standard should know, is necessary to avoid the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien. If any such payment has not been made and the Servicer receives notice
of a tax lien with respect to the Mortgage being imposed, the Servicer will
advance or cause to be advanced funds (which will constitute a Servicing
Advance) necessary to discharge such lien on the Mortgaged Property in order
to prevent loss of title to the Mortgaged Property.
(h) Notification of Adjustments. With respect to each Mortgage Loan, the
Servicer shall adjust the Mortgage Rate on the related interest rate
adjustment date and shall adjust the Scheduled Payment on the related mortgage
payment adjustment date, if applicable, in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note. The Servicer shall
execute and deliver any and all necessary notices required under applicable
law and the terms of the related Mortgage Note and Mortgage regarding the
Mortgage Rate and Scheduled Payment adjustments. The Servicer shall promptly,
upon written request therefor, deliver to the Master Servicer such
notifications and any additional applicable data regarding such adjustments
and the methods used to calculate and implement such adjustments. Upon the
discovery by the Servicer or the receipt of notice from the Master Servicer
that the Servicer has failed to adjust a Mortgage Rate or Scheduled Payment in
accordance with the terms of the related Mortgage Note, the Servicer shall
immediately deposit in the Custodial Account from its own funds the amount of
any interest loss or deferral caused the Seller thereby.
(i) Payment of Taxes, Insurance and Other Charges.
(i) With respect to each Mortgage Loan which provides for Escrow
Payments, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates, sewer rents, and
other charges which are or may become a lien upon the Mortgaged Property
and the status of fire and hazard insurance coverage and shall obtain,
from time to time, all bills for the payment of such charges (including
renewal premiums) ("Property Charges") and shall effect payment thereof
prior to the applicable penalty or termination date, 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
53
the terms of the Mortgage. The Servicer shall effect timely payment of
all such charges (which will constitute Servicing Advances) irrespective
of each Mortgagor's faithful performance in the payment of the same or
the making of the Escrow Payments if necessary to avoid a lien or loss on
the Mortaged Property.
(ii) To the extent that a Mortgage does not provide for Escrow
Payments, the Servicer shall make Servicing Advances from its own funds
to effect payment of all Property Charges upon receipt of notice of any
failure to pay on the part of the Mortgagor, or at such other time as the
Servicer determines to be in the best interest of the Trust; provided,
that in any event the Servicer shall pay such charges on or before any
date by which payment is necessary to preserve the lien status of the
Mortgage. The Servicer shall pay any late fee or penalty (which will
constitute Servicing Advances) which is payable due to any delay in
payment of any Property Charge and necessary to avoid a lien on or loss
on Mortgage Property.
(j) Protection of Accounts. The Servicer may transfer the Custodial
Account or the Escrow Account to a different Eligible Institution from time to
time. Such transfer shall be made only upon obtaining the consent of the
Master Servicer, which consent shall not be withheld unreasonably, and the
Servicer shall give notice to the Master Servicer and the Indenture Trustee of
any change in the location of the Custodial Account.
The Servicer shall bear any expenses, losses or damages sustained by
the Master Servicer or the Indenture Trustee if the Custodial Account and/or
the Escrow Account are not Eligible Accounts.
Amounts on deposit in the Custodial Account may be invested at the
option of the Servicer, but only in Eligible Investments. Any such Eligible
Investment with respect to the Custodial Account shall mature no later than
two (2) Business Days prior to the Servicer Remittance Date in each month;
provided, however, that if such Eligible Investment is an obligation of an
Eligible Institution (other than the Servicer) that maintains the Custodial
Account, then such Eligible Investment may mature on the related Servicer
Remittance Date. Any such Eligible Investment shall be made in the name of the
Servicer in trust for the benefit of the Indenture Trustee. All income on or
gain realized from any such Eligible Investment shall be for the benefit of
the Servicer and may be withdrawn at any time by the Servicer. Any losses
incurred in respect of any such investment shall be deposited in the Custodial
Account by the Servicer out of its own funds immediately as realized. If, at
any time, the amount on deposit in the Custodial Account exceeds the amount of
the applicable FDIC insurance, such excess above the amount of the applicable
FDIC insurance shall be invested in Eligible Investments.
(k) Maintenance of Hazard Insurance. The Servicer shall cause to be
maintained for each Mortgage Loan hazard insurance such that all buildings
upon the related Mortgaged Property are insured by a generally acceptable
insurer acceptable under the Servicing Standard against loss by fire, hazards
of extended coverage and such other hazards as are customary in the area where
the Mortgaged Property is located, in an amount which is at least equal to the
lesser of (i) the replacement value of the improvements securing such Mortgage
Loan and (ii) the greater of (a) the outstanding principal balance of the
Mortgage Loan plus accrued interest thereon and the good faith estimate of the
Servicer of the related Liquidation Expenses to be
54
incurred in connection therewith and (b) an amount such that the proceeds
thereof shall be sufficient to prevent the Mortgagor or the loss payee from
becoming a co-insurer. The Servicer shall be under no obligation to require
any Mortgagor to obtain earthquake or other additional insurance and shall be
under no obligation itself to maintain any such additional insurance on
property acquired in respect of a Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance.
If upon origination of the Mortgage Loan the related Mortgaged Property
was located in an area identified in the Federal Register by the Flood
Emergency Management Agency as having special flood hazards (and such flood
insurance has been made available), a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
shall be in effect with a generally acceptable insurance carrier acceptable
under the Servicing Standard in an amount representing coverage equal to the
lesser of (i) the minimum amount required, under the terms of coverage, to
compensate for any damage or loss on a replacement cost basis (or the unpaid
balance of the mortgage if replacement cost coverage is not available for the
type of building insured) and (ii) the maximum amount of insurance which is
available under the Flood Disaster Protection Act of 1973, as amended. If at
any time during the term of the Mortgage Loan, the Servicer determines in
accordance with applicable law and pursuant to the Servicing Standard that a
Mortgaged Property is located in a special flood hazard area and is not
covered by flood insurance or is covered in an amount less than the amount
required by the Flood Disaster Protection Act of 1973, as amended, the
Servicer shall notify the related Mortgagor that the Mortgagor must obtain
such flood insurance coverage, and if said Mortgagor fails to obtain the
required flood insurance coverage within thirty (30) days after such
notification, the Servicer shall immediately force place the required flood
insurance on the Mortgagor's behalf.
The Servicer shall cause to be maintained on each Mortgaged Property
such other or additional insurance as may be required pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance, or pursuant to the requirements of any
private mortgage guaranty insurer, or as may be required to conform with the
Servicing Standard.
In the event that the Master Servicer or the Servicer shall determine
that the Mortgaged Property should be insured against loss or damage by
hazards and risks not covered by the insurance required to be maintained by
the Mortgagor pursuant to the terms of the Mortgage, the Servicer shall
communicate and consult with the Mortgagor with respect to the need for such
insurance and bring to the Mortgagor's attention the desirability of
protection of the Mortgaged Property.
All policies required hereunder shall name the Servicer as loss payee
and shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days' prior written notice
of any cancellation, reduction in amount or material change in coverage.
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 are
55
generally acceptable under the Servicing Standard. The Servicer shall
determine that such policies provide sufficient risk coverage and amounts,
that they insure the property owner, and that they properly describe the
property address. The Servicer shall notify the Mortgagor of the expiration of
any such insurance and, prior to force placing any insurance, will permit the
Mortgagor a grace period (not to exceed 60 days) to obtain renewal coverage.
Pursuant to Section 4.02(d), 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 related Mortgaged
Property, or property acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor, in accordance with the Servicer's normal servicing
procedures) shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.02(e).
(l) Maintenance of Mortgage Impairment Insurance. In the event that the
Servicer shall obtain and maintain a blanket policy insuring against losses
arising from fire and hazards covered under extended coverage 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 4.02(k) and otherwise
complies with all other requirements of Section 4.02(k), it shall conclusively
be deemed to have satisfied its obligations as set forth in Section 4.02(k).
Any amounts collected by the Servicer under any such policy relating to a
Mortgage Loan shall be deposited in the Custodial Account subject to
withdrawal pursuant to Section 4.02(e). Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained
on the related Mortgaged Property a policy complying with Section 4.02(k), and
there shall have been a loss which would have been covered by such policy, the
Servicer shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the Servicer's funds, without
reimbursement therefor. Upon request of the Master Servicer or the Indenture
Trustee, the Servicer shall cause to be delivered to such person 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 30 days'
prior written notice to the Master Servicer and the Indenture Trustee.
(m) Maintenance of Fidelity Bond and Errors and Omissions Insurance. The
Servicer shall maintain with responsible companies, at its own expense, a
blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Servicer Employees"). Any such Fidelity Bond and Errors
and Omissions Insurance Policy 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 Servicer Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Servicer against
losses in connection with the release or satisfaction of a Mortgage Loan
without having obtained payment in full of the indebtedness secured thereby.
No provision of this Section 4.02(m) requiring such Fidelity Bond and Errors
and Omissions Insurance Policy 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
coverage amounts which are acceptable for the Servicer as determined by Fannie
Mae and
56
Freddie Mac. Upon the request of the Master Servicer or the Indenture Trustee,
the Servicer shall cause to be delivered to such party a certified true copy
of such fidelity bond and insurance policy and a statement from the surety and
the insurer that such fidelity bond and insurance policy shall in no event be
terminated or materially modified without 30 days' prior written notice to the
Master Servicer and the Indenture Trustee.
(n) Inspections. The Servicer shall inspect the Mortgaged Property as
often as deemed necessary by the Servicer to assure itself that the value of
the Mortgaged Property is being preserved. In addition, the Servicer shall
inspect the Mortgaged Property and/or take such other actions as may be
necessary or appropriate in accordance with the Servicing Standard or as may
be required by the primary mortgage guaranty insurer. The Servicer shall keep
a written report of each such inspection.
(o) Restoration of Mortgaged Property. The Servicer need not obtain the
approval of the Master Servicer or the Indenture Trustee prior to releasing
any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied
to the restoration or repair of the Mortgaged Property if such release is in
accordance with the Servicing Standard. At a minimum, the Servicer shall
comply with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
(i) the Servicer shall receive satisfactory independent verification
of completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Servicer shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens; and
(iii) pending repairs or restoration, the Servicer shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
(p) Title, Management and Disposition of REO Property. In the event that
title to any Mortgaged Property is acquired in foreclosure or by deed in lieu
of foreclosure, the deed or certificate of sale shall be taken in the name of
the Indenture Trustee or its nominee (which shall include the Servicer) in
trust for the benefit of the Noteholders, or in the event the Indenture
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 (with
a copy delivered to the Indenture Trustee) from any attorney duly licensed to
practice law in the state where the REO Property is located. The Person or
Persons holding such title other than the Indenture Trustee shall acknowledge
in writing that such title is being held as nominee for the Indenture Trustee.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Indenture Trustee solely for the purpose of its prompt
disposition and sale. The Servicer, either itself or through an agent selected
by the Servicer, shall manage, conserve, protect and operate the REO Property
in the same manner that it manages, conserves, protects and operates
57
other foreclosed property for its own account, and in the same manner that
similar property in the same locality as the REO Property is managed. The
Servicer shall attempt to sell the same (and may temporarily rent the same for
a period not greater than one year, except as otherwise provided below) on
such terms and conditions as the Servicer deems to be in the best interest of
the Issuer, the Indenture Trustee and the Noteholders.
If the Servicer hereafter becomes aware that a Mortgaged Property is an
Environmental Problem Property, the Servicer will notify the Master Servicer
of the existence of the Environmental Problem Property. Additionally, the
Servicer shall set forth in such notice a description of such problem, a
recommendation to the Master Servicer relating to the proposed action
regarding the Environmental Problem Property, and the Servicer shall carry out
the recommendation set forth in such notice. Notwithstanding the foregoing,
the Servicer shall obtain the Master Servicer's prior written consent to any
expenditures proposed to remediate Environmental Problem Properties or to
defend any claims associated with Environmental Problem Properties if such
expenses, in the aggregate, are expected to exceed $100,000. Failure to
provide written notice of disapproval of the expenditure within five (5)
Business Days of receipt of such request for prepaid expenditures shall be
deemed an approval of such expenditure. If the Servicer has received reliable
instructions to the effect that a Mortgaged Property is an Environmental
Problem Property (e.g., Servicer obtains a broker's price opinion which
reveals the potential for such problem), the Servicer will not accept a
deed-in-lieu of foreclosure upon any such Mortgaged Property without first
obtaining a preliminary environmental investigation for that Mortgaged
Property.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property
and, to the extent required and available under the Flood Disaster Protection
Act of 1973, as amended, flood insurance in the amount required above, which
may be in the form of a blanket policy. Any amounts collected by the Servicer
under any such policy relating to a Mortgage Loan shall be deposited in the
Custodial Account subject to withdrawal pursuant to Section 4.02(e). Such
policy may contain a deductible clause, in which case, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 4.02(k), and there shall have been a loss which would
have been covered by such policy, the Servicer shall deposit in the Custodial
Account at the time of such loss the amount not otherwise payable under the
blanket policy because of such deductible clause, such amount to deposited
from the Servicer's funds, without reimbursement therefor.
The proceeds of sale of the REO Property shall be promptly deposited in
the Custodial Account. As soon as practical thereafter the expenses of such
sale shall be paid and the Servicer shall reimburse itself pursuant to Section
4.02(e) for any related unreimbursed Servicing Advances, unpaid Servicing Fees
and unreimbursed advances made pursuant to this Section or Section 4.03.
The Servicer shall make Servicing Advances of all funds necessary for
the proper operation, management and maintenance of the REO Property,
including the cost of maintaining any hazard insurance pursuant to Section
4.02(k), such advances to be reimbursed from the disposition or liquidation
proceeds of the REO Property or pursuant to Section 4.02(e)(4). The
58
Servicer shall make monthly remittances on each Servicer Remittance Date to
the Master Servicer of the net cash flow from the REO Property (which shall
equal the revenues from such REO Property net of the expenses described in
this Section 4.02(p) and of any reserves reasonably required from time to time
to be maintained to satisfy anticipated liabilities for such expenses).
(q) Real Estate Owned Reports. Together with the statement furnished
pursuant to Section 4.03(b), the Servicer shall furnish to the Master Servicer
on or before the 18th calendar day in each month a statement with respect to
any REO Property covering the operation of such REO Property for the previous
month and the Servicer's efforts in connection with the sale of such REO
Property and any rental of such REO Property incidental to the sale thereof
for the previous month. That statement shall be accompanied by such other
information as the Master Servicer shall reasonably request.
(r) Liquidation Reports. Upon the foreclosure sale of any Mortgaged
Property or the acquisition thereof by the Indenture Trustee pursuant to a
deed in lieu of foreclosure, the Servicer shall submit to the Indenture
Trustee and the Master Servicer a monthly liquidation report with respect to
such Mortgaged Property.
(s) Reports of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property, the
Servicer shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code.
(t) Prepayment Premiums. The Servicer or any designee of the Servicer
shall not waive any Prepayment Premium with respect to any Mortgage Loan that
contains a Prepayment Premium and that prepays during the term of the premium.
If the Servicer or its designee fails to collect the Prepayment Premium upon
any prepayment of any Mortgage Loan that contains a Prepayment Premium, the
Servicer shall pay to the Master Servicer or the Trust Administrator at such
time (by deposit to the Custodial Account) an amount equal to amount of the
Prepayment Premium that was not collected. Notwithstanding the above, the
Servicer or its designee may waive a Prepayment Premium without paying the
Issuer the amount of the Prepayment Premium if (i) the Mortgage Loan is in
default (defined as 61 days or more delinquent) and such waiver would maximize
recovery of total proceeds taking into account the value of such Prepayment
Premium and the related Mortgage Loan or (ii) if the prepayment is not a
result of a refinancing by the Servicer or any of its affiliates and the
Mortgage Loan is foreseen to be in default and such waiver would maximize
recovery of total proceeds taking into account the value of such Prepayment
Premium and the related Mortgage Loan or (iii) the collection of the
Prepayment Premium would be in violation of applicable federal, state or local
laws or would be deemed "predatory" thereunder.
(u) Compliance with Safeguarding Customer Information Requirements. The
Servicer has implemented and will maintain security measures designed to meet
the objectives of the Interagency Guidelines Establishing Standards for
Safeguarding Customer Information published in final form on February 1, 2001,
66 Fed. Reg. 8616, and the rules promulgated thereunder, as amended from time
to time (the "Guidelines").
59
(v) Presentment of Claims and Collection of Proceeds. The Servicer shall
prepare and present on behalf of the Indenture Trustee and the Noteholders all
claims under the Insurance Policies with respect to the Mortgage Loans, and
take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such policies. Any proceeds disbursed to the Servicer in respect of such
policies or bonds shall be promptly deposited in the Custodial Account upon
receipt, except that any amounts realized that are to be applied to the repair
or restoration of the related Mortgaged Property as a condition requisite to
the presentation of claims on the related Mortgage Loan to the insurer under
any applicable Insurance Policy need not be so deposited (or remitted).
(w) Purchase of Defaulted Mortgage Loans. The Servicer, in its sole
discretion, shall have the right to elect (by written notice sent to the
Indenture Trustee and the Trust Administrator) to purchase for its own account
from the Trust Estate any Mortgage Loan that is 90 days or more Delinquent at
a price equal to the Purchase Price; provided, however, that the Servicer may
only exercise this right on or after the last day of the calendar month in
which such Mortgage Loan became 90 days Delinquent (such month, the "Eligible
Purchase Month"); provided further, that any such Mortgage Loan which becomes
current but thereafter becomes Delinquent may only be purchased by the
Servicer pursuant to this Section 4.02(w) in any ensuing Eligible Purchase
Month. The principal portion of the funds in respect of such purchase of a
Mortgage Loan will be considered a Principal Prepayment and the Purchase Price
shall be deposited in the Collection Account. Upon receipt by the Trust
Administrator of the full amount of the Purchase Price for such Mortgage Loan
and notification thereof has been made to the Indenture Trustee, the Indenture
Trustee shall release or cause to be released and reassign to the Servicer the
related Mortgage File for such Mortgage Loan and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be necessary to vest in such party or its
designee or assignee title to any such Mortgage Loan released pursuant hereto,
free and clear of all security interests, liens and other encumbrances created
by this Agreement and the Indenture, which instruments shall be prepared by
the Servicer and the Indenture Trustee shall have no further responsibility
with respect to the Mortgage File relating to such 90 days Delinquent Mortgage
Loan purchased by the Seller.
(x) Seller Financial Covenant Termination Events. The Servicer shall
notify the Master Servicer and the Trust Administrator in writing promptly
following the occurrence of a Seller Financial Covenant Termination Event. The
Master Servicer and the Trust Administrator will have no obligation to
independently determine or verify whether such a Seller Financial Covenant
Termination Event has occurred and will rely solely on the written
notification provided by the Servicer. In calculating the Seller Financial
Covenant Termination Event numbers, the Servicer will use a consolidated
balance sheet and a consolidated income statement prepared in accordance with
U.S. GAAP and consistent with the audited financial statements of the Seller
to calculate the Seller Financial Covenant Termination Event numbers.
Section 4.03. Payments To the Master Servicer.
(a) Remittances. On each Servicer Remittance Date, the Servicer shall
remit on a scheduled/scheduled basis by wire transfer of immediately available
funds to the Master Servicer (a) all amounts deposited in the Custodial
Account as of the close of business on the last day of the related Collection
Period (net of charges against or withdrawals from the Custodial Account
60
pursuant to Section 4.02(e)), plus (b) all Advances, if any, which the
Servicer is obligated to make pursuant to Section 4.03(c), minus (c) any
amounts attributable to Principal Prepayments, Liquidation Proceeds, Insurance
Proceeds, Condemnation Proceeds or REO Disposition Proceeds received after the
applicable Prepayment Period, which amounts shall be remitted on the following
Servicer Remittance Date, together with any Compensating Interest required to
be deposited in the Custodial Account in accordance with Section
4.02(d)(ii)(6) and Section 4.04(c), and minus (d) any amounts attributable to
Scheduled Payments collected but due on a Due Date or Due Dates subsequent to
the first day of the month in which such Servicer Remittance Date occurs,
which amounts shall be remitted on the Servicer Remittance Date next
succeeding the Due Date related to such Scheduled Payment.
With respect to any remittance received by the Master Servicer after
the Servicer Remittance Date on which such remittance was due as provided
above, the Servicer shall pay to the Master Servicer interest on any such late
remittance at an annual rate equal to the Prime Rate, adjusted as of the date
of each change, plus three percentage points, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be deposited
in the Custodial Account by the Servicer on the date such late remittance is
made and shall cover the period commencing with the day following such
Servicer Remittance Date and ending with the Business Day on which such
remittance is made, both inclusive. The payment by the Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of
any Servicer Event of Default by the Servicer.
All remittances required to be made to the Master Servicer shall be
made to the following wire account or to such other account as may be
specified by the Master Servicer from time to time:
Wells Fargo Bank, N.A.
San Francisco, CA
ABA#: 121-000-248
Account Name: Corporate Trust Clearing
Account Number: 3970771416
Reference: 17166100, Aames 2005-2
(b) Statements to Master Servicer and Trust Administrator. On the 18th
day of each calendar month (or, if such 18th day is not a Business Day, then
no later than noon (Eastern Time) on the immediately preceding Business Day),
the Servicer shall furnish to the Master Servicer (i) a monthly remittance
advice in the format set forth in Exhibit G-1 hereto (including the
information in Exhibit G-1A), a monthly defaulted loan report in the format
set forth in Exhibit G-2 hereto (or in such other format mutually agreed to
between the Servicer and the Master Servicer) and, with respect to each
Mortgage Loan with respect to which a Realized Loss occurred during the
immediately preceding calendar month, a realized loss report in the format set
forth in Exhibit G-3 hereto (or in such other format mutually agreed to
between the Servicer and the Master Servicer), in each case relating to the
period ending on the last day of the preceding calendar month and (ii) all
such information required pursuant to clause (i) above on a magnetic tape or
other similar media reasonably acceptable to the Master Servicer. No later
than two Business Days after the end of each Prepayment Period, the Servicer
shall furnish to the Master Servicer a monthly report containing such
information regarding prepayments of
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Mortgage Loans during such Prepayment Period and in a format as mutually
agreed to between the Servicer and the Master Servicer.
Such monthly remittance advice shall also be accompanied by a
supplemental report provided to the Master Servicer and the Seller which
includes on an aggregate basis for the previous calendar month (i) the amount
of any insurance claims filed, (ii) the amount of any claim payments made and
(iii) the amount of claims denied or curtailed. The Master Servicer will
convert such data into a format acceptable to the Trust Administrator and
provide monthly reports to the Trust Administrator pursuant to the Trust
Agreement.
In addition, not more than 75 days after the end of each calendar year,
commencing December 31, 2005, the Servicer shall provide (as such information
becomes reasonably available to the Servicer) to the Master Servicer and the
Trust Administrator such information concerning the Mortgage Loans and annual
remittances to the Master Servicer therefrom as is necessary for the Trust
Administrator to prepare the reports required by Section 5.09(c). Such
obligation of the Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer to the Master Servicer and the Trust Administrator pursuant to any
requirements of the Code as from time to time are in force. The Servicer shall
also provide to the Trust Administrator such information as may be requested
by it and required for the completion of any tax reporting responsibility of
the Trust Administrator within such reasonable time frame as shall enable the
Trust Administrator to timely file each Schedule Q (or other applicable tax
report or return) required to be filed by it.
(c) Advances by Servicer. On the Business Day immediately preceding each
Servicer Remittance Date, the Servicer shall deposit in the Custodial Account
from its own funds or from amounts held for future payment, or a combination
of both, an amount equal to all Advances for the related Servicer Remittance
Date. Any amounts held for future payment and so used shall be replaced by the
Servicer by deposit in the Custodial Account on or before any future Servicer
Remittance Date if funds in the Custodial Account on such Servicer Remittance
Date shall be less than remittances to the Master Servicer required to be made
on such Servicer Remittance Date. The Servicer shall keep appropriate records
of such amounts and will provide such records to the Master Servicer upon
request.
The Servicer's obligation to make such Advances as to any Mortgage Loan
will continue through the last Scheduled Payment due prior to the payment in
full of the Mortgage Loan, or through the last Remittance Date prior to the
Remittance Date for the payment of all Liquidation Proceeds and other payments
or recoveries (including Insurance Proceeds and Condemnation Proceeds) with
respect to the related Mortgage Loan.
(d) Due Dates Other Than the First of the Month. Mortgage Loans having
Due Dates other than the first day of a month shall be accounted for as
described in this Section 4.03(d). Any Scheduled Payment due on a day other
than the first day of each month shall be considered due on the first day of
the month following the month in which that payment is due as if such payment
were due on the first day of that month. For example, a Scheduled Payment due
on August 15 shall be considered to be due on September 1. Any Scheduled
Payment due and collected on a Mortgage Loan after the Cut-off Date shall be
deposited in the Custodial Account. For Mortgage Loans with Due Dates on the
first day of a month, deposits to the Custodial
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Account begin with the Scheduled Payment due on the first of the month
following the Cut-off Date.
(e) Credit Reporting. For each Mortgage Loan, in accordance with its
current servicing practices, the Servicer will accurately and fully report its
underlying borrower credit files to each of the following credit repositories
or their successors: Equifax Credit Information Services, Inc., Trans Union,
LLC and Experian Information Solution, Inc., on a monthly basis in a timely
manner.
Section 4.04. General Servicing Procedures.
(a) Transfers of Mortgaged Property. The Servicer shall use its best
efforts to enforce any "due-on-sale" provision contained in any Mortgage or
Mortgage Note and to deny assumption by the person to whom the Mortgaged
Property has been or is about to be sold whether by absolute conveyance or by
contract of sale, and whether or not the Mortgagor remains liable on the
Mortgage and the Mortgage Note. When the Mortgaged Property has been conveyed
by the Mortgagor, the Servicer shall, to the extent it has knowledge of such
conveyance, exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause applicable thereto; provided, however,
that the Servicer shall not exercise such rights if prohibited by law from
doing so.
If the Servicer reasonably believes it is unable under applicable law
to enforce such "due-on-sale" clause, the Servicer shall enter into (i) an
assumption and modification agreement with the person to whom such property
has been conveyed pursuant to which such person becomes liable under the
Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the
event the Servicer is unable under applicable law to require that the original
Mortgagor remain liable under the Mortgage Note and the Servicer has the prior
consent of the primary mortgage guaranty insurer, a substitution of liability
agreement with the seller of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the buyer of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage
Note. In connection with any such assumption, neither the Mortgage Rate borne
by the related Mortgage Note, the timing of principal or interest payments on
the Mortgage Loan, the term of the Mortgage Loan nor the outstanding principal
amount of the Mortgage Loan shall be changed.
To the extent that any Mortgage Loan is assumable, the Servicer shall
inquire diligently into the creditworthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used by the Servicer, its affiliates or Fannie Mae with
respect to underwriting mortgage loans of the same type as the Mortgage Loans.
If the credit of the proposed transferee does not meet such underwriting
criteria, the Servicer diligently shall, to the extent permitted by the
Mortgage or the Mortgage Note and by applicable law, accelerate the maturity
of the Mortgage Loan.
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
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any assumption which the Servicer may be restricted by law from preventing,
for any reason whatsoever.
(b) Satisfaction of Mortgages and Release of Mortgage Files. Upon the
payment in full of any Mortgage Loan, 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 notify the Master Servicer in the monthly
remittance advice as provided in Section 4.03(b), and may request the release
of any Mortgage Loan Documents from the Custodian in accordance with the
Custodial Agreement.
If the Servicer satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage, the
Servicer shall deposit into the Custodial Account the entire outstanding
principal balance, plus all accrued interest on such Mortgage Loan, on the day
preceding the Servicer Remittance Date in the month following the date of such
release. The Servicer shall maintain the Fidelity Bond and Errors and
Omissions Insurance Policy as provided for in Section 4.02(m) insuring the
Servicer against any loss it may sustain with respect to any Mortgage Loan not
satisfied in accordance with the procedures set forth herein.
(c) Servicing Compensation. As consideration for servicing the Mortgage
Loans subject to this Agreement, the Servicer shall be paid in the aggregate
the relevant Servicing Fee for each Mortgage Loan remaining subject to this
Agreement during any month or part thereof. Such Servicing Fee shall be
payable monthly and retained by the Servicer, or as otherwise provided in
Section 4.02(e)(2). The obligation of the Issuer to pay the Servicing Fee is
limited to, and the Servicing Fee is payable from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds) of
such Scheduled Payment collected by the Servicer, or as otherwise provided in
Section 4.02(e)(2). Additional servicing compensation in the form of Ancillary
Income shall be retained by the Servicer and is not required to be deposited
in the Custodial Account.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled
to reimbursement thereof except as specifically provided for herein.
The Servicing Fee payable to or retained by the Servicer with respect
to any Collection Period shall be reduced by the aggregate Prepayment Interest
Shortfall Amount for the related Prepayment Period required to be deposited in
the Custodial Account and remitted to the Master Servicer on the related
Servicer Remittance Date. The Servicer shall be obligated to remit to the
Master Servicer on each Servicer Remittance Date the aggregate Prepayment
Interest Shortfall Amount, only up to an amount equal to in the aggregate the
Servicing Fee the Servicer is entitled to receive for such Collection Period.
(d) Annual Audit Report. The Servicer shall, at its own expense, cause a
firm of independent public accountants (who may also render other services to
the Servicer), which is a member of the American Institute of Certified Public
Accountants, to furnish, as soon as practicable in each year beginning with
2006, but in no event later than March 15 of each calendar year, to the
Seller, the Master Servicer, the Indenture Trustee and the Sarbanes
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Certifying Party (i) year-end audited (if available) financial statements of
the Servicer and (ii) a statement to the effect that such firm has examined
certain documents and records for the preceding fiscal year (or during the
period from the date of commencement of such Servicer's duties hereunder until
the end of such preceding fiscal year in the case of the first such
certificate) and that, on the basis of such examination conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that the Servicer's overall
servicing operations have been conducted in compliance with the Uniform Single
Attestation Program for Mortgage Bankers except for such exceptions that, in
the opinion of such firm, the Uniform Single Attestation Program for Mortgage
Bankers requires it to report, in which case such exceptions shall be set
forth in such statement.
(e) Annual Compliance Certifications.
(i) No later than March 15 of each calendar year, commencing with
the year 2006, the Servicer shall, at its own expense, deliver to the
Seller, the Master Servicer, the Indenture Trustee and the Trust
Administrator a servicer's certificate stating, as to each signer
thereof, that (i) a review of the activities of the Servicer during such
preceding fiscal year 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.
(ii) For so long as a certificate under the Sarbanes-Oxley Act of
2002, as amended ("Sarbanes-Oxley"), is required to be given on behalf of
the Issuer, no later than March 15 of each calendar year, commencing with
the year 2006, or at any other time that a certification pursuant to
Sarbanes-Oxley is required to be given on behalf of the Issuer and upon
thirty (30) days, written request of such parties, an officer of the
Servicer shall execute and deliver an Officer's Certificate to the
Depositor, the Master Servicer and the Trust Administrator for the
benefit of the Issuer and the Sarbanes Certifying Party and its officers,
directors and affiliates, in the form of Exhibit H hereto.
(iii) The Servicer shall indemnify and hold harmless the Issuer, the
Depositor, the Indenture Trustee, the Owner Trustee, the Trust
Administrator and the Master Servicer and their respective officers,
directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a
breach by the Servicer or any of its officers, directors, agents or
affiliates of its obligations under this Section 4.04(e) for the
negligence, bad faith or willful misconduct of the Servicer in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless any of the foregoing parties, then the
Servicer agrees that it shall contribute to the amount paid or payable by
the indemnified party or parties as a result of the losses, claims,
damages or liabilities of the indemnified party or parties in such
proportion as is appropriate to reflect the relative fault of the
indemnified party or parties on the one hand and the Servicer on the
other in connection with a breach of the
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Servicer's obligations under this Section 4.04(e) or the Servicer's
negligence, bad faith or willful misconduct in connection therewith.
(f) Inspection. The Servicer shall provide the Indenture Trustee and the
Master Servicer, upon five (5) Business Days' advance notice, during normal
business hours, access to all records maintained by the Servicer in respect of
its rights and obligations hereunder and reasonable access to officers of the
Servicer responsible for such obligations. Upon request, the Servicer shall
furnish to the Indenture Trustee and the Master Servicer its most recent
publicly available financial statements and such other information relating to
its capacity to perform its obligations under this Agreement. Notwithstanding
anything to the contrary in this Section 4.04, nothing in this Agreement shall
limit the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Servicer to provide access as provided in this Section 4.04(f) as a result of
such obligation shall not constitute a breach of this Section 4.04(f).
Section 4.05. Representations, Warranties and Agreements.
(a) Representations, Warranties and Agreements of the Servicer. The
Servicer, as a condition to the consummation of the transactions contemplated
hereby, hereby makes the following representations and warranties to the
Master Servicer, the Depositor, the Seller and the Indenture Trustee and the
Trust Administrator, as of the Closing Date:
(i) Due Organization and Authority. The Servicer is a corporation
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; the Servicer has the full
corporate 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 (except to the extent bankruptcy,
insolvency, reorganization, fraudulent conveyance or similar laws affect
the enforcement of creditor's 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) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Servicer;
(iii) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by the
Servicer or the transactions contemplated hereby, nor the fulfillment of
or compliance with the terms and conditions of this Agreement, will (a)
conflict with or result in a breach of any of the terms, conditions or
provisions of the Servicer's charter or by-laws or any legal restriction
or constitute a default under any of the foregoing, (b) materially
conflict with, result in a material breach, violation or acceleration of,
or result in a material default under, the terms of any other agreement
or instrument to which the Servicer is a party or by which it
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may be bound, (c) result in a material violation of any law, rule,
regulation, order, judgment or decree to which the Servicer or its
property is subject or (d) materially impair the ability of the Servicer
to act as Servicer hereunder with respect to the Mortgage Loans;
(iv) Ability to Perform. 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;
(v) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the Servicer's knowledge, threatened against
the Servicer which, either in any one instance 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 which would draw into question the
validity of this Agreement or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or
which would be likely to impair materially the ability of the Servicer to
perform under the terms of this Agreement;
(vi) No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the
execution, delivery and performance by the Servicer of or compliance by
the Servicer with this Agreement, or if required, such approval has been
obtained prior to the Closing Date;
(vii) No Default. The Servicer is not in default, and no event or
condition exists that after the giving of notice or lapse of time or
both, would constitute an event of default under any material mortgage,
indenture, contract, agreement, judgment, or other undertaking, to which
the Servicer is a party or which purports to be binding upon it or upon
any of its assets, which default could impair materially the ability of
the Servicer to perform under the terms of this Agreement;
(viii) Ability to Service. The Servicer is an FHA Approved Mortgagee
in good standing to service mortgages, and has not been suspended as a
mortgagee or servicer by the FHA and has the facilities, procedures and
experienced personnel necessary for the sound servicing of mortgage loans
of the same type as the Mortgage Loans. No event has occurred, including
but not limited to a change in insurance coverage, which would make the
Servicer unable to comply with HUD, FHA eligibility requirements or which
would require notification to any of HUD or FHA;
(ix) No Untrue Information. Neither this Agreement nor any
statement, report or other document furnished or to be furnished pursuant
to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained therein not
misleading; and
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(x) No Commissions to Third Parties. The Servicer has not dealt with
any broker or agent or anyone else who might be entitled to a fee or
commission in connection with this transaction other than the Seller.
(b) Remedies for Breach of Representations and Warranties of the
Servicer. It is understood and agreed that the representations and warranties
set forth in Sections 4.05(a) shall survive the engagement of the Servicer to
perform the servicing responsibilities as of the Closing Date hereunder and
the delivery of the Servicing Files to the Servicer and shall inure to the
benefit of the Master Servicer and the Indenture Trustee. Upon discovery by
the Servicer, the Master Servicer or the Indenture Trustee of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the ability of the Servicer to perform its duties and obligations
under this Agreement or otherwise materially and adversely affects the value
of the Mortgage Loans, the Mortgaged Property or the priority of the security
interest on such Mortgaged Property or the interests of the Master Servicer or
the Indenture Trustee, the party discovering such breach shall give prompt
written notice to the other parties.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in Section
4.05(a) which materially and adversely affects the ability of the Servicer to
perform its duties and obligations under this Agreement or otherwise
materially and adversely affects the value of the Mortgage Loans, the
Mortgaged Property or the priority of the security interest on such Mortgaged
Property, the Servicer shall use its best efforts promptly to cure such breach
in all material respects and, if such breach cannot be cured, the Servicer
shall, at the Indenture Trustee's or the Master Servicer's option, assign its
rights and obligations under this Agreement (or with respect to the affected
Mortgage Loans) to a successor servicer. Such assignment shall be made in
accordance with Sections 4.06(b) and 4.06(c).
In addition, the Servicer shall indemnify all other parties to this
Agreement and hold each of them harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of the Servicer's representations and warranties contained in Section
4.05.
Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 4.05(a) shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Master Servicer, the Depositor or the Indenture Trustee to the Servicer,
(ii) failure by the Servicer to cure such breach within the applicable cure
period, and (iii) demand upon the Servicer by the Master Servicer or the
Indenture Trustee for compliance with this Agreement.
(c) Additional Indemnification by the Servicer. The Servicer shall
indemnify the Master Servicer, the Depositor, the Issuer, the Indenture
Trustee, the Owner Trustee, and the Trust Administrator and hold each of them
harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and any other costs, fees and expenses (collectively, the "Liabilities") that
the indemnified party may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in accordance
with the terms of this Agreement. The Servicer shall immediately
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notify the Master Servicer, the Depositor, the Indenture Trustee, the Owner
Trustee and the Trust Administrator if a claim is made by a third party with
respect to this Agreement or the Mortgage Loans that may result in such
Liabilities, and the Servicer shall assume (with the prior written consent of
the indemnified party) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or any
indemnified party in respect of such claim and follow any written instructions
received from such indemnified party in connection with such claim. The
Servicer shall be reimbursed promptly from the Trust Fund for all amounts
advanced by it pursuant to the preceding sentence except when the claim is in
any way related to the Servicer's indemnification pursuant to this Section
4.05(c), or the failure of the Servicer to service and administer the Mortgage
Loans in accordance with the terms of this Agreement.
Section 4.06. The Servicer.
(a) Merger or Consolidation of the Servicer. The Servicer shall keep in
full effect its existence, rights and franchises as a corporation, and shall
obtain and preserve its qualification to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement or any of the
Mortgage Loans and to perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the business
of the Servicer, shall be the successor of the Servicer 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 or surviving Person shall be an institution (i)
having a net worth of not less than $15,000,000, and (ii) which is a FHA
Approved Mortgagee in good standing.
(b) Limitation on Liability of the Servicer and Others. Neither the
Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Master Servicer, the Depositor,
the Issuer, the Indenture Trustee or the Trust Administrator 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 Servicer or any such person against any breach
of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement (except to the extent
otherwise covered by Section 4.05(c)). The Servicer and any director, officer,
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 shall not be under any obligation
to appear in, prosecute or defend any legal action which is not incidental to
its duties to service the Mortgage Loans in accordance with this Agreement and
which in its opinion may involve it in any expense or liability; provided,
however, that 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. In such event, the Servicer shall be entitled to
reimbursement from the Trust Fund for the reasonable legal expenses and costs
of such action.
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The Servicer and any director, officer, employee or agent of the
Servicer shall be indemnified and held harmless by the Trust against any and
all Liabilities incurred in connection with any legal action relating to this
Agreement or the Notes, except to the extent such Liabilities resulted from or
arose out of the negligence, bad faith or willful misfeasance in the
performance of the Servicer's (or any director, officer, employee or agent of
the Servicer) duties hereunder or by reason of its reckless disregard of its
obligations and duties hereunder.
(c) Limitation on Resignation and Assignment by the Servicer. This
Agreement has been entered into with the Servicer in reliance upon the
independent status of the Servicer, and the representations as to the adequacy
of its servicing facilities, plant, personnel, records and procedures,
integrity, reputation and financial standing, and the continuance thereof.
Therefore, except as expressly provided in this Section 4.06(c) and in
Sections 4.02(a) and 4.09, the Servicer shall neither assign its rights under
this Agreement or the servicing hereunder nor delegate its duties hereunder or
any portion thereof, or sell or otherwise dispose of all or substantially all
of its property or assets without, in each case, the prior written consent of
the Seller, the Master Servicer and the Trust Administrator, which consent, in
the case of an assignment of rights or delegation of duties, shall be granted
or withheld in the discretion of the Seller, the Master Servicer and the Trust
Administrator; provided, that in each case, there must be delivered to the
Seller, the Master Servicer, the Indenture Trustee and the Trust Administrator
a letter from each Rating Agency to the effect that such transfer of servicing
or sale or disposition of assets will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Notes.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Servicer and the Master
Servicer, or upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Seller, the Master Servicer and the Indenture Trustee which Opinion of Counsel
shall be in form and substance reasonably acceptable to each of them. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided
in Section 4.08.
Without in any way limiting the generality of this Section 4.06, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof or sell or otherwise dispose of all or substantially all of its
property or assets, except to the extent permitted by and in accordance with
this Section 4.06 and in Sections 4.02(a) and 4.09, without the prior written
consent of the Seller, the Master Servicer, the Indenture Trustee and the
Trust Administrator, then such parties shall have the right to terminate this
Agreement upon notice given as set forth in Section 4.07, without any payment
of any penalty or damages and without any liability whatsoever to the Servicer
or any third party.
(d) Successor Servicers. The provisions of Sections 4.06(a), (b), and (c)
shall apply to any successor to the Servicer hereunder.
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Section 4.07. Termination for Cause.
Any of the following occurrences shall constitute an event of default
(each, a "Servicer Event of Default") on the part of the Servicer:
(1) any failure by the Servicer to remit to the Master Servicer
any payment required to be made under the terms of this Agreement
which continues unremedied for a period of two Business Days after
the date upon which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the
Master Servicer; or
(2) failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the
part of the Servicer set forth in this Agreement which continues
unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Master Servicer; or
(3) failure by the Servicer to maintain its license to do
business or service residential mortgage loans in any jurisdiction
where the Mortgaged Properties are located except where the failure
to so maintain such license does not have a material adverse effect
on the Servicer's ability to service the Mortgage Loans; or
(4) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
including bankruptcy, 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 or
unstayed for a period of 60 days; or
(5) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or relating
to all or substantially all of its property; or
(6) 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, bankruptcy or reorganization
statute, make an assignment for the benefit of its creditors,
voluntarily suspend payment of its obligations or cease its normal
business operations for three Business Days; or
(7) the Servicer ceases to be a FHA Approved Mortgagee; or
(8) the Servicer attempts to assign the servicing of the
Mortgage Loans or its right to servicing compensation hereunder or
the Servicer or attempts to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or
any portion thereof in a manner not permitted under this Agreement;
or
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(9) the net worth of the Servicer shall be less than
$15,000,000; or
(10) failure by the Servicer to duly perform, within the
required time period, its obligations under Section 4.04(e) or
4.04(d) which failure continues unremedied for a period of 7 days
after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer by
the Master Servicer; or
(11) a Servicer Termination Trigger Event or a Seller Financial
Covenant Termination Event shall have occurred.
In each and every such case, so long as a Servicer Event of Default
shall not have been remedied, in addition to whatsoever rights the Master
Servicer or the Indenture Trustee may have at law or equity to damages,
including injunctive relief and specific performance, the Master Servicer, by
notice in writing to the Servicer, may terminate all the rights and
obligations of the Servicer under this Agreement and in and to the servicing
contract established hereby and the proceeds thereof.
Upon receipt by the Servicer of such written termination notice, all
authority and power of the Servicer, under this Agreement, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in a
successor servicer appointed by the Master Servicer, in accordance with
Section 4.08(a). Upon written request from the Master Servicer, the Servicer
shall prepare, execute and deliver to the successor servicer any and all
documents and other instruments, place in such successor's possession all
Servicing Files, and do or cause to be done all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, including
but not limited to the transfer and endorsement or assignment of the Mortgage
Loans and related documents, at the Servicer's sole expense. The Servicer
shall cooperate with the Seller, the Master Servicer, the Indenture Trustee
and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or
Escrow Account or thereafter received with respect to the Mortgage Loans.
By a written notice, the Master Servicer may waive any default by the
Servicer in the performance of its obligations hereunder and its consequences.
Upon any waiver of a past default, such default shall cease to exist, and any
Servicer Event of Default 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 thereon except
to the extent expressly so waived.
Section 4.08. Successor to Servicer, Miscellaneous Provisions.
(a) Successor to the Servicer. Simultaneously with the termination of the
Servicer's responsibilities and duties under this Agreement pursuant to
Section 4.05, 4.06, or 4.07, the Master Servicer shall (i) within 90 days of
the Servicer's notice of such termination, succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set forth in
clauses (i) and (ii) of
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the second paragraph of Section 4.06(a) and which shall succeed to all rights
and assume all of the responsibilities, duties and liabilities of the Servicer
under this Agreement simultaneously with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement. Any successor
to the Servicer (other than the Master Servicer) shall be subject to the
approval of the Master Servicer and the Trust Administrator. Any approval of a
successor servicer by the Master Servicer and the Trust Administrator, shall,
if the successor servicer is not at that time a servicer of other Mortgage
Loans for the Trust, be conditioned upon the receipt by the Master Servicer,
the Seller, the Indenture Trustee and the Trust Administrator of a letter from
each Rating Agency to the effect that such transfer of servicing will not
result in a qualification, withdrawal or downgrade of the then-current rating
of any of the Notes. In connection with such appointment and assumption, the
Master Servicer may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Servicer under this Agreement. In the event that the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned sections, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it is obligated to exercise
under this Agreement (including continuing to make Advances during such
transition period pursuant to Section 4.03(c)) and shall take no action
whatsoever that might impair or prejudice the rights or financial condition of
its successor. The resignation or removal of the Servicer pursuant to the
aforementioned sections shall not become effective until a successor shall be
appointed pursuant to this Section 4.08(a) and shall in no event relieve the
Servicer of the representations and warranties made pursuant to Sections 4.05
and the remedies available to the Master Servicer, the Indenture Trustee and
the Seller under Sections 4.08(b) and 4.05(b) and (c), it being understood and
agreed that the provisions of such Sections 4.08(b) and 4.05(b) and (c) shall
be applicable to the Servicer notwithstanding any such resignation or
termination of the Servicer, or the termination of this Agreement. Neither the
Master Servicer, in its capacity as successor servicer, nor any other
successor servicer shall be responsible for the lack of information and/or
documents that it cannot otherwise obtain through reasonable efforts.
Within a reasonable period of time, but in no event later than 30 days
following the appointment of a successor entity, the Servicer shall prepare,
execute and deliver to the successor entity any and all documents and other
instruments, place in such successor's possession all Servicing Files, and do
or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including but not limited
to the transfer of any Mortgage Notes and the related documents. The Servicer
shall cooperate with the Indenture Trustee, the Master Servicer or the Seller,
as applicable, and such successor in effecting the termination of the
Servicer's responsibilities and rights hereunder and the transfer of servicing
responsibilities to the successor Servicer, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or
Escrow Account or thereafter received with respect to the Mortgage Loans.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Indenture Trustee, the Servicer, the Master Servicer, the
Trust Administrator and the Seller an instrument (i) accepting such
appointment, wherein the successor shall make the
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representations and warranties set forth in Section 4.05(a) and provide for
the same remedies set forth in such Section herein and (ii) an assumption of
the due and punctual performance and observance of each covenant and condition
to be performed and observed by the Servicer under this Agreement, whereupon
such successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer, with like
effect as if originally named as a party to this Agreement. Any termination or
resignation of the Servicer or termination of this Agreement pursuant to
Sections 4.05, 4.06 and 4.07 shall not affect any claims that the Seller, the
Master Servicer, the Indenture Trustee or the Trust Administrator may have
against the Servicer arising out of the Servicer's actions or failure to act
prior to any such termination or resignation.
The Servicer shall deliver promptly to the successor servicer the funds
in the Custodial Account and Escrow Account(s) and all Mortgage Loan documents
and related documents and statements held by it hereunder and the Servicer
shall account for all funds and shall execute and deliver such instruments and
do such other things as may reasonably be required to more fully and
definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, it shall notify
the Indenture Trustee, the Trust Administrator, the Seller and Master Servicer
and the Depositor of such appointment.
(b) Costs. The Seller shall pay the legal fees and expenses of its
attorneys. Costs and expenses incurred in connection with the transfer of the
servicing responsibilities, including fees for delivering Servicing Files,
shall be paid by (i) the terminated or resigning Servicer if such termination
or resignation is a result of an occurrence of a termination event under
Section 4.05(b) or 4.07, and (ii) to the extent not paid by such Servicer, and
in all other cases, by the Trust.
Section 4.09. Sub-Servicers and Sub-Servicing Agreements.
(a) The Servicer may enter into sub-servicing agreements for any
servicing and administration of Mortgage Loans with any institution that is
acceptable to the Seller and that is in compliance with the laws of each state
necessary to enable it to perform its obligations under such sub-servicing
agreement. The Servicer shall give notice to the Rating Agencies and the
Master Servicer of the appointment of any sub-servicer. The Servicer shall not
enter into any sub-servicing agreement that does not provide for the servicing
of the Mortgage Loans specified therein on a basis consistent with the terms
of this Agreement or that otherwise violates the provisions of this Agreement.
The Servicer may enter into, and make amendments to, any sub-servicing
agreement or enter into different forms of sub-servicing agreements; provided,
however, that any such amendments or forms shall be consistent with and not
violate the provisions of this Agreement.
(b) For purposes of this Agreement the Servicer shall be deemed to have
received payments on Mortgage Loans when any sub-servicer has received such
payments. With respect to the Servicer's obligations under Section 4.03(a) to
make deposits in the Custodial Account maintained by the Servicer, the
Servicer shall be deemed to have made such deposits when any
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sub-servicer has made such deposits into a sub-servicing account if permitted
by the related sub-servicing agreement.
(c) Any sub-servicing agreement and any other transactions or services
relating to the Mortgage Loans involving a sub-servicer shall be deemed to be
between the sub-servicer and the Servicer alone and the Master Servicer and
the Indenture Trustee shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
sub-servicer, except that the Indenture Trustee shall have such claims or
rights that arise as a result of any funds held by a sub-servicer in trust for
or on behalf of the Issuer. Notwithstanding the execution of any sub-servicing
agreement, the Servicer shall not be relieved of any liability hereunder and
shall remain obligated and liable for the servicing and administration of the
Mortgage Loans.
(d) The Servicer shall be entitled to terminate any sub-servicing
agreement and the rights and obligations of any sub-servicer pursuant to any
sub-servicing agreement in accordance with the terms and conditions of such
sub-servicing agreement but only with the prior consent of the Seller. In the
event of termination of any sub-servicer, all servicing obligations of such
sub-servicer shall be assumed simultaneously by the Servicer without any act
or deed on the part of such sub-servicer or the Servicer, and the Servicer
either shall service directly the related Mortgage Loans or shall enter into a
sub-servicing agreement with a successor sub-servicer. The Servicer shall give
written notice to the Seller, Master Servicer and Indenture Trustee of the
termination of any sub-servicer.
(e) Any sub-servicing agreement shall include the provision that such
agreement may be immediately terminated by the Master Servicer or the
Indenture Trustee, in accordance with the terms of this Agreement, in the
event that the Servicer shall, for any reason, no longer be the Servicer
(including termination due to a Servicer Event of Default) (i) without fee or
(ii) clearly and unambiguously states that any termination fee is the sole
responsibility of the Servicer and none of the Seller, Depositor, Master
Servicer, Indenture Trustee or the Issuer has any liability therefor,
regardless of the circumstances surrounding such termination.
Section 4.10. Miscellaneous Servicing Provisions.
(a) Protection of Confidential Information. The Servicer shall keep
confidential and shall not divulge to any party, without the Seller's prior
written consent, any nonpublic information pertaining to the Mortgage Loans or
any borrower thereunder, except to the extent that it is appropriate for the
Servicer to do so in working with legal counsel, special servicers, auditors,
taxing authorities or other governmental agencies.
(b) No Personal Solicitation. For as long as the Servicer services the
Mortgage Loans, it covenants that it will not, and that it will ensure that
its affiliates and agents will not, directly solicit or provide information
for any other party to solicit for prepayment or refinancing of any of the
Mortgage Loans by the related mortgagors. It is understood that promotions
undertaken by the Servicer which are directed to the general public at large,
or certain segments thereof, shall not constitute solicitation as that term is
used in this Section 4.10(b).
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(c) Intention of the Parties. It is the intention of the Seller and the
Servicer that the Seller is conveying, and the Servicer is receiving, only a
contract for servicing the Mortgage Loans. Accordingly, the parties hereby
acknowledge that the Trust remains the sole and absolute owner of the Mortgage
Loans (other than the servicing rights) and all rights related thereto,
subject to the lien of the Indenture.
Section 4.11. Advance Facility.
(a) The Servicer is hereby authorized to enter into a facility (an
"Advance Facility") with any Person which provides that such Person (an
"Advancing Person") agrees to fund some or all of the Advances and/or
Servicing Advances required to be made by the Servicer pursuant to this
Agreement or that the Servicer may pledge or assign its rights to be
reimbursed for Advances and/or Servicing Advances, directly or indirectly, to
an Advancing Person, although no such Advance Facility shall reduce or
otherwise affect the Servicer's obligation to fund such Advances and/or
Servicing Advances. If the Servicer enters into an Advance Facility, the
Servicer and the related Advancing Person shall deliver to the Indenture
Trustee, the Master Servicer and the Trust Administrator at the respective
addresses set forth in Section 10.07 hereof a written notice (an "Advance
Facility Notice"), stating the identity of the Advancing Person. If the
Servicer enters into such an Advance Facility pursuant to this Section 4.11,
upon reasonable request of the Advancing Person, the Trust Administrator shall
execute a letter of acknowledgment prepared by the Servicer, confirming its
receipt of notice of the existence of such Advance Facility. To the extent
that an Advancing Person previously identified in the Advance Facility Notice
funds any Advance or any Servicing Advance and the Servicer provides the Trust
Administrator with an Officer's Certificate that such Advancing Person is
entitled to reimbursement, such Advancing Person shall be entitled to receive
reimbursement pursuant to this Agreement for such amount to the extent
provided in Section 4.11(c). Such Officer's Certificate must specify the
amount of the reimbursement, the remittance date, the written payment
instructions for the Advancing Person, the Section of this Agreement that
permits the applicable Advance or Servicing Advance to be reimbursed and
either the section(s) of the Advance Facility that entitle the Advancing
Person to receive reimbursement from the Trust Administrator, rather than the
Servicer, or proof of an event of default by the Servicer under the Advance
Facility entitling the Advancing Person to reimbursement from the Trust
Administrator. The Trust Administrator shall not have any duty or liability
with respect to any calculation of any reimbursement to be paid to an
Advancing Person and shall be entitled to conclusively rely without
independent investigation on the Officer's Certificate provided pursuant to
this Section 4.11. An Advancing Person whose obligations hereunder are limited
to the funding of Advances and/or Servicing Advances, or who merely receives
an assignment or pledge of the Servicer's rights to be reimbursed for Advances
and/or Servicing Advances, shall not be required to meet the qualifications of
the Servicer or any sub-servicer and will not be deemed to be a sub-servicer
under this Agreement.
(b) None of the Depositor, the Master Servicer, the Trust Administrator
or the Indenture Trustee shall, as a result of the existence of any Advance
Facility, have any additional duty or liability with respect to the
calculation or payment of any reimbursement for Advances or Servicing
Advances, nor, as a result of the existence of any Advance Facility, shall the
Depositor, the Master Servicer, the Trust Administrator or the Indenture
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the
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reimbursement for Advances or Servicing Advances, except, in the case of the
Trust Administrator, to remit reimbursements in accordance with payment
instructions received pursuant to Section 4.11(a). The Servicer shall
indemnify the Depositor, the Master Servicer, the Trust Administrator, the
Indenture Trustee, any successor Servicer and the Issuer for any claim, loss,
liability or damage resulting from any claim by the Advancing Person, except
to the extent that such claim, loss, liability or damage resulted from or
arose out of the negligence, recklessness or willful misconduct on the part of
the Depositor, the Master Servicer, the Trust Administrator, the Indenture
Trustee, any successor Servicer or the Issuer, as the case may be, or failure
by the successor Servicer, the Master Servicer or the Trust Administrator, as
the case may be, to remit funds as required by this Agreement or the
commission of an act or omission to act by the successor Servicer, the Master
Servicer or the Trust Administrator, as the case may be, and the passage of
any applicable cure or grace period, such that, in the case of the Master
Servicer, a Master Servicer Event of Default occurs under this Agreement, or
in the case of the successor Servicer, the Master Servicer or the Trust
Administrator, such entity is subject to termination for cause under this
Agreement.
(c) If an Advance Facility is entered into, and if the Servicer so
notifies the Trust Administrator, then the Servicer shall not seek
reimbursement for any Advance or Servicing Advance made by an Advancing Person
under Section 6.05, but instead the Servicer shall remit the amounts relating
to Advances to the Master Servicer for inclusion in the monthly remittance
made to the Trust Administrator on a Servicer Remittance Date in accordance
with this Agreement. The Trust Administrator, upon its receipt of an Officer's
Certificate in accordance with Section 4.11 hereof, shall pay to the Advancing
Person or to a trustee, agent or custodian designated in the Officer's
Certificate specified in Section 4.11(a), reimbursements for Advances and
Servicing Advances from the Collection Account to the same extent the Servicer
would have been permitted to reimburse itself from its Custodial Account for
such Advances and/or Servicing Advances in accordance with Sections 4.02(e)
and 6.05, had the Servicer itself funded such Advance or Servicing Advance.
(d) All Advances and Servicing Advances made pursuant to the terms of
this Agreement shall be deemed made and shall be reimbursed on a "first
in-first out" (FIFO) basis, such that an advance made earlier in time with
respect to any Mortgage Loan shall be reimbursed to the Servicer who made that
advance, before reimbursement of an advance made later in time with respect to
that Mortgage Loan, and a predecessor Servicer's advances with respect to any
particular Mortgage Loan shall be reimbursed before reimbursement of a
successor Servicer's advances with respect to such Mortgage Loan.
(e) In making its determination that any Advance or Servicing Advance
theretofore made has become a Nonrecoverable Advance, the Servicer shall apply
the same criteria in making such determination regardless of whether such
Advance or Servicing Advance shall have been made by the Servicer or any
predecessor Servicer.
(f) The Servicer shall maintain and provide to any successor Servicer
and, upon request, the Master Servicer, the Trust Administrator and the
Indenture Trustee a detailed accounting on a loan-by-loan basis as to amounts
advanced by, pledged or assigned to, and reimbursed to any Advancing Person.
The successor Servicer shall be entitled to rely on any
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such information provided by the predecessor Servicer, and the successor
Servicer shall not be liable for any errors in such information.
(g) Any amendment to this Section 4.11 or to any other provision of this
Agreement that may be necessary or appropriate to effect the terms of an
Advance Facility as described generally in this Section 4.11, including
amendments to add provisions relating to a successor Servicer, may be entered
into by the parties hereto without the consent of any Noteholder, provided
that such amendment complies with Section 10.03. All reasonable costs and
expenses (including attorneys' fees) of each party hereto of any such
amendment shall be borne solely by the Servicer. The parties hereto hereby
acknowledge and agree that: (a) the Advances and/or Servicing Advances
financed by and/or pledged to an Advancing Person under any Advance Facility
are obligations owed to the Servicer payable only from the cash flows and
proceeds received under this Agreement for reimbursement of Advances and/or
Servicing Advances only to the extent provided herein, and the Indenture
Trustee, the Owner Trustee, the Trust Administrator, the Master Servicer and
the Issuer are not, as a result of the existence of any Advance Facility,
separately obligated or liable to repay any Advances and/or Servicing Advances
financed by the Advancing Person; (b) the Servicer will be responsible for
remitting to the Advancing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advancing
Person, subject to the provisions of this Agreement and except to the extent
an election is made to remit all such reimbursements to the Trust
Administrator as described in Section 4.11(c); and (c) none of the Master
Servicer, the Trust Administrator and the Indenture Trustee shall have any
responsibility to track or monitor the administration of the financing
arrangement between the Servicer and any Advancing Person.
ARTICLE V
ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER AND THE TRUST ADMINISTRATOR
Section 5.01. Duties of the Master Servicer; Representations and
Warranties.
(a) For and on behalf of the Issuer, the Indenture Trustee and the
Noteholders, the Master Servicer shall master service the Mortgage Loans from
and after the Closing Date in accordance with the provisions of this Article
V. The Master Servicer hereby represents and warrants to the Depositor, the
Issuer, the Indenture Trustee, the Trust Administrator and the Servicer, as of
the Closing Date, that:
(i) it is validly existing and in good standing as a federally
chartered national banking association and as Master Servicer has full
power and authority to transact any and all business contemplated by this
Agreement and to execute, deliver and comply with its obligations under
the terms of this Agreement, the execution, delivery and performance of
which have been duly authorized by all necessary corporate action on the
part of the Master Servicer;
(ii) the execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement will not (A) violate the Master Servicer's charter or bylaws,
(B) violate any law or regulation or any
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administrative decree or order to which it is subject or (C) constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Master Servicer is a
party or by which it is bound or to which any of its assets are subject,
which violation, default or breach would materially and adversely affect
the Master Servicer's ability to perform its obligations under this
Agreement;
(iii) this Agreement constitutes, assuming due authorization,
execution and delivery hereof by the other respective parties hereto, a
legal, valid and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors' rights
in general, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(iv) the Master Servicer is not in default with respect to any order
or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency to the extent that any such default
would materially and adversely affect its performance hereunder;
(v) the Master Servicer is not a party to or bound by any agreement
or instrument or subject to any charter provision, bylaw or any other
corporate restriction or any judgment, order, writ, injunction, decree,
law or regulation that may materially and adversely affect its ability as
Master Servicer to perform its obligations under this Agreement or that
requires the consent of any third person to the execution of this
Agreement or the performance by the Master Servicer of its obligations
under this Agreement;
(vi) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement;
(vii) the Master Servicer, or an affiliate thereof the primary
business of which is the servicing of conventional residential mortgage
loans, is a Fannie Mae- or FHLMC-approved seller/servicer;
(viii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of or compliance by the Master
Servicer with this Agreement or the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders (if any) as have been obtained;
(ix) the consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master Servicer;
(x) the Master Servicer has obtained an Errors and Omissions
Insurance Policy and a Fidelity Bond in accordance with Section 5.02 each
of which is in full force
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and effect, and each of which provides at least such coverage as is
required hereunder; and
(xi) the information about the Master Servicer under the heading
"The Master Servicer" in the Prospectus Supplement does not include an
untrue statement of a material fact and does not omit to state a material
fact, with respect to the statements made, necessary in order to make the
statements in light of the circumstances under which they were made not
misleading.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 5.01 shall survive the execution and delivery of
this Agreement. The Master Servicer shall indemnify the Depositor, the Issuer,
the Indenture Trustee, the Owner Trustee, the Trust Administrator and the
Servicer and hold them harmless against any loss, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Master Servicer's
representations and warranties contained in this Section 5.01. It is
understood and agreed that the enforcement of the obligation of the Master
Servicer set forth in this Section to indemnify the foregoing parties as
provided in this Section constitutes the sole remedy (other than as set forth
in Section 8.01) of such parties respecting a breach of the foregoing
representations and warranties. Such indemnification shall survive any
termination of the Master Servicer as Master Servicer hereunder, and any
termination of this Agreement.
Any cause of action against the Master Servicer relating to or arising
out of the breach of any representations and warranties made in this Section
shall accrue upon discovery of such breach by the Depositor, the Issuer, the
Indenture Trustee, the Trust Administrator or the Servicer or notice thereof
by any one of such parties to the other parties. Notwithstanding anything in
this Agreement to the contrary, the Master Servicer shall not be liable for
special, indirect or consequential losses or damages of any kind whatsoever
(including, but not limited to, lost profits).
Section 5.02. Master Servicer Fidelity Bond and Master Servicer Errors
and Omissions Insurance Policy.
(a) The Master Servicer, at its expense, shall maintain in effect a
Fidelity Bond and a Errors and Omissions Insurance Policy, affording coverage
with respect to all directors, officers, employees and other Persons acting on
the Master Servicer's behalf, and covering errors and omissions in the
performance of the Master Servicer's obligations hereunder. The Master
Servicer's Errors and Omissions Insurance Policy and the Master Servicer
Fidelity Bond shall be in such form and amount that would be consistent with
coverage customarily maintained by master servicers of mortgage loans similar
to the Mortgage Loans and shall by its terms not be cancelable without thirty
days' prior written notice to the Indenture Trustee. The Master Servicer shall
provide the Depositor and the Indenture Trustee, upon request, with a copy of
such policy and fidelity bond. The Master Servicer shall (i) require the
Servicer to maintain an Errors and Omissions Insurance Policy and a Fidelity
Bond in accordance with the provisions of Section 4.02(m) of this Agreement,
(ii) cause the Servicer to provide to the Master Servicer certificates
evidencing that such policy and bond is in effect and to furnish to the Master
Servicer any notice of cancellation, non-renewal or modification of the policy
or bond received by it, as
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and to the extent provided in Section 4.02(m) of the Agreement, and (iii)
furnish copies of such policies and of the certificates and notices referred
to in clause (ii) to the Indenture Trustee upon request.
(b) The Master Servicer shall promptly report to the Indenture Trustee
and the Trust Administrator any material changes that may occur in the Master
Servicer's Fidelity Bond or the Master Servicer's Errors and Omissions
Insurance Policy and shall furnish either such party, on request, with
certificates evidencing that such bond and insurance policy are in full force
and effect. The Master Servicer shall promptly report to the Indenture Trustee
and the Trust Administrator all cases of embezzlement or fraud, if such events
involve funds relating to the Mortgage Loans. The total losses, regardless of
whether claims are filed with the applicable insurer or surety, shall be
disclosed in such reports together with the amount of such losses covered by
insurance. If a bond or insurance claim report is filed with any of such
bonding companies or insurers, the Master Servicer shall promptly furnish a
copy of such report to the Indenture Trustee and the Trust Administrator. Any
amounts relating to the Mortgage Loans collected by the Master Servicer under
any such bond or policy shall be promptly remitted by the Master Servicer to
the Trust Administrator for deposit into the Collection Account. Any amounts
relating to the Mortgage Loans collected by the Servicer under any such bond
or policy shall be remitted to the Master Servicer.
Section 5.03. Master Servicer's Financial Statements and Related
Information. For each year this Agreement is in effect, the Master Servicer
shall deliver to the Trust Administrator, the Indenture Trustee, each Rating
Agency and the Depositor a copy of its annual unaudited financial statements
on or prior to May 31 of each year, beginning May 31, 2006. Such financial
statements shall include a balance sheet, income statement, statement of
retained earnings, statement of additional paid in capital, statement of
changes in financial position and all related notes and schedules and shall be
in comparative form, certified by a nationally recognized firm of Independent
Accountants to the effect that such statements were examined and prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the preceding year.
Section 5.04. Power to Act; Procedures.
(a) The Master Servicer shall master service the Mortgage Loans, provided
that the Master Servicer shall not take, or knowingly permit the Servicer to
take, any action that is inconsistent with or prejudices the interests of the
Issuer, the Indenture Trustee or the Noteholders in any Mortgage Loan or the
rights and interests of the Depositor, the Issuer, the Indenture Trustee and
the Noteholders under this Agreement and the Indenture. The Master Servicer
shall represent and protect the interests of the Issuer, the Indenture Trustee
and the Noteholders in the same manner as it protects its own interests in
mortgage loans in its own portfolio in any claim, proceeding or litigation
regarding a Mortgage Loan. Without limiting the generality of the foregoing,
the Master Servicer in its own name, and the Servicer, to the extent such
authority is delegated to such Servicer under this Agreement, is hereby
authorized and empowered by the Indenture Trustee when the Master Servicer or
such Servicer, as the case may be, believes it appropriate in its best
judgment and in accordance with the Servicing Standard, to execute and
deliver, on behalf of itself and the Noteholders, the Trust Administrator, the
Indenture Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of
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partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged
Properties. The Indenture Trustee shall furnish the Master Servicer, upon
request, with any powers of attorney (on the standard form used by the
Indenture Trustee) empowering the Master Servicer or the Servicer to execute
and deliver instruments of satisfaction or cancellation, or of partial or full
release or discharge, and to foreclose upon or otherwise liquidate Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to
the Mortgage Loans or the Mortgaged Property, in accordance with this
Agreement, and the Indenture Trustee shall execute and deliver such other
documents as the Master Servicer may request, necessary or appropriate to
enable the Master Servicer to master service the Mortgage Loans and carry out
its duties hereunder, and to allow the Servicer to service the Mortgage Loans
in each case in accordance with the Servicing Standard (and the Indenture
Trustee or the Trust Administrator shall have no liability for misuse of any
such powers of attorney by the Master Servicer or the Servicer). If the Master
Servicer or the Indenture Trustee has been advised that it is likely that the
laws of the state in which action is to be taken prohibit such action if taken
in the name of the Indenture Trustee or that the Indenture Trustee would be
adversely affected under the "doing business" or tax laws of such state if
such action is taken in its name, then upon request of the Indenture Trustee,
the Master Servicer shall join with the Indenture Trustee in the appointment
of a co-trustee pursuant to Section 6.10 of the Indenture. In no event shall
the Master Servicer, without the Indenture Trustee's written consent: (i)
initiate any action, suit or proceeding solely under the Indenture Trustee's
name without indicating the Master Servicer's representative capacity or (ii)
take any action with the intent to cause, and which actually does cause, the
Indenture Trustee to be registered to do business in any state. The Master
Servicer shall indemnify the Indenture Trustee for any and all costs,
liabilities and expenses incurred by the Indenture Trustee in connection with
the negligent or willful misuse of such powers of attorney by the Master
Servicer. In the performance of its duties hereunder, the Master Servicer
shall be an independent contractor and shall not, except in those instances
where it is taking action in the name of the Indenture Trustee, be deemed to
be the agent of the Indenture Trustee.
(b) In master servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures and exercise the same care that it
customarily employs and exercises in master servicing and administering loans
for its own account, giving due consideration to the Servicing Standard where
such practices do not conflict with this Agreement. Consistent with the
foregoing, the Master Servicer may, and may permit the Servicer to, in its
discretion (i) waive any late payment charge and (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 120 days;
provided, however, that the maturity of any Mortgage Loan shall not be
extended past the date on which the final payment is due on the latest
maturing Mortgage Loan as of the Cut-off Date. In the event of any extension
described in clause (ii) above, the Master Servicer shall make or cause the
Servicer to make Advances on the related Mortgage Loan in accordance with the
provisions of Section 4.03 on the basis of the amortization schedule of such
Mortgage Loan without modification thereof by reason of such extension.
Section 5.05. Enforcement of Servicer's and Master Servicer's
Obligations.
(a) The Master Servicer shall not be required to (i) take any action with
respect to the servicing of any Mortgage Loan that the Servicer is not
required to take under this Agreement
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and (ii) cause the Servicer to take any action or refrain from taking any
action if this Agreement does not require the Servicer to take such action or
refrain from taking such action.
(b) The Master Servicer, for the benefit of the Issuer, the Indenture
Trustee and the Noteholders, shall enforce the obligations of the Servicer
hereunder, and shall, in the event that the Servicer fails to perform its
obligations in accordance herewith, terminate the rights and obligations of
the Servicer hereunder and either act as servicer of the related Mortgage
Loans or cause other parties hereto to either assume the obligations of the
Servicer under this Agreement (or agree to execute and deliver a successor
servicing or sub-servicing agreement with a successor servicer). Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of servicing or sub-servicing rights and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Master Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Master
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor initially (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loans, (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed, and then, (iii) to the extent that such amounts
are insufficient to reimburse the Master Servicer for the costs of such
enforcement, from the Collection Account.
Section 5.06. [Reserved]
Section 5.07. Collection Account.
(a) On the Closing Date, the Trust Administrator shall open and shall
thereafter maintain a segregated account held in trust in the name of the
Securities Intermediary (the "Collection Account"), entitled "Collection
Account, Deutsche Bank National Trust Company, as Indenture Trustee, in trust
for Holders of the Aames Mortgage Investment Trust 2005-2, Mortgage Backed
Notes, Series 2005-2." The Collection Account shall relate solely to the Notes
issued by the Issuer, and funds deposited in the Collection Account shall not
be commingled with any other monies.
(b) The Collection Account shall be an Eligible Account. If an existing
Collection Account ceases to be an Eligible Account, the Trust Administrator
shall establish a new Collection Account that is an Eligible Account within 10
days and transfer all funds and investment property on deposit in such
existing Collection Account into such new Collection Account.
(c) The Trust Administrator shall give to the Master Servicer and the
Indenture Trustee prior written notice of the name and address of the
depository institution at which the Collection Account is maintained and the
account number of such Collection Account. The Trust Administrator shall take
such actions as are necessary to cause the depository institution holding the
Collection Account to hold such account in the name of the Indenture Trustee.
On each Payment Date, the entire amount on deposit in the Collection Account
relating to the Mortgage Loans (subject to permitted withdrawals set forth in
Section 5.08), other than amounts not included in Interest Remittance Amount
or Principal Remittance Amount to be paid to
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Noteholders for such Payment Date, shall be applied to make the requested
payment of principal and/or interest on each class of Notes.
(d) The Master Servicer shall deposit or cause to be deposited in the
Collection Account on the earlier of the applicable Payment Date and one
Business Day following receipt thereof, the following amounts received or
payments made by the Master Servicer (other than in respect of principal of
and interest on the Mortgage Loans due on or before the Cut-off Date):
(i) all remittances from the Custodial Account to the Master
Servicer pursuant to Section 4.03;
(ii) all Advances made by the Servicer or the Master Servicer
pursuant to Section 6.05 hereof and any payment in respect of Prepayment
Interest Shortfalls paid by the Master Servicer pursuant to Section 5.21
hereof; and
(iii) the Purchase Price of any Mortgage Loan repurchased by the
Depositor or the Seller during the related Prepayment Period or any other
Person and any Substitution Amount related to any Qualifying Substitute
Mortgage Loan.
(e) Funds in the Collection Account may be invested by the Trust
Administrator in Eligible Investments selected by and at the written direction
of the Trust Administrator, which shall mature not later than one Business Day
prior to the next Payment Date (or on the Payment Date with respect to any
Eligible Investment of the Trust Administrator or any other fund managed or
advised by it or any Affiliate) and any such Eligible Investment shall not be
sold or disposed of prior to its maturity. All such Eligible Investments shall
be made in the name of the Master Servicer in trust for the benefit of the
Indenture Trustee and the Noteholders. All income and gain realized from any
Eligible Investment shall be for the benefit of the Master Servicer and shall
be subject to its withdrawal or order from time to time, subject to Section
5.08 and shall not be part of the Trust Estate. The amount of any losses
incurred in respect of any such investments shall be deposited in such
Collection Account by the Master Servicer out of its own funds, without any
right of reimbursement therefor, immediately as realized. The foregoing
requirements for deposit in the Collection Account are exclusive, it being
understood and agreed that, without limiting the generality of the foregoing,
payments of interest on funds in the Collection Account and payments in the
nature of late payment charges, assumption fees and other incidental fees and
charges relating to the Mortgage Loans need not be deposited by the Master
Servicer in the Collection Account and may be retained by the Master Servicer
or the Servicer, as applicable, as additional servicing compensation. If the
Master Servicer deposits in the Collection Account any amount not required to
be deposited therein, it may at any time withdraw such amount from such
Collection Account.
Section 5.08. Application of Funds in the Collection Account. The Trust
Administrator may, from time to time, make, or cause to be made, withdrawals
from the Collection Account for the following purposes:
(i) to reimburse the Master Servicer or the Servicer, as applicable,
for any previously unreimbursed Advances or Servicing Advances made by
any such party, such right to reimbursement pursuant to this subclause
(i) being limited to amounts received
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on or in respect of a particular Mortgage Loan (including, for this
purpose, Liquidation Proceeds, Condemnation Proceeds, REO Disposition
Proceeds and amounts representing Insurance Proceeds with respect to the
property subject to the related Mortgage) which represent late recoveries
(net of the applicable Servicing Fee) of payments of principal or
interest respecting which any such Advance was made, it being understood,
in the case of any such reimbursement, that the Master Servicer's or
Servicer's right thereto shall be prior to the rights of the Noteholders;
(ii) to reimburse the Master Servicer or the Servicer following a
final liquidation of a Mortgage Loan for any previously unreimbursed
Advances made by any such party (A) that such party determines in good
faith will not be recoverable from amounts representing late recoveries
of payments of principal or interest respecting the particular Mortgage
Loan as to which such Advance was made or from Liquidation Proceeds,
Condemnation Proceeds, REO Disposition Proceeds or Insurance Proceeds
with respect to such Mortgage Loan and/or (B) to the extent that such
unreimbursed Advances exceed the related Liquidation Proceeds or
Insurance Proceeds, it being understood, in the case of each such
reimbursement, that the Master Servicer's or Servicer's right thereto
shall be prior to the rights of the Noteholders;
(iii) to reimburse the Master Servicer or the Servicer from
Liquidation Proceeds for Liquidation Expenses and for amounts expended by
it pursuant to Section 4.02(o) in good faith in connection with the
restoration of damaged property and, to the extent that Liquidation
Proceeds after such reimbursement exceed the unpaid principal balance of
the related Mortgage Loan, together with accrued and unpaid interest
thereon at the applicable Mortgage Rate less the applicable Servicing Fee
Rate and Master Servicing Fee Rate for such Mortgage Loan to the Due Date
next succeeding the date of its receipt of such Liquidation Proceeds, to
pay to the Master Servicer or the Servicer out of such excess the amount
of any unpaid assumption fees, late payment charges or other Mortgagor
charges on the related Mortgage Loan and to retain any excess remaining
thereafter as additional servicing compensation, it being understood, in
the case of any such reimbursement or payment, that such Master
Servicer's or Servicer's right thereto shall be prior to the rights of
the Noteholders;
(iv) to pay to the Depositor or the Seller or any other Person, as
applicable, with respect to each Mortgage Loan or REO Property acquired
in respect thereof that has been purchased pursuant to this Agreement,
all amounts received thereon and not paid on the date on which the
related repurchase was effected, and to pay to the applicable party any
Advances and Servicing Advances to the extent specified in the definition
of Purchase Price;
(v) to the extent not paid by the Servicer, to pay any Insurance
Premium with respect to a Mortgage Loan;
(vi) to pay to the Master Servicer income earned on the investment
of funds on deposit in the Collection Account;
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(vii) on each Payment Date, to make payment to the Noteholders in
the amounts and in the manner provided for in Section 6.02 for the
related Payment Date (to the extent collected by the Master Servicer or
the Servicer);
(viii) on each Payment Date, to make payment to the Ownership
Certificate, all Prepayment Premiums received during the immediately
preceding Prepayment Period;
(ix) to make payment to itself, the Master Servicer, the Servicer,
the Indenture Trustee, the Custodian, the Owner Trustee and others
pursuant to any provision of this Agreement, the Trust Agreement, the
Indenture or the Custodial Agreement;
(x) to withdraw funds deposited in error in the Collection Account;
(xi) to clear and terminate the Collection Account pursuant to
Article IX; and
(xii) to reimburse a successor master servicer (solely in its
capacity as successor master servicer), for any fee or advance occasioned
by a termination of the Master Servicer, and the assumption of such
duties by the Indenture Trustee as successor master servicer or a
successor master servicer appointed by the Indenture Trustee pursuant to
Section 8.01, in each case to the extent not reimbursed by the terminated
Master Servicer, it being understood, in the case of any such
reimbursement or payment, that the right of the Master Servicer or the
Indenture Trustee thereto shall be prior to the rights of the
Noteholders.
In connection with withdrawals pursuant to subclauses (i) and (iv)
above, the Master Servicer's or the Servicer's or such other Person's
entitlement thereto is limited to collections or other recoveries on the
related Mortgage Loan. The Trust Administrator shall therefore keep and
maintain a separate accounting for each Mortgage Loan for the purpose of
justifying any withdrawal from the Collection Account it maintains pursuant to
such subclauses.
Section 5.09. Reports to Indenture Trustee and Noteholders.
(a) On each Payment Date, the Trust Administrator shall make available to
the Indenture Trustee and each Noteholder, a report setting forth the
following information (on the basis of Mortgage Loan level information
obtained from the Servicer):
(i) the aggregate amount of the payment to be made on such Payment
Date to the Holders of each Class of Notes, to the extent applicable,
allocable to principal on the Mortgage Loans, including Liquidation
Proceeds and Insurance Proceeds, stating separately the amount
attributable to scheduled principal payments and unscheduled payments in
the nature of principal;
(ii) the aggregate amount of the payment to be made on such Payment
Date to the Holders of each Class of Notes allocable to interest and the
calculation thereof;
(iii) the amount, if any, of any payment to the Holder of the
Ownership Certificate;
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(iv) (A) the aggregate amount of any Advances required to be made by
or on behalf of the Servicer (or the Master Servicer) with respect to
such Payment Date, (B) the aggregate amount of such Advances actually
made, and (C) the amount, if any, by which (A) above exceeds (B) above;
(v) the total number of Mortgage Loans, the aggregate Stated
Principal Balance of all the Mortgage Loans as of the close of business
on the last day of the related Collection Period, after giving effect to
payments allocated to principal reported under clause (i) above;
(vi) the Class Principal Amount of each Class of Notes, to the
extent applicable, as of such Payment Date after giving effect to
payments allocated to principal reported under clause (i) above;
(vii) the amount of all Prepayment Premiums distributed to the
Ownership Certificate;
(viii) the amount of any Realized Losses incurred with respect to
the Mortgage Loans (x) in the applicable Prepayment Period and (y) in the
aggregate since the Cut-off Date;
(ix) the amount of the Servicing Fee paid during the Collection
Period to which such payment relates;
(x) the number and aggregate Stated Principal Balance of Mortgage
Loans, as reported to the Trust Administrator by the Servicer, (a)
remaining outstanding, (b) delinquent 30 to 59 days on a contractual
basis, (c) delinquent 60 to 89 days on a contractual basis, (d)
delinquent 90 or more days on a contractual basis, (e) as to which
foreclosure proceedings have been commenced as of the close of business
on the last Business Day of the calendar month immediately preceding the
month in which such Payment Date occurs, (f) in bankruptcy and (g) that
are REO Properties;
(xi) the aggregate Stated Principal Balance of any Mortgage Loans
with respect to which the related Mortgaged Property became an REO
Property as of the close of business on the last Business Day of the
calendar month immediately preceding the month in which such Payment Date
occurs;
(xii) with respect to substitution of Mortgage Loans in the
preceding calendar month, the Stated Principal Balance of each Deleted
Mortgage Loan and of each Qualifying Substitute Mortgage Loan;
(xiii) the aggregate outstanding Basis Risk Shortfalls and Unpaid
Basis Risk Shortfalls, if any, for each Class of Notes, after giving
effect to the payments made on such Payment Date;
(xiv) the Note Interest Rate applicable to such Payment Date with
respect to each Class of Notes;
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(xv) the Interest Remittance Amount and the Principal Remittance
Amount applicable to such Payment Date;
(xvi) if applicable, the amount of any shortfall (i.e., the
difference between the aggregate amounts of principal and interest which
Noteholders would have received if there were sufficient available
amounts in the Collection Account and the amounts actually paid);
(xvii) any Overcollateralization Deficiency Amount after giving
effect to the payments made on such Payment Date;
(xviii) LIBOR with respect to such Payment Date; and
(xix) indication of whether a Servicer Termination Trigger Event or
a Seller Financial Covenant Termination Event has occurred.
In the case of information furnished pursuant to subclauses (i), (ii) and
(vi) above, the amounts shall (except in the case of the report delivered to
the holder of the Ownership Certificate) be expressed as a dollar amount per
$1,000 of original principal amount of Notes.
The Trust Administrator will make such report and additional loan level
information (and, at its option, any additional files containing the same
information in an alternative format) available each month to the Rating
Agencies and Noteholders via the Trust Administrator's website. The Trust
Administrator's website can be accessed at www.ctslink.com. Assistance in
using the website can be obtained by calling the Trust Administrator's
customer service desk at (301) 815-6600. Such parties that are unable to use
the website are entitled to have a paper copy mailed to them via first class
mail by notifying the Trust Administrator at Wells Fargo Bank, N.A., P.O. Box
98, Columbia, Maryland 21046 (or for overnight deliveries at 9062 Old
Annapolis Road, Columbia, Maryland 21045), and indicating such. The Trust
Administrator shall have the right to change the way such statements are
distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Trust Administrator shall provide
timely and adequate notification to all above parties regarding any such
changes.
The foregoing information and reports shall be prepared and determined by
the Trust Administrator based solely on Mortgage Loan data provided to the
Trust Administrator by the Master Servicer (in a format agreed to by the Trust
Administrator and the Master Servicer) no later than the Payment Date. In
preparing or furnishing the foregoing information, the Trust Administrator and
the Master Servicer shall be entitled to rely conclusively on the accuracy of
the information or data regarding the Mortgage Loans, the related REO
Property, Seller Financial Covenant Termination Events and Servicer
Termination Trigger Events that has been provided to the Master Servicer by
the Servicer, and neither the Trust Administrator nor the Master Servicer
shall be obligated to verify, recompute, reconcile or recalculate any such
information or data. The Trust Administrator, the Indenture Trustee, the
Custodian and the Master Servicer shall be entitled to conclusively rely on
all of such data and information provided to the Master Servicer and shall
have no liability for any errors in such data or information.
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(b) Upon the reasonable advance written request of any Noteholder that is
a savings and loan, bank or insurance company, which request, if received by
the Indenture Trustee shall be forwarded promptly to the Trust Administrator,
the Trust Administrator shall provide, or cause to be provided (or, to the
extent that such information or documentation is not required to be provided
by the Servicer, shall use reasonable efforts to obtain such information and
documentation from the Servicer, and provide), to such Noteholder such reports
and access to information and documentation regarding the Mortgage Loans as
such Noteholder may reasonably deem necessary to comply with applicable
regulations of the Office of Thrift Supervision or its successor or other
regulatory authorities with respect to an investment in the Notes; provided,
however, that the Trust Administrator shall be entitled to be reimbursed by
such Noteholder for actual expenses incurred in providing such reports and
access.
(c) Within 90 days, or such shorter period as may be required by statute
or regulation, after the end of each calendar year, the Trust Administrator
shall have prepared and shall make available to each Person who at any time
during the calendar year was a Noteholder of record, and make available to
Security Owners (identified as such by the Clearing Agency) in accordance with
applicable regulations, a report summarizing the items provided to the
Noteholders pursuant to Section 5.09(a) on an annual basis as may be required
to enable such Holders to prepare their federal income tax returns; provided,
however, that this Section 5.09(c) shall not be applicable where relevant
reports or summaries are required elsewhere in this Agreement. Such
information shall include the amount of original issue discount accrued on
each Class of Notes and information regarding the expenses of the Issuer. The
Trust Administrator shall be deemed to have satisfied such requirement if it
forwards such information in any other format permitted by the Code. The
Master Servicer shall provide the Trust Administrator with such information as
is necessary for the Trust Administrator to prepare such reports.
(d) The Trust Administrator shall furnish any other information that is
required by the Code and regulations thereunder to be made available to
Noteholders. The Master Servicer shall provide the Trust Administrator with
such information as is necessary for the Trust Administrator to prepare such
reports (and the Trust Administrator may rely solely upon such information).
Section 5.10. Termination of Servicer; Successor Servicers.
(a) The Master Servicer shall be entitled to terminate the rights and
obligations of the Servicer upon the occurrence of a Servicer Event of Default
as set forth in Section 4.07; provided, however, that in the event of
termination of the Servicer, the Master Servicer shall provide for the
servicing of the Mortgage Loans by a successor servicer as provided in Section
4.08.
The parties acknowledge that notwithstanding the preceding sentence,
there may be a transition period, not to exceed 90 days, in order to effect
the transfer of servicing to a successor servicer. The Master Servicer shall
be entitled to be reimbursed by the Servicer (or by the Trust Estate, if the
Servicer is unable to fulfill its obligations hereunder) for all costs
associated with the transfer of servicing, including without limitation, any
costs or expenses associated with the complete transfer of all servicing data
and the completion, correction or manipulation of such
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servicing data, as may be required by the Master Servicer to correct any
errors or insufficiencies in the servicing data or otherwise to enable the
Master Servicer to service the Mortgage Loans properly and effectively.
(b) If the Master Servicer acts as a successor Servicer, it shall not
assume liability for the representations and warranties of the Servicer that
it replaces. The Master Servicer shall use reasonable efforts to have the
successor Servicer assume liability for the representations and warranties
made by the terminated Servicer and in the event of any such assumption by the
successor servicer, the Master Servicer may, in the exercise of its business
judgment, release the terminated Servicer from liability for such
representations and warranties.
(c) If the Master Servicer acts as a successor Servicer, it will have no
obligation to make an Advance if it determines in its reasonable judgment that
such Advance would constitute a Nonrecoverable Advance.
Section 5.11. Master Servicer Liable for Enforcement. The Master Servicer
shall use commercially reasonable efforts to ensure that the Mortgage Loans
are serviced in accordance with the provisions of this Agreement and shall use
commercially reasonable efforts to enforce the provisions of Article IV for
the benefit of the Noteholders. The Master Servicer shall be entitled to enter
into any agreement with any Servicer for indemnification of the Master
Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification. Except as expressly set forth herein, the Master
Servicer shall have no liability for the acts or omissions of the Servicer in
the performance by such Servicer of its obligations under Article IV.
Section 5.12. Assumption of Master Servicing by Indenture Trustee.
(a) In the event the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of any Master Servicer Event of
Default under Section 8.01 of this Agreement), the Indenture Trustee shall
thereupon assume all of the rights and obligations of such Master Servicer
hereunder. The Indenture Trustee, its designee or any successor master
servicer appointed by the Indenture Trustee shall be deemed to have assumed
all of the Master Servicer's interest herein, except that the Master Servicer
shall not thereby be relieved of any liability or obligations of the Master
Servicer accruing prior to its replacement as Master Servicer, and shall be
liable to the Indenture Trustee, and hereby agrees to indemnify and hold
harmless the Indenture Trustee from and against all costs, damages, expenses
and liabilities (including reasonable attorneys' fees) incurred by the
Indenture Trustee as a result of such liability or obligations of the Master
Servicer and in connection with the Indenture Trustee's assumption (but not
its performance, except to the extent that costs or liability of the Indenture
Trustee are created or increased as a result of negligent or wrongful acts or
omissions of the Master Servicer prior to its replacement as Master Servicer)
of the Master Servicer's obligations, duties or responsibilities thereunder.
(b) The Master Servicer that has been terminated shall, upon request of
the Indenture Trustee but at the expense of such Master Servicer, deliver to
the assuming party all documents and records relating to the Mortgage Loans
and an accounting of amounts collected and held by
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it and otherwise use its best efforts to effect the orderly and efficient
transfer of master servicing to the assuming party.
Section 5.13. [Reserved]
Section 5.14. Release of Mortgage Files.
(a) Upon (i) becoming aware of the payment in full of any Mortgage Loan
or (ii) the receipt by the Master Servicer of a notification that payment in
full has been or will be escrowed in a manner customary for such purposes, the
Master Servicer will, or will cause the Servicer to, promptly notify the
Indenture Trustee (or the Custodian) by a certification (which certification
shall include a statement to the effect that all amounts received in
connection with such payment that are required to be deposited in the
Collection Account maintained by the Trust Administrator pursuant to Section
5.07 have been or will be so deposited) of a Servicing Officer and shall
request (on the form attached to the Custodial Agreement) the Indenture
Trustee or the Custodian, to deliver to the Servicer the related Mortgage
File. Upon receipt of such certification and request, the Indenture Trustee or
the Custodian (with the consent, and at the direction of the Indenture
Trustee), shall promptly release the related Mortgage File to the Servicer and
the Indenture Trustee shall have no further responsibility with regard to such
Mortgage File. Upon any such payment in full, the Master Servicer is
authorized, and the Servicer is authorized, to give, as agent for the
Indenture Trustee, as the mortgagee under the Mortgage that secured the
Mortgage Loan, an instrument of satisfaction (or assignment of mortgage
without recourse) regarding the Mortgaged Property subject to the Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor
of such payment, it being understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Collection Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, the Indenture Trustee shall execute such documents as
shall be prepared and furnished to the Indenture Trustee by the Master
Servicer, or by the Servicer, as applicable, (in a form reasonably acceptable
to the Indenture Trustee) and as are necessary for the prosecution of any such
proceedings. The Indenture Trustee or the Custodian, shall, upon request of
the Master Servicer or of the Servicer, as applicable, and delivery to the
Indenture Trustee or the Custodian, of a trust receipt signed by a Servicing
Officer substantially in the form attached to the Custodial Agreement, release
the related Mortgage File held in its possession or control to the Master
Servicer (or the Servicer, as applicable). Such trust receipt shall obligate
the Master Servicer or the Servicer, as applicable, to return the Mortgage
File to the Indenture Trustee or the Custodian, as applicable, when the need
therefor by the Master Servicer or the Servicer, as applicable, no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the trust receipt shall be released by the Indenture Trustee or the
Custodian, as applicable, to the Master Servicer or the Servicer as
applicable.
Section 5.15. Documents, Records and Funds in Possession of Master
Servicer To Be Held for Indenture Trustee.
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(a) The Master Servicer shall transmit, or cause the Servicer to
transmit, to the Indenture Trustee such documents and instruments coming into
the possession of the Master Servicer or the Servicer from time to time as are
required by the terms hereof to be delivered to the Indenture Trustee or the
Custodian. Any funds received by the Master Servicer or by the Servicer in
respect of any Mortgage Loan or which otherwise are collected by the Master
Servicer or the Servicer as Liquidation Proceeds or Insurance Proceeds in
respect of any Mortgage Loan shall be held for the benefit of the Indenture
Trustee and the Noteholders subject to the Master Servicer's right to retain
or withdraw amounts provided in this Agreement and to the right of the
Servicer to retain its Servicing Fee and other amounts as provided herein. The
Master Servicer shall, and shall cause the Servicer to, provide access to
information and documentation regarding the Mortgage Loans to the Indenture
Trustee, their respective agents and accountants at any time upon reasonable
request and during normal business hours, and to Noteholders that are savings
and loan associations, banks or insurance companies, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of such Office
and Corporation or examiners of any other federal or state banking or
insurance regulatory authority if so required by applicable regulations of the
Office of Thrift Supervision or other regulatory authority, such access to be
afforded without charge but only upon reasonable request in writing and during
normal business hours at the offices of the Master Servicer designated by it.
In fulfilling such a request the Master Servicer shall not be responsible for
determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer or the Servicer, in respect of any Mortgage
Loans, whether from the collection of principal and interest payments or from
Liquidation Proceeds or Insurance Proceeds, shall be held by the Master
Servicer or by the Servicer for and on behalf of the Indenture Trustee as the
Indenture Trustee's agent and bailee for purposes of perfecting the Indenture
Trustee's security interest therein as provided by relevant Uniform Commercial
Code or laws; provided, however, that the Master Servicer and the Servicer
shall be entitled to setoff against, and deduct from, any such funds any
amounts that are properly due and payable to the Master Servicer or the
Servicer under this Agreement and shall be authorized to remit such funds to
the Trust Administrator in accordance with this Agreement.
(c) The Master Servicer hereby acknowledges that concurrently with the
execution of this Agreement, the Indenture Trustee shall own or, to the extent
that a court of competent jurisdiction shall deem the conveyance of the
Mortgage Loans from the Seller to the Depositor not to constitute a sale, the
Indenture Trustee shall have a security interest in the Mortgage Loans and in
all Mortgage Files representing such Mortgage Loans and in all funds and
investment property now or hereafter held by, or under the control of, the
Servicer or the Master Servicer that are collected by the Servicer or the
Master Servicer in connection with the Mortgage Loans, whether as scheduled
installments of principal and interest or as full or partial prepayments of
principal or interest or as Liquidation Proceeds or Insurance Proceeds or
otherwise, and in all proceeds of the foregoing and proceeds of proceeds (but
excluding any fee or other amounts to which the Servicer or the Master
Servicer is entitled to hereunder); and the Master Servicer agrees that so
long as the Mortgage Loans are assigned to and held by the Indenture Trustee
or the Custodian, all documents or instruments constituting part of the
Mortgage Files, and such funds relating to the Mortgage Loans which come into
the possession or custody of, or which are subject to the control of, the
Master Servicer or the Servicer shall be held by the Master Servicer
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or the Servicer for and on behalf of the Indenture Trustee as the Indenture
Trustee's agent and bailee for purposes of perfecting the Indenture Trustee's
security interest therein as provided by the applicable Uniform Commercial
Code or other applicable laws.
(d) The Master Servicer agrees that it shall not, and shall not authorize
the Servicer to, create, incur or subject any Mortgage Loans, or any funds
that are deposited in any Custodial Account, Escrow Account or the Collection
Account, or any funds that otherwise are or may become due or payable to or
for the benefit of the Indenture Trustee, to any claim, lien, security
interest, judgment, levy, writ of attachment or other encumbrance, nor assert
by legal action or otherwise any claim or right of setoff against any Mortgage
Loan or any funds collected on, or in connection with, a Mortgage Loan.
Section 5.16. Opinion. On or before the Closing Date, the Master Servicer
shall cause to be delivered to the Depositor, the Seller, the Indenture
Trustee, the Issuer, the Trust Administrator and the Servicer one or more
Opinions of Counsel, dated the Closing Date, in form and substance reasonably
satisfactory to the Depositor, as to the due authorization, execution and
delivery of this Agreement by the Master Servicer and the enforceability
thereof.
Section 5.17. [Reserved]
Section 5.18. [Reserved]
Section 5.19. [Reserved]
Section 5.20. Indenture Trustee To Retain Possession of Certain Insurance
Policies and Documents. The Indenture Trustee (or the Custodian on behalf of
the Indenture Trustee) shall retain possession and custody of the originals of
the primary mortgage insurance policies or certificate of insurance if
applicable and any certificates of renewal as to the foregoing as may be
issued from time to time as contemplated by this Agreement. Until all amounts
payable in respect of the Notes have been paid in full and the Master Servicer
otherwise has fulfilled its obligations under this Agreement, the Indenture
Trustee (or the Custodian) shall also retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions of
this Agreement. The Master Servicer shall promptly deliver or cause the
Servicer to deliver to the Indenture Trustee (or the Custodian), upon the
execution or receipt thereof the originals of the primary mortgage insurance
policies and any certificates of renewal thereof, and such other documents or
instruments that constitute portions of the Mortgage File that come into the
possession of the Master Servicer or the Servicer from time to time.
Section 5.21. Compensation to the Master Servicer. Pursuant to Section
5.07(e), all income and gain realized from any investment of funds in the
Collection Account shall be for the benefit of the Master Servicer as
compensation. Notwithstanding the foregoing, the Master Servicer shall deposit
in the Collection Account, on or before the related Payment Date, an amount
equal to the lesser of (i) its master servicing compensation with respect to
such Payment Date and (ii) the amount of any Compensating Interest Payment
required to be paid by the Servicer with respect to such Payment Date pursuant
to this Agreement, but which is not paid by the Servicer on its behalf. The
Master Servicer shall be required to pay all expenses incurred by
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it in connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement.
Section 5.22. [Reserved]
Section 5.23. Reports to the Indenture Trustee.
(a) Not later than 30 days after each Payment Date, the Trust
Administrator shall, upon request, forward to the Indenture Trustee a
statement, deemed to have been certified by a officer of the Trust
Administrator, setting forth the status of the Collection Account maintained
by the Trust Administrator as of the close of business on the related Payment
Date, indicating that all payments required by this Agreement to be made by
the Trust Administrator have been made (or if any required payment has not
been made by the Trust Administrator, specifying the nature and status
thereof) and showing, for the period covered by such statement, the aggregate
of deposits into and withdrawals from the Collection Account maintained by the
Trust Administrator. Copies of such statement shall be provided by the Trust
Administrator, upon request, to the Depositor, Attention: Aames 2005-2 and any
Noteholders (or by the Indenture Trustee at the Trust Administrator's expense
if the Trust Administrator shall fail to provide such copies to the
Noteholders (unless (i) the Trust Administrator shall have failed to provide
the Indenture Trustee with such statement or (ii) the Indenture Trustee has no
actual knowledge of the Trust Administrator's failure to provide such
statement)).
(b) Not later than two Business Days following each Payment Date, the
Trust Administrator shall deliver to one Person designated by the Depositor,
in a format consistent with other electronic loan level reporting supplied by
the Master Servicer in connection with similar transactions, "loan level"
information with respect to the Mortgage Loans as of the related Determination
Date, to the extent that such information has been provided to the Master
Servicer by the Servicer or by the Depositor.
(c) All information, reports and statements prepared by the Master
Servicer under this Agreement shall be based on information supplied to the
Master Servicer by the Servicer without independent verification thereof and
the Master Servicer shall be entitled to rely on such information.
Section 5.24. Annual Officer's Certificate as to Compliance.
(a) The Master Servicer shall deliver to the Indenture Trustee no later
than five Business Days after the 15th of March of each calendar year,
commencing in March 2006, an Officer's Certificate, certifying that with
respect to the period ending on the immediately preceding December 31: (i)
such Servicing Officer has reviewed the activities of such Master Servicer
during the preceding calendar year or portion thereof and its performance
under this Agreement, (ii) to the best of such Servicing Officer's knowledge,
based on such review, such Master Servicer has performed and fulfilled its
duties, responsibilities and obligations under this Agreement in all material
respects throughout such year, or, if there has been a default in the
fulfillment of any such duties, responsibilities or obligations, specifying
each such default known to such Servicing Officer and the nature and status
thereof, (iii) nothing has come to the attention of such Servicing Officer to
lead such Servicing Officer to believe that the Servicer has failed to
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perform any of its duties, responsibilities and obligations set forth in
Article IV hereunder in all material respects throughout such year, or, if
there has been a material default in the performance or fulfillment of any
such duties, responsibilities or obligations, specifying each such default
known to such Servicing Officer and the nature and status thereof, and (iv)
the Master Servicer has received from the Servicer an annual certificate of
compliance and a copy of such Servicer's annual audit report, or, if any such
certificate or report has not been received by the Master Servicer, the Master
Servicer is using its best reasonable efforts to obtain such certificate or
report.
(b) Copies of such statements shall be provided to any Noteholder upon
request, by the Master Servicer or by the Indenture Trustee at the Master
Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Indenture
Trustee with such statement or (ii) the Indenture Trustee has no actual
knowledge of the Master Servicer's failure to provide such statement).
Section 5.25. Annual Independent Accountants' Servicing Report. If the
Master Servicer (or any of its Affiliates) has, during the course of any
fiscal year, directly serviced, as a successor Servicer, any of the Mortgage
Loans, then the Master Servicer at its expense shall cause a nationally
recognized firm of independent certified public accountants to furnish a
statement to the Indenture Trustee and the Depositor no later than five
Business Days after the fifteenth of March of each calendar year, commencing
in March 2006, to the effect that, with respect to the most recently ended
calendar year, such firm has examined certain records and documents relating
to the Master Servicer's performance of its servicing obligations under this
Agreement and pooling and servicing and trust agreements in material respects
similar to this Agreement and to each other and that, on the basis of such
examination conducted substantially in compliance with the audit program for
mortgages serviced for FHLMC or the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that the Master Servicer's
activities have been conducted in compliance with this Agreement, or that such
examination has disclosed no material items of noncompliance except for (i)
such exceptions as such firm believes to be immaterial, (ii) such other
exceptions as are set forth in such statement and (iii) such exceptions that
the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Program for Mortgages Serviced by FHLMC requires it to report. Copies of such
statements shall be provided to any Noteholder upon request by the Master
Servicer, or by the Indenture Trustee at the expense of the Master Servicer if
the Master Servicer shall fail to provide such copies. If such report
discloses exceptions that are material, the Master Servicer shall advise the
Indenture Trustee whether such exceptions have been or are susceptible to
cure, and will take prompt action to do so.
Section 5.26. Merger or Consolidation. Any Person into which the Master
Servicer may be merged or consolidated, or any Person resulting from any
merger, conversion, other change in form or consolidation to which the Master
Servicer shall be a party, or any Person succeeding to the business of the
Master Servicer, shall be the successor to the Master Servicer 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 or resulting Person to the Master
Servicer shall be a Person that shall be qualified and approved (or that have
an Affiliate that is qualified and approved) to service mortgage loans for
Fannie Mae or FHLMC and shall have a net worth of not less than $15,000,000.
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Section 5.27. Resignation of Master Servicer. Except as otherwise
provided in Sections 5.26 and this Section 5.27 hereof, the Master Servicer
shall not resign from the obligations and duties hereby imposed on it unless
it determines that the Master Servicer's 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 and cannot be cured.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel that shall be Independent to such effect
delivered to the Indenture Trustee. No such resignation shall become effective
until the Indenture Trustee shall have assumed, or a successor master servicer
shall have been appointed by the Indenture Trustee and until such successor
shall have assumed, the Master Servicer's responsibilities and obligations
under this Agreement. Notice of such resignation shall be given promptly by
the Master Servicer and the Depositor to the Indenture Trustee.
Section 5.28. Assignment or Delegation of Duties by the Master Servicer.
Except as expressly provided herein, the Master Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed
by the Master Servicer hereunder, unless the Indenture Trustee and the
Depositor shall have consented to such action; provided, however, that the
Master Servicer shall have the right without the prior written consent of the
Indenture Trustee or the Depositor to delegate or assign to or subcontract
with or authorize or appoint an Affiliate of the Master Servicer to perform
and carry out any duties, covenants or obligations to be performed and carried
out by the Master Servicer hereunder. In no case, however, shall any such
delegation, subcontracting or assignment to an Affiliate of the Master
Servicer relieve the Master Servicer of any liability hereunder. Notice of
such permitted assignment shall be given promptly by the Master Servicer to
the Depositor and the Indenture Trustee. If, pursuant to any provision hereof,
the duties of the Master Servicer are transferred to a successor master
servicer, the entire amount of compensation payable to the Master Servicer
pursuant hereto, including amounts payable to or permitted to be retained or
withdrawn by the Master Servicer pursuant to Section 5.21 hereof, shall
thereafter be payable to such successor master servicer.
Section 5.29. Limitation on Liability of the Master Servicer and Others.
(a) The Master Servicer undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Master Servicer from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that the
duties and obligations of the Master Servicer shall be determined solely by
the express provisions of this Agreement, the Master Servicer 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 Master Servicer and, in absence
of bad faith on the part of the Master Servicer, the Master Servicer 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 Master Servicer and conforming to the requirements of this Agreement.
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(c) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indenture Trustee or the Noteholders 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 Master Servicer or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in its performance of its duties or by reason of reckless disregard for its
obligations and duties under this Agreement. The Master Servicer and any
director, officer, employee or agent of the Master Servicer shall be entitled
to indemnification by the Trust Estate and will be held harmless against any
loss, liability or expense incurred in connection with any legal action
relating to this Agreement, the Notes or any other Operative Agreement other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of his or its duties hereunder or
by reason of reckless disregard of his or its obligations and duties
hereunder. The Master Servicer and any director, officer, employee or agent of
the Master 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 Master Servicer shall be under no obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties
to master service the Mortgage Loans in accordance with this Agreement and
that in its opinion may involve it in any expenses or liability; provided,
however, that the Master Servicer may in its sole discretion undertake any
such action that it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Noteholders hereunder. In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Issuer and the Master Servicer shall be entitled to be
reimbursed therefor out of the Collection Account it maintains as provided by
Section 4.08.
Section 5.30. Indemnification; Third Party Claims. The Master Servicer
agrees to indemnify the Depositor, the Issuer, the Indenture Trustee, the
Owner Trustee and the Servicer and hold them harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, liability, fees and expenses that the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee or the
Servicer may sustain as a result of the failure of the Master Servicer to
perform its duties and master service the Mortgage Loans in compliance with
the terms of this Agreement. The Depositor, the Issuer, the Indenture Trustee,
the Owner Trustee and the Servicer shall immediately notify the Master
Servicer if a claim is made by a third party with respect to this Agreement,
the Mortgage Loans entitling the Depositor, the Issuer, the Indenture Trustee,
the Owner Trustee or the Servicer to indemnification under this Section 5.30,
whereupon the Master Servicer shall assume the defense of any such claim and
pay all expenses in connection therewith, including counsel fees, and promptly
pay, discharge and satisfy any judgment or decree which may be entered against
it or them in respect of such claim. The failure to provide such immediate
notice shall not affect the Master Servicer's obligation pursuant to this
Section 5.30 to indemnify the Depositor, the Issuer, the Indenture Trustee,
the Owner Trustee and the Servicer, except to the extent that the Master
Servicer is materially prejudiced by such failure to notify.
Section 5.31. Alternative Index. In the event that the Servicer notifies
the Master Servicer in writing that the Index for any Mortgage Loan, as
specified in the related Mortgage Note, becomes unavailable for any reason,
the Master Servicer shall select an alternative index in accordance with the
terms of such Mortgage Note or, if such Mortgage Note does not make
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provision for the selection of an alternative index in such event, the Master
Servicer shall, subject to applicable law, select an alternative index based
on information comparable to that used in connection with the original Index
and, in either case, such alternative index shall thereafter be the Index for
such Mortgage Loan.
Section 5.32. Transfer of Servicing. The Servicer agrees that it shall
provide written notice to the Master Servicer and the Indenture Trustee thirty
days prior to any proposed transfer or assignment by the Seller of the
servicing of the Mortgage Loans. In addition, the ability of the Servicer to
transfer or assign the servicing hereunder to a successor servicer shall be
subject to the following conditions:
(i) Receipt of written consent of the Master Servicer to such
transfer;
(ii) Such successor servicer must be a FHA Approved Mortgagee;
(iii) Such successor servicer must satisfy the servicer eligibility
standards set forth in Section 4.06(a);
(iv) Such successor servicer must execute and deliver to the Master
Servicer and the Indenture Trustee an agreement, in form and substance
reasonably satisfactory to the Master Servicer and the Indenture Trustee,
that contains an assumption by such successor servicer of the due and
punctual performance and observance of each covenant and condition to be
performed and observed by the Servicer;
(v) If the successor servicer is not a Servicer of Mortgage Loans at
the time of the transfer, there must be delivered to the Indenture
Trustee a letter from each Rating Agency to the effect that such transfer
of servicing will not result in a qualification, withdrawal or downgrade
of the then-current rating of any of the Notes; and
(vi) The Seller shall, at its cost and expense, take such steps, or
cause the terminated Servicer to take such steps, as may be necessary or
appropriate to effectuate and evidence the transfer of the servicing of
the Mortgage Loans to such successor servicer, including, but not limited
to, the following: (A) to the extent required by the terms of the
Mortgage Loans and by applicable federal and state laws and regulations,
the Seller shall cause the prior Servicer to timely mail to each obligor
under a Mortgage Loan any required notices or disclosures describing the
transfer of servicing of the Mortgage Loans to the successor servicer;
(B) prior to the effective date of such transfer of servicing, the Seller
shall cause the prior Servicer to transmit to any related insurer
notification of such transfer of servicing; (C) on or prior to the
effective date of such transfer of servicing, the Seller shall cause the
prior Servicer to deliver to the successor servicer all Mortgage Loan
Documents and any related records or materials; (D) on or prior to the
effective date of such transfer of servicing, the Seller shall cause the
prior Servicer to transfer to the successor servicer, or, if such
transfer occurs after a Servicer Remittance Date but before the next
succeeding Payment Date, to the Trust Administrator, all funds held by
the prior Servicer in respect of the Mortgage Loans; (E) on or prior to
the effective date of such transfer of servicing, the Seller shall cause
the prior Servicer to, after the effective date of the transfer of
servicing to the successor
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servicer, continue to forward to such successor servicer, within one
Business Day of receipt, the amount of any payments or other recoveries
received by the prior Servicer, and to notify the successor servicer of
the source and proper application of each such payment or recovery; and
(F) the Seller shall cause the prior Servicer to, after the effective
date of transfer of servicing to the successor servicer, continue to
cooperate with the successor servicer to facilitate such transfer in such
manner and to such extent as the successor servicer may reasonably
request.
ARTICLE VI
DEPOSITS AND PAYMENTS TO HOLDERS
Section 6.01. The Collection Account.
(a) The Trust Administrator shall establish and maintain in the name of
the Notes Intermediary the Collection Account as provided in Section 5.07,
which account shall be pledged to the Indenture Trustee for the benefit of the
Noteholders.
(b) The Trust Administrator shall make withdrawals from the Collection
Account only for the purposes set forth in Section 5.08.
Section 6.02. Payments from the Collection Account.
(a) On each Payment Date, the Trust Administrator (or the Paying Agent on
behalf of the Trust Administrator) shall withdraw from the Collection Account
the Total Remittance Amount (to the extent such amount is on deposit in the
Collection Account) and shall pay such amount as specified in this Section.
All allocations and payments made between and with respect to Pool 1 and Pool
2 in this Section shall be made concurrently.
(b) On each Payment Date, the Trust Administrator (or the Paying Agent on
behalf of the Trust Administrator) shall pay the Interest Remittance Amount
for Pool 1 for such date in the following order of priority in accordance with
the report of the Trust Administrator:
(i) pro rata, to the Class 1A1 Notes, Class 1A2 and Class 1A3 Notes,
Current Interest thereon for such Payment Date;
(ii) to the Class 2A1 Notes, Current Interest thereon (after giving
effect to the payment of the Interest Remittance Amount for Pool 2) for
such Payment Date; and
(iii) sequentially, pursuant to clause (d) below.
(c) On each Payment Date, the Trust Administrator (or the Paying Agent on
behalf of the Trust Administrator) shall pay the Interest Remittance Amount
for Pool 2 for such date in the following order of priority in accordance with
the report of the Trust Administrator:
(i) to the Class 2A1 Notes, Current Interest thereon for such
Payment Date;
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(ii) pro rata, to the Class 1A1 Notes, Class 1A2 and Class 1A3
Notes, Current Interest thereon (after giving effect to the payment of
the Interest Remittance Amount for Pool 1) for such Payment Date; and
(iii) sequentially, pursuant to clause (d) below.
(d) On each Payment Date, the Trust Administrator (or the Paying Agent on
behalf of the Trust Administrator) shall pay the Interest Remittance Amount
for both Pool 1 and Pool 2 for such date after payments under clause (b) and
clause (c) above in the following order of priority in accordance with the
report of the Trust Administrator:
(i) to the Class M1, Class M2, Class M3, Class M4, Class M5, Class
M6, Class M7, Class M8, Class M9, Class B1, Class B2, Class B3 and Class
B4 Notes, sequentially, in that order (the "Subordinate Priority"),
Current Interest for such Payment Date;
(ii) to the Indenture Trustee, the Custodian (to the extent not paid
by the Seller pursuant to the Custodial Agreement), the Owner Trustee,
the Master Servicer, the Trust Administrator and the Servicer, previously
unreimbursed extraordinary costs, liabilities and expenses to the extent
provided in this Agreement (including amounts set forth in Section
4.08(b)(ii)); and
(iii) for application as part of Monthly Excess Cashflow for such
Payment Date, as provided in subsection (f) of this Section, any Interest
Remittance Amount remaining after application pursuant to clauses (i) and
(ii) above.
(e) On each Payment Date, the Trust Administrator (or the Paying Agent on
behalf of the Trust Administrator) shall pay the Principal Remittance Amount
for such date in accordance with the report of the Trust Administrator as
follows:
(i) On each Payment Date (a) prior to the Stepdown Date or (b) with
respect to which a Trigger Event is in effect, the Trust Administrator
(or the Paying Agent on behalf of the Trust Administrator) shall make the
following payments to the extent of funds then in the Collection Account
available therefor, concurrently:
(1) For Pool 1: The Principal Payment Amount for Pool 1 will be
paid in the following order of priority:
(A) sequentially, to the Class 1A1, Class 1A2 and Class
1A3 Notes, in that order, until the Class Principal Amount of
each such class has been reduced to zero;
(B) to the Class 2A1 Notes, after giving effect to
payments pursuant to subsection 6.02(e)(i)(2)(A), until the
Class Principal Amount of such class has been reduced to zero;
(C) to the Class M1, Class M2, Class M3, Class M4, Class
M5, Class M6, Class M7, Class M8, Class M9, Class B1, Class B2,
Class B3
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and Class B4 Notes, in accordance with the Subordinate
Priority, until the Class Principal Amount of each such class
has been reduced to zero; and
(D) for application as part of Monthly Excess Cashflow for
such Payment Date, as provided for in subsection (f) of this
Section, any such Principal Payment Amount for Pool 1 remaining
after application pursuant to clauses (A) through (C) above.
(2) For Pool 2: The Principal Payment Amount for Pool 2 will be
paid in the following order of priority:
(A) to the Class 2A1 Notes, until the Class Principal
Amount of such class has been reduced to zero;
(B) sequentially, to the Class 1A1, Class 1A2 and Class
1A3 Notes, in that order, after giving effect to payments made
pursuant to subsection 6.02(e)(i)(1)(A), until the Class
Principal Amount of each such class has been reduced to zero;
(C) to the Class M1, Class M2, Class M3, Class M4, Class
M5, Class M6, Class M7, Class M8, Class M9, Class B1, Class B2,
Class B3 and Class B4 Notes, in accordance with the Subordinate
Priority, until the Class Principal Amount of each such class
has been reduced to zero; and
(D) for application as part of Monthly Excess Cashflow for
such Payment Date, as provided for in subsection (f) of this
Section, any such Principal Payment Amount for Pool 2 remaining
after application pursuant to clauses (A) through (C) above.
(ii) On each Payment Date (a) on or after the Stepdown Date and (b)
with respect to which a Trigger Event is not in effect, the Trust
Administrator (or the Paying Agent on behalf of the Trust Administrator)
shall pay the Principal Payment Amount for such date in the following
order of priority:
(1) (a) so long as any of the Subordinate Notes are
outstanding, to the Class 1A1, Class 1A2 and Class 1A3 Notes (from
amounts in Pool 1 except as provided below) (in accordance with the
Pool 1 Senior Priority) and to the Class 2A1 Notes (from amounts in
Pool 2 except as provided below), in each case, an amount equal to
the lesser of (x) the Principal Payment Amount for the related
Mortgage Pool for such Payment Date and (y) the Related Senior
Principal Payment Amount for such Mortgage Pool for such Payment
Date, in each case until the Class Principal Amount of each such
class or classes has been reduced to zero; provided, however, to the
extent that the Principal Payment Amount for a Mortgage Pool exceeds
the Related Senior Principal Payment Amount for such Mortgage Pool,
such excess shall be paid to the Senior Notes of the other Mortgage
Pool (in the case of the Class 1A1, Class 1A2 and Class 1A3 Notes,
in accordance with the Pool 1 Senior Priority), but in an amount not
to exceed the Senior Principal Payment Amount for such Payment Date
(as reduced by any
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payments pursuant to subclauses (x) and (y) of this clause (1)(a) on
such Payment Date; or (b) otherwise to the Class 1A1, Class 1A2 and
Class 1A3 Notes (in accordance with the Pool 1 Senior Priority) and
to the Class 2A1 Notes, the Principal Payment Amount for the related
Mortgage Pool for such Payment Date;
(2) to the Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9, Class B1, Class B2, Class B3
and Class B4 Notes, in accordance with the Subordinate Priority, in
each case in an amount equal to the lesser of (x) the excess of (a)
the aggregate Principal Payment Amount for Pool 1 and Pool 2 for
such Payment Date over (b) the aggregate of the amount paid to the
Senior Notes on such Payment Date pursuant to clause (1) above and
any amounts paid to any class or classes of Subordinate Notes that
have a higher priority of payment than the subject class on such
Payment Date pursuant to this clause (2), and (y) the Subordinate
Class Principal Payment Amount for the subject class for such
Payment Date, until the Class Principal Amount of such class has
been reduced to zero; and
(3) for application as part of Monthly Excess Cashflow for such
Payment Date, as provided in subsection (f) of this Section, any
Principal Payment Amount remaining after application pursuant to
clauses (1) and (2) above.
(f) On each Payment Date, the Trust Administrator (or the Paying Agent on
behalf of the Trust Administrator) shall pay the Monthly Excess Cashflow for
such date and, subject to Section 6.06(c), (d) and (e), respectively, the
amounts received by the Trust Administrator under the Group 1 Cap Agreement,
the Group 2 Cap Agreement and the Subordinate Cap Agreement, in each case in
accordance with the report of the Trust Administrator as follows:
(i) for each Payment Date occurring (a) before the Stepdown Date or
(b) on or after the Stepdown Date but for which a Trigger Event is in
effect, until the aggregate Class Principal Amount of the Notes equals
the Target Amount for such Payment Date, in the following order of
priority:
(a) concurrently, pro rata based on the respective Senior
Proportionate Percentages for Pool 1 and Pool 2 for such Payment
Date, to the Class 1A1, Class 1A2 and Class 1A3 Notes (in accordance
with the Pool 1 Senior Priority) and to the Class 2A1 Notes, until
the Class Principal Amount of each such class has been reduced to
zero; and
(b) to the Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9, Class B1, Class B2, Class B3
and Class B4 Notes, in accordance with the Subordinate Priority,
until the Class Principal Amount of each such class has been reduced
to zero;
(ii) for each Payment Date occurring (a) on or after the Stepdown
Date and (b) with respect to which a Trigger Event is not in effect, in
the following order of priority:
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(a) concurrently, in proportion to the aggregate Class
Principal Amount of the Senior Notes related to each Mortgage Pool,
after giving effect to principal payments on such Payment Date
pursuant to subsection 6.02(e)(ii), to the Class 1A1, Class 1A2 and
Class 1A3 Notes (in accordance with the Pool 1 Senior Priority) and
to the Class 2A1 Notes, until the aggregate Class Principal Amount
of the Senior Notes, after giving effect to payments on such Payment
Date, equals the Senior Target Amount; and
(b) to the Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9, Class B1, Class B2, Class B3
and Class B4 Notes, in accordance with the Subordinate Priority, in
reduction of their respective Class Principal Amounts, in each case
until the aggregate Class Principal Amount of the Senior Notes and
the classes of Subordinate Notes, if any, that have a higher
priority of payment than the subject class, after giving effect to
payments on such Payment Date, equals the Target Amount for the
subject class for such Payment Date;
(iii) for each Payment Date, after giving effect to payments
pursuant to priority 6.02(f)(i) or (ii) above, as the case may be, on
such Payment Date, subject to Section 6.06(c), (d) and (e), respectively,
amounts received by the Trust Administrator under the Group 1 Cap
Agreement, the Group 2 Cap Agreement and the Subordinate Cap Agreement
shall be paid concurrently, (1) in the case of amounts received under the
Group 1 Cap Agreement, concurrently, in proportion to their respective
Basis Risk Shortfall and Unpaid Basis Risk Shortfall amounts, to the
Group 1 Notes, any applicable Basis Risk Shortfall and Unpaid Basis Risk
Shortfall amounts for each such class for such Payment Date, (2) in the
case of amounts received under the Group 2 Cap Agreement, to the Class
2A1 Notes, any applicable Basis Risk Shortfall and Unpaid Basis Risk
Shortfall amounts for such class for such Payment Date and (3) in the
case of amounts received under the Subordinate Cap Agreement,
concurrently, in proportion to their respective Basis Risk Shortfall and
Unpaid Basis Risk Shortfall amounts, to the Subordinate Notes, any
applicable Basis Risk Shortfall and Unpaid Basis Risk Shortfall amounts
for each such class for such Payment Date;
(iv) for each Payment Date, from Monthly Excess Cashflow remaining
after payments have been made pursuant to priority 6.02(f)(i) or (ii)
above, as the case may be, and after giving effect to payments described
in priority 6.02(f)(iii) above, in the following order of priority:
(1) concurrently, in proportion to their respective Basis Risk
Shortfall and Unpaid Basis Risk Shortfall amounts for such Payment
Date remaining unpaid after giving effect to payments described in
priority 6.02(f)(iii) above, to the Senior Notes, any such Basis
Risk Shortfall and Unpaid Basis Risk Shortfall amounts remaining
unpaid for each such class; and
(2) to the Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6, Class M7, Class M8, Class M9, Class B1, Class B2, Class B3
and Class B4 Notes, in accordance with the Subordinate Priority, any
applicable Basis Risk
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Shortfall and Unpaid Basis Risk Shortfall amounts for each such
class for such Payment Date remaining unpaid after giving effect to
payments described in priority 6.02(f)(iii) above;
(v) to the Class M1, Class M2, Class M3, Class M4, Class M5, Class
M6, Class M7, Class M8, Class M9, Class B1, Class B2, Class B3 and Class
B4 Notes, in accordance with the Subordinate Priority, any Deferred
Interest for each such class and such Payment Date; and
(vi) to the Ownership Certificate, any amount remaining on such date
after application pursuant to clauses (i) through (v) above.
On the Redemption Date, the Trust Administrator (or the Paying Agent on
behalf of the Trust Administrator) shall pay to each Class of Notes the
related Termination Price therefor, as set forth in the Indenture.
Section 6.03. [Reserved].
Section 6.04. Control of the Trust Account and Deferred Interest.
(a) The Depositor and the Issuer hereby appoint Wells Fargo Bank, N.A. as
Securities Intermediary with respect to the Trust Account, and the Issuer has,
pursuant to the Indenture, granted to the Indenture Trustee, for the benefit
of the Noteholders, a security interest to secure all amounts due Noteholders
hereunder in and to the Trust Account and the Security Entitlements to all
Financial Assets credited to the Trust Account, including without limitation
all amounts, securities, investments, Financial Assets, investment property
and other property from time to time deposited in or credited to the Trust
Account and all proceeds thereof. Amounts held from time to time in the Trust
Account will continue to be held by the Securities Intermediary for the
benefit of the Indenture Trustee, as collateral agent, for the benefit of the
Noteholders. Upon the termination of the Issuer or the discharge of the
Indenture, the Indenture Trustee shall inform the Securities Intermediary of
such termination. By acceptance of their Notes or interests therein, the
Noteholders shall be deemed to have appointed Wells Fargo Bank, N.A. as
Securities Intermediary. Wells Fargo Bank, N.A. hereby accepts such
appointment as Securities Intermediary.
(b) With respect to the Trust Account Property credited to the Trust
Account, the Securities Intermediary agrees that:
(i) with respect to any Trust Account Property that is held in
deposit accounts, each such deposit account shall be subject to the
exclusive custody and control of the Securities Intermediary, and the
Securities Intermediary shall have sole signature authority with respect
thereto;
(ii) the sole assets permitted in the Trust Account shall be those
as the Securities Intermediary agrees to treat as Financial Assets; and
(iii) any such Trust Account Property that is, or is treated as, a
Financial Asset shall be physically delivered (accompanied by any
required endorsements) to, or credited
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to an account in the name of, the Securities Intermediary or other
eligible institution maintaining the Trust Account in accordance with the
Securities Intermediary's customary procedures such that the Securities
Intermediary or such other institution establishes a Security Entitlement
in favor of the Indenture Trustee with respect thereto over which the
Securities Intermediary or such other institution has Control;
(c) The Securities Intermediary hereby confirms that (A) the Trust
Account is an account to which Financial Assets are or may be credited, and
the Securities Intermediary shall, subject to the terms of this Agreement,
treat the Indenture Trustee, as collateral agent, as entitled to exercise the
rights that comprise any Financial Asset credited to the Trust Account, (B)
all Trust Account Property in respect of the Trust Account will be promptly
credited by the Securities Intermediary to such account, and (C) all
securities or other property underlying any Financial Assets credited to the
Trust Account shall be registered in the name of the Securities Intermediary,
endorsed to the Securities Intermediary or in blank or credited to another
securities account maintained in the name of the Securities Intermediary and
in no case will any Financial Asset credited to the Trust Account be
registered in the name of the Depositor or the Issuer, payable to the order of
the Depositor or the Issuer or specially endorsed to the Depositor or the
Issuer, except to the extent the foregoing have been specially endorsed to the
Securities Intermediary or in blank;
(d) The Securities Intermediary hereby agrees that each item of property
(whether investment property, Financial Asset, security, instrument or cash)
credited to the Trust Account shall be treated as a Financial Asset;
(e) If at any time the Securities Intermediary shall receive an
Entitlement Order from the Indenture Trustee (or the Trust Administrator on
its behalf) directing transfer or redemption of any Financial Asset relating
to the Trust Account, the Securities Intermediary shall comply with such
Entitlement Order without further consent by the Depositor, the Issuer or any
other Person. If at any time the Indenture Trustee or the Trust Administrator
notifies the Securities Intermediary in writing that the Issuer has been
terminated or the Indenture discharged in accordance herewith and with the
Trust Agreement or the Indenture, as applicable, and the security interest
granted pursuant to the Indenture has been released, then thereafter if the
Securities Intermediary shall receive any order from the Depositor or the
Issuer directing transfer or redemption of any Financial Asset relating to the
Trust Account, the Securities Intermediary shall comply with such Entitlement
Order without further consent by the Indenture Trustee or any other Person;
(f) In the event that the Securities Intermediary has or subsequently
obtains by agreement, operation of law or otherwise a security interest in the
Trust Account or any Financial Asset credited thereto, the Securities
Intermediary hereby agrees that such security interest shall be subordinate to
the security interest of the Indenture Trustee. The Financial Assets credited
to the Trust Account will not be subject to deduction, set-off, banker's lien,
or any other right in favor of any Person other than the Indenture Trustee
(except that the Securities Intermediary may set-off (i) all amounts due to it
in respect of its customary fees and expenses for the routine maintenance and
operation of the Trust Account and (ii) the face amount of any checks which
have been credited to the Trust Account but are subsequently returned unpaid
because of uncollected or insufficient funds);
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(g) There are no other agreements entered into between the Securities
Intermediary in such capacity and the Depositor or the Issuer with respect to
the Trust Account. In the event of any conflict between this Agreement (or any
provision of this Agreement) and any other agreement now existing or hereafter
entered into, the terms of this Agreement shall prevail;
(h) The rights and powers granted under the Indenture and herein to the
Indenture Trustee have been granted in order to perfect its security interest
in the Trust Account and the Security Entitlements to the Financial Assets
credited thereto, and are powers coupled with an interest and will neither be
affected by the bankruptcy of the Depositor or the Issuer nor by the lapse of
time. The obligations of the Securities Intermediary hereunder shall continue
in effect until the security interest of the Indenture Trustee in the Trust
Account, and in such Security Entitlements, has been terminated pursuant to
the terms of this Agreement and the Indenture Trustee or the Issuer, as
applicable, has notified the Securities Intermediary of such termination in
writing; and
(i) Notwithstanding anything else contained herein, the Depositor and the
Issuer agree that the Trust Account will be established only with the
Securities Intermediary or another institution meeting the requirements of
this Section, which by acceptance of its appointment as Securities
Intermediary agrees substantially as follows: (1) it will comply with
Entitlement Orders related to the Trust Account issued by the Indenture
Trustee, as collateral agent, without further consent by the Depositor or the
Issuer, without further consent by the Depositor; (2) until termination of the
Issuer or discharge of the Indenture, it will not enter into any other
agreement related to such accounts pursuant to which it agrees to comply with
Entitlement Orders of any Person other than the Indenture Trustee, as
collateral agent, or the Trust Administrator on its behalf; and (3) all assets
delivered or credited to it in connection with such account and all
investments thereof will be promptly credited to the applicable account.
(j) Notwithstanding the foregoing, the Issuer shall have the power,
revocable by the Indenture Trustee or by the Owner Trustee with the consent of
the Indenture Trustee, to instruct the Indenture Trustee, the Trust
Administrator and the Master Servicer to make withdrawals and payments from
the Trust Account for the purpose of permitting the Master Servicer, the Trust
Administrator or the Owner Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties under
the Indenture.
(k) Each of the Depositor and the Issuer agrees to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments
(including, without limitation, any financing statements under the Relevant
UCC or this Agreement) as may be necessary to perfect the interests created by
this Section in favor of the Issuer and the Indenture Trustee and otherwise
fully to effectuate the purposes, terms and conditions of this Section. The
Depositor shall:
(i) promptly execute, deliver and file any financing statements,
amendments, continuation statements, assignments, certificates and other
documents with respect to such interests and perform all such other acts
as may be necessary in order to perfect or to maintain the perfection of
the Issuer's and the Indenture Trustee's security interest in the Trust
Account Property; and
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(ii) make the necessary filings of financing statements or
amendments thereto within five days after the occurrence of any of the
following: (1) any change in its corporate name or any trade name or its
jurisdiction of organization; (2) any change in the location of its chief
executive office or principal place of business; and (3) any merger or
consolidation or other change in its identity or corporate structure and
promptly notify the Issuer and the Indenture Trustee of any such filings.
(iii) Neither the Depositor nor the Issuer shall organize under the
law of any jurisdiction other than the State under which each is
organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) without
giving 30 days prior written notice of such action to its immediate and
mediate transferee, including the Indenture Trustee. Before effecting
such change, each of the Depositor or the Issuer proposing to change its
jurisdiction of organization shall prepare and file in the appropriate
filing office any financing statements or other statements necessary to
continue the perfection of the interests of its immediate and mediate
transferees, including the Indenture Trustee, in the Trust Account
Property. In connection with the transactions contemplated by the
Operative Agreements relating to the Trust Account Property, each of the
Depositor and the Issuer authorizes its immediate or mediate transferee
to file in any filing office any initial financing statements, any
amendments to financing statements, any continuation statements, or any
other statements or filings described in this Section 6.04.
None of the Securities Intermediary or any director, officer, employee or
agent of the Securities Intermediary shall be under any liability to the
Indenture Trustee or the Noteholders for any action taken, or not taken, in
good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Securities Intermediary
against any liability to the Indenture Trustee or the Noteholders which would
otherwise be imposed by reason of the Securities Intermediary's willful
misconduct, bad faith or negligence in the performance of its obligations or
duties hereunder. The Securities Intermediary and any director, officer,
employee or agent of the Securities Intermediary may rely in good faith on any
document of any kind which, prima facie, is properly executed and submitted by
any Person respecting any matters arising hereunder. The Securities
Intermediary shall be under no duty to inquire into or investigate the
validity, accuracy or content of such document. The Issuer shall indemnify the
Securities Intermediary for and hold it harmless against any loss, liability
or expense arising out of or in connection with this Agreement and carrying
out its duties hereunder, including the costs and expenses of defending itself
against any claim of liability, except in those cases where the Securities
Intermediary has been guilty of bad faith, negligence or willful misconduct.
The foregoing indemnification shall survive any termination of this Agreement
or the resignation or removal of the Securities Intermediary.
Section 6.05. Advances by Master Servicer and Servicer.
(a) Subject to Section 4.03(c), Advances shall be made in respect of each
Servicer Remittance Date as provided herein. If, on any Determination Date,
the Servicer determines that any Scheduled Payments due during the related
Collection Period have not been received, such Servicer shall advance such
amount to the extent provided in Section 4.03(c) hereof. If any Servicer fails
to remit Advances required to be made under Section 4.03(c) hereof, the Master
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Servicer shall itself make, or shall cause the successor Servicer to make,
such Advance on the Servicer Remittance Date immediately following such
Determination Date. If the Master Servicer determines that an Advance is
required, it shall on the Business Day immediately prior to the related
Payment Date remit to the Trust Administrator from its own funds (or funds
advanced by the applicable Servicer) for deposit in the Collection Account
immediately available funds in an amount equal to such Advance. The Master
Servicer and the Servicer shall be entitled to be reimbursed from the
Collection Account, and the Servicer shall be entitled to be reimbursed from
its respective Custodial Account, for all Advances made by it as provided in
Section 4.02(e). Notwithstanding anything to the contrary herein, in the event
the Master Servicer determines in its reasonable judgment that an Advance is a
Nonrecoverable Advance, the Master Servicer shall be under no obligation to
make such Advance.
(b) In the event that the Master Servicer or Servicer fails for any
reason to make an Advance required to be made pursuant to this Section 6.05,
the Indenture Trustee, as successor Master Servicer, shall, on or before the
related Payment Date, deposit in the Collection Account an amount equal to the
excess of (a) Advances required to be made by the Master Servicer or the
Servicer that would have been deposited in such Collection Account over (b)
the amount of any Advance made by the Master Servicer or the Servicer with
respect to such Payment Date; provided, however, that the Indenture Trustee as
successor Master Servicer shall be required to make such Advance only if it is
not prohibited by law from doing so and it has determined that such Advance
would be recoverable from amounts to be received with respect to such Mortgage
Loan, including late payments, Liquidation Proceeds, Insurance Proceeds, or
otherwise. The Indenture Trustee shall be entitled to be reimbursed from the
Collection Account for Advances made by it pursuant to this Section 6.05 as if
it were the Master Servicer and shall be entitled to receive all compensation
and fees of the Master Servicer in accordance with Section 8.01(b).
Section 6.06. The Interest Rate Cap Agreements.
(a) The Trust Administrator shall establish and maintain an Eligible
Account in its name, in trust for the benefit of the Noteholders, the Interest
Rate Cap Account.
(b) The Trust Administrator shall deposit any Interest Rate Cap Receipts
received with respect to any Interest Rate Cap Agreement Payment Date into the
Interest Rate Cap Account. Amounts on deposit in the Interest Rate Cap Account
shall remain uninvested.
(c) On each Group 1 Cap Agreement Payment Date, the Trust Administrator
shall withdraw from the Interest Rate Cap Account any Interest Rate Cap
Receipts from the Group 1 Cap Agreement to make payments in the order of
priority and to the extent specified in Section 6.02(f)(iii)(1); provided,
that on each Payment Date on which there is a payment received by the Trust
Administrator under the Group 1 Cap Agreement that is based on a notional
amount in excess of the aggregate Class Principal Amount of the Class 1A1,
Class 1A2 and Class 1A3 Notes (such amount, the "Excess Group 1 Cap Amount"),
then the Trust Administrator shall pay (i) the Excess Group 1 Cap Amount to
the Ownership Certificate and (ii) the excess of such Interest Rate Cap
Receipts over the Excess Group 1 Cap Amount for such Payment Date in the order
of priority and to the extent specified in Section 6.02(f)(iii)(1) of this
Agreement.
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(d) On each Group 2 Cap Agreement Payment Date, the Trust Administrator
shall withdraw from the Interest Rate Cap Account any Interest Rate Cap
Receipts from the Group 2 Cap Agreement to make payments in the order of
priority and to the extent specified in Section 6.02(f)(iii)(2); provided,
that on each Payment Date on which there is a payment received by the Trust
Administrator under the Group 2 Cap Agreement that is based on a notional
amount in excess of the aggregate Class Principal Amount of the Class 2A1
Notes (such amount, the "Excess Group 2 Cap Amount"), then the Trust
Administrator shall pay (i) the Excess Group 2 Cap Amount to the Ownership
Certificate and (ii) the excess of such Interest Rate Cap Receipts over the
Excess Group 2 Cap Amount for such Payment Date in the order of priority and
to the extent specified in Section 6.02(f)(iii)(2) of this Agreement.
(e) On each Subordinate Cap Agreement Payment Date, the Trust
Administrator shall withdraw from the Interest Rate Cap Account any Interest
Rate Cap Receipts from the Subordinate Cap Agreement to make payments in the
order of priority and to the extent specified in Section 6.02(f)(iii)(3);
provided, that on each Payment Date on which there is a payment received by
the Trust Administrator under the Subordinate Cap Agreement that is based on a
notional amount in excess of the aggregate Class Principal Amount of the
Subordinate Notes (such amount, the "Excess Subordinate Cap Amount"), then the
Trust Administrator shall pay (i) the Excess Subordinate Cap Amount to the
Ownership Certificate and (ii) the excess of such Interest Rate Cap Receipts
over the Excess Subordinate Cap Amount for such Payment Date in the order of
priority and to the extent specified in Section 6.02(f)(iii)(3) of this
Agreement.
(f) On the Payment Date in October 2007, after any amounts therefrom have
been paid in accordance with Section 6.06(c), (d) and (e) above, any amounts
remaining in the Interest Rate Cap Account shall be paid by the Trust
Administrator to the Ownership Certificate, and the Interest Rate Cap Account
shall be terminated by the Trust Administrator.
ARTICLE VII
ADMINISTRATION OF THE AGREEMENTS
Section 7.01. Duties of the Trust Administrator.
(a) The Trust Administrator agrees to perform all of the duties of the
Issuer under the Depository Agreement. In addition to its duties performed
under the Depository Agreement, the Trust Administrator shall take such action
that is the duty of the Issuer to take with respect to the following matters
under the Trust Agreement, this Agreement and the Indenture:
(i) the duty to cause the Note Register to be kept if the Issuer
assumes the duties of Note Registrar, and to give the Indenture Trustee
notice of any appointment of a new Note Registrar and the location, or
change in location, of the Note Register (Section 2.04 of the Indenture);
(ii) the duty to cause the Certificate Register to be kept if the
Issuer assumes the duties of Certificate Registrar, and to give the Owner
Trustee notice of any appointment of a new Certificate Registrar and the
location, or change in location, of the Certificate Register (Section
3.03 of the Trust Agreement);
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(iii) causing the preparation of the Notes for execution by the
Owner Trustee upon the registration of any transfer or exchange of the
Notes (Sections 2.04 and 2.05 of the Indenture);
(iv) causing the preparation of Definitive Notes in accordance with
the instructions of any Clearing Agency, the duty to attempt to locate a
qualified successor to the Clearing Agency, if necessary, and the
preparation of written notice to the Indenture Trustee of termination of
the book-entry system through the Clearing Agency (Section 2.12 of the
Indenture);
(v) the maintenance of an office for registration of transfer or
exchange of Notes (Section 3.02 of the Indenture);
(vi) the maintenance of an office for registration of transfer or
exchange of the Ownership Certificate (Section 3.08 of the Trust
Agreement);
(vii) the calculation of accrual of original issue discount and the
amortization of premium on the Notes (clause (v) of the fourth paragraph
of Section 3.03 of the Indenture);
(viii) upon written notice or actual knowledge thereof, the
notification to the Indenture Trustee and each Rating Agency of a
Servicer Event of Default or a Master Servicer Event of Default under
this Agreement (Section 3.07(d) of the Indenture);
(ix) upon written notice or actual knowledge thereof, the delivery
of notice to the Indenture Trustee and each Rating Agency of each
Indenture Event of Default under the Indenture (Section 3.19 of the
Indenture);
(x) the furnishing of the Indenture Trustee with the names and
addresses of Holders of Notes during any period when the Indenture
Trustee is not the Note Registrar (Section 7.01 of the Indenture);
(xi) causing the preparation of any continuation statements or
amendments necessary to protect the Collateral (Section 3.05 of the
Indenture);
(xii) the mailing to the Noteholders of notices with respect to
their consent to any supplemental indentures (Sections 9.01, 9.02, 9.03
and 9.06 of the Indenture); and
(xiii) any other duties expressly required to be performed by the
Trust Administrator under the Indenture or the Trust Agreement.
(b) The Seller shall undertake the duties of the Issuer with respect to
the following matters under the Indenture:
(i) to cause the preparation of Issuer Orders (and execute the same
on behalf of the Issuer) (Sections 9.01 and 9.02);
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(ii) to obtain Opinions of Counsel with respect to the execution of
supplemental indentures and, if necessary, to mail to the Noteholders
notices with respect to their consent to such supplemental indentures
(Sections 9.01, 9.02, 9.03 and 9.07 of the Indenture);
(iii) the preparation (but not the execution) of the annual
Officer's Certificate regarding the Issuer's compliance with the terms of
the Indenture (Section 3.09 of the Indenture); and
(iv) causing the preparation of an Officer's Certificate and the
obtaining of the Opinion of Counsel (which shall not be at the expense of
the Trust Administrator) with respect to any request by the Issuer to the
Indenture Trustee to take any action under the Indenture (Sections 4.01
and 11.01 of the Indenture);
(v) the compliance with any request of the Indenture Trustee with
respect to the sale of the Collateral in a commercially reasonable manner
if an Indenture Event of Default shall have occurred and be continuing
under the Indenture (Section 5.04 of the Indenture); and
(vi) causing the preparation of an Issuer Request and Officer's
Certificate (and executing the same on behalf of the Issuer) and the
obtaining of an Opinion of Counsel (which shall not be at the expense of
the Trust Administrator), if necessary, for the release of the
Collateral, as defined in the Indenture (Section 8.03 of the Indenture).
(c) The Issuer will indemnify the Owner Trustee, the Seller and the Trust
Administrator, and their respective agents for, and hold them harmless
against, any losses, liability or expense incurred without gross negligence or
bad faith on their part, arising out of or in connection with the acceptance
or administration of the transactions contemplated by the Trust Agreement or
this Agreement, including the reasonable costs and expenses of defending
themselves against any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Trust Agreement, the
Indenture or this Agreement.
(d) Subject to subsection (e) of this Section 7.01, and in accordance
with the directions of the Owner Trustee, the Trust Administrator shall
perform or supervise the performance of such other activities in connection
with the Collateral (including the Operative Agreements) as are not covered by
any of the foregoing provisions and as are expressly requested in writing by
the Owner Trustee and are reasonably within the capability of the Trust
Administrator.
(e) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Trust Administrator may enter into transactions with
or otherwise deal with any of its Affiliates; provided, however, that the
terms of any such transactions or dealings shall be in accordance with any
directions received from the Issuer and shall be, in the Trust Administrator's
opinion, no less favorable to the Issuer than would be available from
unaffiliated parties.
In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Trust Administrator shall be subject to the same
standard of care and have the same rights,
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indemnifications and immunities as the Indenture Trustee under the Indenture,
including, without limitation, the right to reimbursement and indemnification
on behalf of the Issuer from funds in the Collection Account for all losses,
costs and expenses of any kind or nature (including without limitation
attorneys' fees and disbursements) incurred by the Trust Administrator
(including without limitation in its various capacities as Paying Agent,
Certificate Paying Agent, Certificate Registrar and Note Registrar) in
connection with the performance of its duties hereunder or under any other
Operative Agreement.
The Trust Administrator in its capacity as the Certificate Registrar, and
upon a request received from the Owner Trustee, shall promptly notify the
Certificateholders of (i) any change in the Corporate Trust Office of the
Owner Trustee, (ii) any amendment to the Trust Agreement requiring notice be
given to the Certificateholders and (iii) any other notice required to be
given to the Certificateholders by the Owner Trustee under the Trust
Agreement.
Section 7.02. Duties of the Trust Administrator With Respect to the
Indenture, the Trust Agreement and this Agreement.
(a) The Trust Administrator shall take all appropriate action with
respect to the following matters under the Indenture, the Trust Agreement and
this Agreement:
(i) the duties of an authenticating agent for authentication of the
Notes (Sections 2.01, 2.02, 2.05 and 2.10 of the Indenture);
(ii) the duties of Note Registrar to be kept (Sections 2.03, 2.04
and 2.07 of the Indenture);
(iii) to provide notices and instructions to the Clearing Agency
(Section 2.11 of the Indenture);
(iv) the duties of Paying Agent (Sections 3.03, 4.01, 4.02 and 5.02
of the Indenture); and
(v) the duties of agent or attorney-in-fact for the purposes of
filing amendments and continuation statements for the Issuer (Section
3.05 of the Indenture).
(b) The Issuer will indemnify the Owner Trustee and the Trust
Administrator, and their respective agents for, and hold them harmless
against, any losses, liability or expense incurred without gross negligence or
bad faith on their part, arising out of or in connection with the acceptance
or administration of the transactions contemplated by the Trust Agreement or
this Agreement, including the reasonable costs and expenses of defending
themselves against any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Trust Agreement, the
Indenture or this Agreement.
Section 7.03. Records. The Trust Administrator shall maintain appropriate
books of account and records relating to services performed hereunder, which
books of account and records shall be accessible for inspection by the Issuer
and the Depositor at any time during normal business hours.
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Section 7.04. Compensation. The Trust Administrator will perform the
duties and provide the services called for under Sections 7.01 and 7.02 above
for such compensation as shall be agreed upon between the Trust Administrator
and the Master Servicer.
Section 7.05. Additional Information to be Furnished to the Issuer. The
Depositor shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
Section 7.06. Independence of the Trust Administrator. For all purposes
of this Agreement, the Trust Administrator shall be an independent contractor
and shall not be subject to the supervision of the Issuer or the Owner Trustee
with respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the Trust
Administrator shall have no authority to act for or represent the Issuer or
the Owner Trustee in any way and shall not otherwise be deemed an agent of the
Issuer or the Owner Trustee.
Section 7.07. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Trust Administrator or the Depositor, respectively, and
either of the Issuer or the Owner Trustee, as members of any partnership,
joint venture, association, syndicate, unincorporated business or other
separate entity, (ii) shall be construed to impose any liability as such on
any of them or (iii) shall be deemed to confer on any of them any express,
implied or apparent authority to incur any obligation or liability on behalf
of the others.
Section 7.08. Other Activities of Trust Administrator and the Depositor.
Nothing herein shall prevent the Trust Administrator, the Depositor or their
respective Affiliates from engaging in other businesses or, in its sole
discretion, from acting in a similar capacity as an Trust Administrator for
any other person or entity even though such person or entity may engage in
business activities similar to those of the Issuer or the Owner Trustee.
Section 7.09. Resignation and Removal of Trust Administrator.
(a) Subject to Section 7.09(d) hereof, the Trust Administrator may resign
its duties hereunder by providing the Issuer with at least 60 days' prior
written notice.
(b) Subject to Section 7.09(d) hereof, the Issuer may remove the Trust
Administrator without cause by providing the Trust Administrator with at least
60 days' prior written notice.
(c) Subject to Section 7.09(d) hereof, the Issuer may remove the Trust
Administrator immediately upon written notice of termination from the Issuer
to the Trust Administrator if any of the following events shall occur:
(i) the Trust Administrator shall default in the performance of any
of its duties under this Agreement and, after notice of such default,
shall not cure such default within ten days (or, if such default cannot
be cured in such time, shall not give within ten days such assurance of
cure as shall be reasonably satisfactory to the Issuer); or
(ii) a court having jurisdiction in the premises shall (x) enter a
decree or order for relief, which decree or order shall not have been
vacated within 60 days, in respect of
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the Trust Administrator in any involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or (y) appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for the Trust Administrator or any
substantial part of its property, or (z) order the winding-up or
liquidation of the Trust Administrator's affairs; or
(iii) the Trust Administrator shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the
appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Trust Administrator or any
substantial part of its property, shall consent to the taking of
possession by any such official of any substantial part of its property,
shall make any general assignment for the benefit of creditors or shall
fail generally to pay its debts as they become due.
The Trust Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section 7.09(c) shall occur, it shall give
written notice thereof to the Issuer and the Indenture Trustee within seven
days after the occurrence of such event.
(d) No resignation or removal of the Trust Administrator pursuant to this
Section shall be effective until (i) a successor Trust Administrator shall
have been appointed by the Issuer in accordance with the Trust Agreement and
(ii) such successor Trust Administrator shall have agreed in writing to be
bound by the terms of this Agreement in the same manner as the Trust
Administrator is bound hereunder. If a successor Trust Administrator does not
take office within 60 days after the retiring Trust Administrator resigns or
is removed, the resigning or removed Trust Administrator or the Issuer may
petition any court of competent jurisdiction for the appointment of a
successor Trust Administrator.
(e) The appointment of any successor Trust Administrator shall be
effective only after receipt of a letter from each Rating Agency to the effect
that such proposed appointment will not cause a reduction or withdrawal of the
then current ratings of the Notes.
(f) Subject to Sections 7.09(d) and 7.09(e) above, the Trust
Administrator acknowledges that upon the appointment of a successor Master
Servicer pursuant to Section 8.01, the Trust Administrator shall immediately
resign and such successor Master Servicer shall automatically become the Trust
Administrator under this Agreement. Any such successor Master Servicer shall
be required to agree to assume the duties of the Trust Administrator under the
terms and conditions of this Agreement and the other Operative Agreements in
its acceptance of appointment as successor Master Servicer.
Section 7.10. Action upon Termination, Resignation or Removal of the
Trust Administrator. Promptly upon the effective date of termination of this
Agreement or the resignation or removal of the Trust Administrator pursuant to
Section 7.09 hereof, the Trust Administrator shall be entitled to be paid all
reimbursable expenses, including any reasonable out-of-pocket attorneys' fees,
accruing to it to the date of such termination, resignation or removal. The
Trust Administrator shall forthwith upon such termination pursuant to Section
7.09 deliver to the successor Trust Administrator all property and documents
of or relating to the
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Collateral then in the custody of the Trust Administrator, or if this
Agreement has been terminated, to the Depositor. In the event of the
resignation or removal of the Trust Administrator pursuant to Section 7.09,
the Trust Administrator shall cooperate with the Issuer and take all
reasonable steps requested to assist the Issuer in making an orderly transfer
of the duties of the Trust Administrator.
ARTICLE VIII
MASTER SERVICER EVENTS OF DEFAULT
Section 8.01. Master Servicer Events of Default; Indenture Trustee To
Act; Appointment of Successor.
(a) The occurrence of any one or more of the following events shall
constitute a "Master Servicer Event of Default":
(i) Any failure by the Master Servicer to furnish to the Trust
Administrator the Mortgage Loan data sufficient to prepare the reports
described in Section 5.09(a) which continues unremedied for a period of
one (1) Business Day after the date upon which written notice of such
failure shall have been given to such Master Servicer by the Indenture
Trustee or the Trust Administrator or to such Master Servicer and the
Indenture Trustee by the Holders of not less than 25% of the Class
Principal Amount of each Class of Notes affected thereby; or
(ii) Any failure on the part of the Master Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this Agreement
which continues unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Indenture Trustee or
the Trust Administrator or to the Master Servicer and the Indenture
Trustee by the Majority Noteholders; or
(iii) A decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator 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 Master Servicer, and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days or any Rating
Agency reduces or withdraws or threatens to reduce or withdraw the rating
of the Notes because of the financial condition or loan servicing
capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, voluntary liquidation or
similar proceedings of or relating to the Master Servicer or of or
relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable
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insolvency or reorganization statute, make an assignment for the benefit
of its creditors or voluntarily suspend payment of its obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose of all
or substantially all of its assets, or consolidate with or merge into
another entity or shall permit another entity to consolidate or merge
into it, such that the resulting entity does not meet the criteria for a
successor servicer as specified in Section 5.26 hereof; or
(vii) If a representation or warranty set forth in Section 5.01
hereof shall prove to be incorrect as of the time made in any respect
that materially and adversely affects the interests of the Noteholders,
and the circumstance or condition in respect of which such representation
or warranty was incorrect shall not have been eliminated or cured within
30 days after the date on which written notice of such incorrect
representation or warranty shall have been given to the Master Servicer
by the Indenture Trustee or the Trust Administrator, or to the Master
Servicer and the Indenture Trustee by the Majority Noteholders; or
(viii) A sale or pledge of any of the rights of the Master Servicer
hereunder or an assignment of this Agreement by the Master Servicer or a
delegation of the rights or duties of the Master Servicer hereunder shall
have occurred in any manner not otherwise permitted hereunder and without
the prior written consent of the Indenture Trustee and the Majority
Noteholders; or
(ix) The Master Servicer has notice or actual knowledge that the
Servicer at any time is not either an FHA Approved Mortgagee, and the
Master Servicer has not terminated the rights and obligations of such
Servicer under this Agreement and replaced the Servicer with an FHA
Approved Mortgagee within 60 days of the date the Master Servicer
receives such notice or acquires such actual knowledge; or
(x) Any failure of the Master Servicer to remit to the Trust
Administrator any Advance required to be made to the Trust Administrator
for the benefit of Noteholders under the terms of this Agreement, which
failure continues unremedied as of the close of business on the Business
Day prior to a Payment Date.
If a Master Servicer Event of Default described in clauses (i) through
(ix) of this Section 8.01 shall occur, then, in each and every case, subject
to applicable law, so long as any such Master Servicer Event of Default shall
not have been remedied within any period of time prescribed by this Section
8.01, the Indenture Trustee, upon obtaining actual knowledge therof, by notice
in writing to the Master Servicer may, and shall, if so directed by the
Majority Noteholders, terminate all of the rights and obligations of the
Master Servicer hereunder and in and to the Mortgage Loans and the proceeds
thereof. If a Master Servicer Event of Default described in clause (x) of this
Section 8.01 shall occur, then, in each and every case, subject to applicable
law, so long as such Master Servicer Event of Default shall not have been
remedied within the time period prescribed by clause (x) of this Section 8.01,
the Indenture Trustee, by notice in writing to the Master Servicer, shall
promptly terminate all of the rights and obligations of the Master Servicer
hereunder and in and to the Mortgage Loans and the proceeds thereof. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the
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Master Servicer, and only in its capacity as Master Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Indenture Trustee pursuant to and under the terms of
this Agreement; and the Indenture Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the defaulting Master 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 or assignment of the Mortgage Loans and related
documents or otherwise. The defaulting Master Servicer agrees to cooperate
with the Indenture Trustee in effecting the termination of the defaulting
Master Servicer's responsibilities and rights hereunder as Master Servicer
including, without limitation, notifying the Servicer of the assignment of the
master servicing function and providing the Indenture Trustee or its designee
all documents and records in electronic or other form reasonably requested by
it to enable the Indenture Trustee or its designee to assume the defaulting
Master Servicer's functions hereunder and the transfer to the Indenture
Trustee for administration by it of all amounts which shall at the time be or
should have been deposited by the defaulting Master Servicer in the Collection
Account maintained by such defaulting Master Servicer and any other account or
fund maintained with respect to the Notes or thereafter received with respect
to the Mortgage Loans. The Master Servicer being terminated shall bear all
reasonable out-of-pocket costs of a master servicing transfer, including but
not limited to those of the Indenture Trustee, legal fees and expenses,
accounting and financial consulting fees and expenses, and costs of amending
the Agreement, if necessary.
The Indenture Trustee shall be entitled to be reimbursed from the Master
Servicer (or by the Trust Estate, if the Master Servicer is unable to fulfill
its obligations hereunder) for all costs associated with the transfer of
servicing from the predecessor Master Servicer, including, without limitation,
any costs or expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Indenture Trustee to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Indenture
Trustee to master service the Mortgage Loans properly and effectively. If the
terminated Master Servicer does not pay such reimbursement within thirty (30)
days of its receipt of an invoice therefor, such reimbursement shall be an
expense of the Trust Estate and the Indenture Trustee shall be entitled to
withdraw such reimbursement from amounts on deposit in the Collection Account
pursuant to Section 5.08(ix); provided that the terminated Master Servicer
shall reimburse the Trust Estate for any such expense incurred by the Trust
Estate; and provided, further, that the Indenture Trustee shall take such
action, if any, as provided in the Indenture and as directed by the
Noteholders pursuant thereto with respect to pursuing any remedy against any
party obligated to make such reimbursement.
Notwithstanding the termination of its activities as Master Servicer,
each terminated Master Servicer shall continue to be entitled to reimbursement
to the extent provided in Section 5.08 to the extent such reimbursement
relates to the period prior to such Master Servicer's termination.
If any Master Servicer Event of Default shall occur, of which a
Responsible Officer of the Indenture Trustee has actual knowledge, the
Indenture Trustee shall promptly notify each Rating Agency of the nature and
extent of such Master Servicer Event of Default. The Trust
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Administrator or the Master Servicer shall immediately give written notice to
the Indenture Trustee upon the Master Servicer's failure to remit Advances on
the date specified herein.
(b) On and after the time the Master Servicer receives a notice of
termination from the Indenture Trustee pursuant to Section 8.01(a) or the
Indenture Trustee receives the resignation of the Master Servicer evidenced by
an Opinion of Counsel pursuant to Section 5.27, the Indenture Trustee, unless
another master servicer shall have been appointed, shall be the successor in
all respects to the Master Servicer in its capacity as such under this
Agreement and the transactions set forth or provided for herein and shall have
all the rights and powers and be subject to all the responsibilities, duties
and liabilities relating thereto and arising thereafter placed on the Master
Servicer hereunder, including the obligation to make Advances; provided,
however, that any failure to perform such duties or responsibilities caused by
the Master Servicer's failure to provide information required by this
Agreement shall not be considered a default by the Indenture Trustee
hereunder. In addition, the Indenture Trustee shall have no responsibility for
any act or omission of the Master Servicer prior to the issuance of any notice
of termination and shall have no liability relating to the representations and
warranties of the Master Servicer set forth in Section 5.01. In the Indenture
Trustee's capacity as such successor, the Indenture Trustee shall have the
same limitations on liability herein granted to the Master Servicer. As
compensation therefor, the Indenture Trustee shall be entitled to receive all
compensation payable to the Master Servicer under this Agreement.
(c) Notwithstanding the above, the Indenture Trustee may, if it shall be
unwilling to continue to so act, or shall, if it is unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any established
housing and home finance institution servicer, master servicer, servicing or
mortgage servicing institution having a net worth of not less than $15,000,000
and meeting such other standards for a successor master servicer as are set
forth in this Agreement, as the successor to such Master Servicer in the
assumption of all of the responsibilities, duties or liabilities of a master
servicer, like the Master Servicer. Such successor Master Servicer may be an
Affiliate of the Indenture Trustee; provided, however, that, unless such
Affiliate meets the net worth requirements and other standards set forth
herein for a successor master servicer, the Indenture Trustee, in its
individual capacity shall agree, at the time of such designation, to be and
remain liable to the Issuer and the Indenture Trustee for such Affiliate's
actions and omissions in performing its duties hereunder. In connection with
such appointment and assumption, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on the
Mortgage Loans as it and such successor shall agree; provided, however, that
no such compensation shall be in excess of that permitted to the Master
Servicer hereunder. The Indenture Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate
any such succession and may make other arrangements with respect to the
servicing to be conducted hereunder which are not inconsistent herewith. The
Master Servicer shall cooperate with the Indenture Trustee and any successor
master servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder including, without limitation, notifying
the Servicer of the assignment of the master servicing functions and providing
the Indenture Trustee and successor master servicer, as applicable, all
documents and records in electronic or other form reasonably requested by it
to enable it to assume the Master Servicer's functions hereunder and the
transfer to the Indenture Trustee or such successor master servicer, as
applicable, all amounts or investment property which shall at the time be or
should have been deposited by the Master
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Servicer in the Collection Account and any other account or fund maintained
with respect to the Notes or thereafter be received with respect to the
Mortgage Loans. Neither the Indenture Trustee nor any other successor master
servicer shall be deemed to be in default hereunder by reason of any failure
to make, or any delay in making, any payment hereunder or any portion thereof
caused by (i) the failure of the Master Servicer to deliver, or any delay in
delivering, cash, documents or records to it, (ii) the failure of the Master
Servicer to cooperate as required by this Agreement, (iii) the failure of the
Master Servicer to deliver the Mortgage Loan data to the Indenture Trustee as
required by this Agreement or (iv) restrictions imposed by any regulatory
authority having jurisdiction over the Master Servicer.
Section 8.02. Additional Remedies of Indenture Trustee Upon Master
Servicer Event of Default. During the continuance of any Master Servicer Event
of Default, so long as such Master Servicer Event of Default shall not have
been remedied, the Indenture Trustee, in addition to the rights specified in
Section 8.01, shall have the right, in its own name and as trustee of an
express trust, to take all actions now or hereafter existing at law, in equity
or by statute to enforce its rights and remedies and to protect the interests,
and enforce the rights and remedies, of the Noteholders (including the
institution and prosecution of all judicial, administrative and other
proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no
remedy provided for by this Agreement shall be exclusive of any other remedy,
and each and every remedy shall be cumulative and in addition to any other
remedy, and no delay or omission to exercise any right or remedy shall impair
any such right or remedy or shall be deemed to be a waiver of any Master
Servicer Event of Default.
Section 8.03. Waiver of Defaults. The Majority Noteholders may, on behalf
of all Noteholders, waive any default or Master Servicer Event of Default by
the Master Servicer in the performance of its obligations hereunder, except
that a default in the making of any required deposit to the Collection Account
that would result in a failure of the Trust Administrator or the Paying Agent
to make any required payment of principal of or interest on the Notes may only
be waived with the consent of 100% of the affected Noteholders. Upon any such
waiver of a past default, such default shall cease to exist, and any Master
Servicer Event of Default 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 thereon except
to the extent expressly so waived.
Section 8.04. Notification to Holders. Upon termination of the Master
Servicer or appointment of a successor to the Master Servicer, in each case as
provided herein, the Indenture Trustee shall promptly mail notice thereof by
first class mail to the Noteholders at their respective addresses appearing on
the applicable Register. The Indenture Trustee shall also, within 45 days
after the occurrence of any Master Servicer Event of Default known to the
Indenture Trustee, give written notice thereof to Noteholders, unless such
Master Servicer Event of Default shall have been cured or waived prior to the
issuance of such notice and within such 45 day period.
Section 8.05. Directions by Noteholders and Duties of Indenture Trustee
During Master Servicer Event of Default. During the continuance of any Master
Servicer Event of Default, the Majority Noteholders may direct the time,
method and place of conducting any proceeding for
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any remedy available to the Indenture Trustee, or exercising any trust or
power conferred upon the Indenture Trustee, under this Agreement; provided,
however, that the Indenture Trustee shall be under no obligation to pursue any
such remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (i) the conducting or defending of
any administrative action or litigation hereunder or in relation hereto and
(ii) the terminating of the Master Servicer or any successor master servicer
from its rights and duties as master servicer hereunder) at the request, order
or direction of any of the Noteholders, unless such Noteholders shall have
offered to the Indenture Trustee security or indemnity reasonably satisfactory
to it against the cost, expenses and liabilities which may be incurred therein
or thereby; and, provided further, that, the Indenture Trustee shall have the
right to decline to follow any such direction if the Indenture Trustee, in
accordance with an Opinion of Counsel, determines that the action or
proceeding so directed may not lawfully be taken or if the Indenture Trustee
in good faith determines that the action or proceeding so directed would
involve it in personal liability for which it is not indemnified to its
satisfaction or be unjustly prejudicial to the non assenting Noteholders.
Section 8.06. Action Upon Certain Failures of the Master Servicer and
Upon Master Servicer Event of Default. In the event that a Responsible Officer
of the Indenture Trustee or the Trust Administrator shall have actual
knowledge of any action or inaction of the Master Servicer that would become a
Master Servicer Event of Default upon the Master Servicer's failure to remedy
the same after notice, the Indenture Trustee or Trust Administrator, as
applicable, shall give notice thereof to the Master Servicer.
Section 8.07. Preparation of Reports.
(a) The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K. Thereafter, within 15 days after each Payment
Date, the Trust Administrator shall, in accordance with industry standards
customary for securities similar to the Notes as required by the Exchange Act
and the rules and regulations of the Securities and Exchange Commission (the
"Commission"), file with the Commission via the Electronic Data Gathering and
Retrieval System (EDGAR), a Form 8-K with a copy of the statement to the
Noteholders for such Payment Date as an exhibit thereto. Prior to January 30,
2006, the Trust Administrator shall, in accordance with industry standards
applicable to the Notes, file a Form 15 Suspension Notification with respect
to the Issuer, if applicable. Prior to March 31, 2006 and prior to March 31 in
each succeeding year so long as a Form 15 has not been filed for the prior
calendar year, the Trust Administrator shall file (and the Master Servicer
will execute) a Form 10-K, in substance conforming to industry standards
applicable to the Notes, with respect to the Issuer. The Form 10-K shall
include the certification required pursuant to Rule 13a-14 under the Exchange
Act (the "Form 10-K Certification," which Form 10-K Certification shall be
signed by the Master Servicer). The Indenture Trustee and the Trust
Administrator shall have no liability for any delay in filing the Form 10-K
due to the failure of such party to timely sign the Form 10-K or Form 10-K
Certification. The Depositor hereby grants, and in the case of the Form 10-K
Certification, an Authorized Officer of the Depositor will grant, to the
Master Servicer and the Trust Administrator a limited power of attorney to
execute and file each such document on behalf of the Depositor. Such power of
attorney shall continue until either the earlier of (i) receipt by the Master
Servicer and the Trust Administrator from the Depositor of written termination
of such power of attorney and (ii) the termination of the Issuer. The
Depositor
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agrees to promptly furnish to the Trust Administrator, from time to time upon
request, such further information, reports, and financial statements within
its control related to this Agreement and the Mortgage Loans as the Depositor
reasonably deems appropriate to prepare and file all necessary reports with
the Commission. The Trust Administrator shall have no responsibility to file
any items other than those specified in this section.
(b) Each person (including their officers or directors) that signs any
Form 10-K Certification shall be entitled to indemnification from the Trust
Estate for any liability or expense incurred by it in connection with such
certification, other than any liability or expense attributable to such
Person's own bad faith, negligence or willful misconduct. The provisions of
this subsection shall survive any termination of this Agreement and the
resignation or removal of such Person.
(c) To the extent that, following the Closing Date, the contents of Forms
8-K, 10-K or other Forms required by the Exchange Act and the Rules and
Regulations of the Commission and the time by which such Forms are required to
be filed, differs from the provisions of this Agreement, the parties hereto
hereby agree that each shall reasonably cooperate to amend the provisions of
this Agreement (in accordance with Section 10.03) in order to comply with such
amended reporting requirements and such amendment of this Agreement. Any such
amendment may result in the reduction of the reports filed by the Servicer
under the Exchange Act. Notwithstanding the foregoing, neither the Master
Servicer, the Servicer nor the Trust Administrator shall be obligated to enter
into any amendment pursuant to this Section that adversely affects its
obligations and immunities under this Agreement.
ARTICLE IX
TERMINATION
Section 9.01. Termination. The respective obligations and
responsibilities of the Master Servicer, the Trust Administrator, the
Depositor, the Issuer, the Servicer and the Indenture Trustee created hereby
(other than obligations expressly stated to survive the termination of the
Trust) shall terminate on the day after the day on which the Notes are paid in
full (including payment pursuant to Section 9.02 below) (the "Termination
Date").
Section 9.02. Termination Prior to Maturity Date; Optional Redemption.
(a) On the Payment Date following the Determination Date on which the
Aggregate Collateral Balance is less than 20% of the Aggregate Collateral
Balance as of the Cut-off Date, Aames Investment Acceptance Corporation acting
directly or through one or more Affiliates, shall have the option to purchase
the Mortgage Loans, any REO Property and any other property remaining in the
Trust for a price equal to the Termination Price. The Master Servicer and the
Servicer will be reimbursed from the Termination Price for any outstanding
Advances, Servicing Advances and unpaid Servicing Fees, Master Servicing Fees
and other amounts not previously reimbursed pursuant to the provisions of this
Agreement, as applicable, and the Trust Administrator, the Owner Trustee and
the Indenture Trustee (including in its capacity as Custodian, if applicable)
shall be reimbursed for any previously unreimbursed amounts for which they are
entitled to be reimbursed pursuant to this Agreement, the Indenture, the
Custodial
121
Agreement (to the extent not paid by the Seller pursuant to the Custodial
Agreement) or the Trust Agreement, as applicable. If such option is exercised,
the Trust will be terminated resulting in a mandatory redemption of the Notes.
Aames Investment Acceptance Corporation shall deliver written notice of its
intention to exercise such option to the Issuer, the Trust Administrator, the
Indenture Trustee and the Master Servicer not less than 15 days prior to the
applicable Payment Date. If Aames Investment Acceptance Corporation fails to
exercise such option prior to the Stepup Date, the Note Interest Rate for each
class of Notes will be increased as set forth herein beginning on the Stepup
Date and for each Payment Date thereafter. Aames Investment Acceptance
Corporation shall deliver written notice of its intention to exercise such
option to the Issuer, the Indenture Trustee and the Master Servicer not less
than ten days prior to the applicable Payment Date.
In connection with such purchase, Aames Investment Acceptance Corporation
shall direct the Servicer to remit to the Trust Administrator all amounts then
on deposit in the Custodial Account (other than amounts permitted to be
withdrawn by it pursuant to Section 4.02(e)) for deposit to the Collection
Account.
(b) In addition, if Aames Investment Acceptance Corporation does not
exercise its purchase option pursuant to subsection (a) of this Section 9.02,
then, on the Payment Date following the Determination Date on which the
Aggregate Collateral Balance is less than 10% of the Aggregate Collateral
Balance as of the Cut-off Date, the Servicer acting directly or through one or
more Affiliates, shall have the option to purchase the Mortgage Loans, any REO
Property and any other property remaining in the Trust for a price equal to
the Termination Price. All conditions applying to Aames Investment Acceptance
Corporation's right to purchase the Mortgage Loans pursuant to paragraph (a)
above shall also apply to the Servicer's right.
(c) Promptly following any such purchase pursuant to paragraph (a) or (b)
of this Section and receipt of an Officer's Certificate of Aames Investment
Acceptance Corporation or of the Servicer, as applicable, that the purchase
price has been deposited in the Collection Account, the Indenture Trustee or
the applicable Custodian shall release the Mortgage Files to the purchaser of
such Mortgage Loans pursuant to this Section 9.02, or otherwise upon its
order.
Section 9.03. Certain Notices upon Final Payment. The Master Servicer or
the Trust Administrator, as applicable, shall give the Issuer, the Indenture
Trustee, the Owner Trustee, each Rating Agency, each Noteholder and the
Depositor at least 30 days' prior written notice of the date on which the
Trust is expected to terminate in accordance with Section 9.01, or the date on
which the Notes will be redeemed in accordance with Section 9.02. Not later
than the fifth Business Day in the Collection Period in which the final
payment in respect to the Notes is payable to the Noteholders, the Indenture
Trustee shall mail to the Noteholders a notice specifying the procedures with
respect to such final payment. The Trust Administrator on behalf of the
Indenture Trustee shall give a copy of such notice to each Rating Agency at
the time such notice is given to Noteholders. Following the final payment
thereon, such Notes shall become void, no longer outstanding and no longer
evidence any right or interest in the Mortgage Loans, the Mortgage Files or
any proceeds of the foregoing.
122
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 10.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.
Section 10.03. Amendment.
(a) This Agreement may be amended from time to time by the parties
hereto, without notice to or the consent of any of the Holders of the Notes,
(i) to cure any ambiguity, (ii) to conform the provisions of this Agreement to
the information contained in the Prospectus or to correct or supplement any
provision herein, (iii) to make any other provision with respect to matters or
questions arising under this Agreement or (iv) to add, delete, or amend any
provision in order to comply with any requirements imposed by the Code, ERISA
and their related regulations. No such amendment effected pursuant to the
preceding sentence shall, as evidenced by an Opinion of Counsel (which shall
be an expense of the party requesting such amendment and shall not be an
expense of the Trust or the Indenture Trustee), (1) affect the status of the
Notes as debt for federal income tax purposes or (2) only in the case of an
amendment effected pursuant to clause (iii) of such sentence, adversely affect
in any material respect the interests of any Holder. Prior to entering into
any amendment without the consent of Holders pursuant to this paragraph, the
Indenture Trustee may require an Opinion of Counsel (at the expense of the
party requesting such amendment) to the effect that such amendment is
permitted under this paragraph. Any such amendment shall be deemed not to
adversely affect in any material respect any Holder, if the Indenture Trustee
receives written confirmation from each Rating Agency that such amendment will
not cause such Rating Agency to reduce the then current ratings assigned to
the Notes.
(b) This Agreement may also be amended from time to time by the parties
hereto with the consent of (i) the Holders of each Class of Notes affected
thereby evidencing Voting Interests aggregating not less than 66-2/3% of each
such Class and (ii) the Holder of the Ownership Certificate, for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement or modifying in any manner the rights of
Noteholders; provided, however, that no such amendment may (i) reduce in any
manner the amount of, or delay the timing of, payments that are required to be
made in respect of any Notes without the consent of the Holder of each such
Note affected thereby or (ii) reduce the percentage of Notes the Holders of
which are required to consent to any such amendment without the consent of the
Holders of 100% of the Class Principal Amount of the Notes. For
123
purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, in the case of Book-Entry Notes, the related Note Owners.
(c) Promptly after the execution of any such amendment, the Indenture
Trustee shall furnish written notification of the substance of such amendment
to each Holder, the Depositor and to each Rating Agency.
(d) It shall not be necessary for the consent of Holders under this
Section 10.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations
as the Indenture Trustee may prescribe.
Section 10.04. Acts of Noteholders. Except as otherwise specifically
provided herein, whenever Noteholder action, consent or approval is required
under this Agreement, such action, consent or approval shall be deemed to have
been taken or given on behalf of, and shall be binding upon, all Noteholders
if the Majority Noteholders agree to take such action or give such consent or
approval.
Section 10.05. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices
for real property records in all of the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Depositor on direction and
at the expense of Holders of not less than 66-2/3% of the Note Principal
Balance of the Notes and of the Holder of the Ownership Certificate requesting
such recordation, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Noteholders, or is necessary for the administration or servicing of the
Mortgage Loans.
Section 10.06. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.07. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed by
overnight courier, addressed as follows or delivered by facsimile (or such
other address as may hereafter be furnished to the other party by like
notice):
(i) if to the Seller:
Aames Investment Corporation
350 South Grand Avenue, 43rd Floor
Los Angeles, California 90071
Attention: Executive Vice President - Capital Markets
124
Telephone: (323) 210-5335
Facsimile: (323) 210-5066
with a copy to:
General Counsel
Telephone: (323) 210-4871
Facsimile: (323) 210-5026
(ii) if to the Servicer:
Aames Capital Corporation
350 South Grand Avenue, 43rd Floor
Los Angeles, California 90071
Attention: Executive Vice President - Capital Markets
Telephone: (323) 210-5335
Facsimile: (323) 210-5066
with a copy to:
General Counsel
Telephone: (323) 210-4871
Facsimile: (323) 210-5026
(iii) if to the Master Servicer:
Wells Fargo Bank, N.A.
P.O. Box 98
Columbia, Maryland 21046
Attention: Aames Mortgage Investment Trust 2005-2
(or in the case of overnight deliveries,
9062 Old Annapolis Road
Columbia, Maryland 21045)
Telephone: (410) 884-2000
Facsimile: (410) 715-2380
(iv) if to the Trust Administrator:
Wells Fargo Bank, N.A.
P.O. Box 98
Columbia, Maryland 21046
Attention: Aames Mortgage Investment Trust 2005-2
(or in the case of overnight deliveries,
9062 Old Annapolis Road
Columbia, Maryland 21045)
Telephone: (410) 884-2000
Facsimile: (410) 715-2380
(v) if to the Indenture Trustee:
125
Deutsche Bank National Trust Company
1761 East Saint Andrew Place
Santa Ana, California 92705
Attention: Trust Administration, AA0502
Telephone: (714) 247-6000
Facsimile: (714) 247-6470
(vi) if to the Depositor:
CWABS, Inc.
4500 Park Granada
Calabasas, California 91302
Attention: Aames 2005-2
(vii) if to the Issuer:
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
All demands, notices and communications to a party hereunder shall be in
writing and shall be deemed to have been duly given when delivered to such
party at the relevant address, facsimile number or electronic mail address set
forth above or at such other address, facsimile number or electronic mail
address as such party may designate from time to time by written notice in
accordance with this Section 10.07.
Section 10.08. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes or
the rights of the Holders thereof.
Section 10.09. Indulgences; No Waivers. Neither the failure nor any delay
on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other
or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
Section 10.10. Headings Not To Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
126
Section 10.11. Benefits of Agreement. Nothing in this Agreement or in the
Notes, express or implied, shall give to any Person, other than the parties to
this Agreement and their successors hereunder and the Holders of the Notes,
any benefit or any legal or equitable right, power, remedy or claim under this
Agreement. Notwithstanding the foregoing, (i) the Owner Trustee shall be an
express third-party beneficiary of this Agreement and (ii) Aames Investment
Acceptance Corporation shall be an express third-party beneficiary with
respect to Section 9.02.
Section 10.12. Special Notices to the Rating Agencies.
(a) The Servicer shall give prompt notice to each Rating Agency of the
occurrence of any of the following events of which it has notice:
(i) any amendment to this Agreement pursuant to Section 10.03; and
(ii) the making of a final payment hereunder.
(b) All notices to the Rating Agencies provided for by this Section shall
be in writing and sent by first class mail, telecopy or overnight courier, as
follows:
if to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10004
Fax no.: (212) 553-4392
if to S&P:
Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc.
55 Water Street
New York, New York 10041
Fax no.: (212) 438-2661
(c) The Trust Administrator shall make available to the Rating Agencies
each report prepared pursuant to Section 5.09.
Section 10.13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
Section 10.14. Execution by the Issuer. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as
Owner Trustee of the Issuer, in the exercise of the powers and authority
conferred and vested in it as trustee, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose of binding
only the Issuer, (c) nothing herein contained shall
127
be construed as creating any liability on Wilmington Trust Company,
individually or personally, to perform any covenant either expressed or
implied contained herein, all such liability, if any, being expressly waived
by the parties hereto and by any person claiming by, through or under the
parties hereto and (d) under no circumstances shall Wilmington Trust Company
be personally liable for the payment of any indebtedness or expenses of the
Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under
this Agreement or any other document.
128
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers hereunto duly authorized as of the
day and year first above written.
AAMES MORTGAGE INVESTMENT TRUST 2005-2,
as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee
By: /s/ Janel R. Havrilla
-----------------------------------------
Name: Janel R. Havrilla
Title: Financial Services Officer
CWABS, INC.,
as Depositor
By: /s/ Ruben Avilez
-----------------------------------------
Name: Ruben Avilez
Title: Vice President
DEUTSCHE BANK NATIONAL TRUST COMPANY, not in
its individual capacity but solely as
Indenture Trustee
By: /s/ Jennifer Hermansader
-----------------------------------------
Name: Jennifer Hermansader
Title: Associate
WELLS FARGO BANK, N.A.,
as Trust Administrator and Master Servicer
By: /s/ Sandra Whalen
-----------------------------------------
Name: Sandra Whalen
Title: Vice President
Transfer and Servicing Agreement
AAMES CAPITAL CORPORATION,
as Servicer
By: /s/ John P. Kim
-----------------------------------------
Name: John P. Kim
Title: Executive Vice President
AAMES INVESTMENT CORPORATION, as Seller
By: /s/ John P. Kim
-----------------------------------------
Name: John P. Kim
Title: Executive Vice President
Transfer and Servicing Agreement
STATE OF DELAWARE )
: ss.:
COUNTY OF NEW CASTLE )
On this 27th day of May 2005, before me, personally appeared
Janel R. Havrilla, known to me to be a Financial Services Officer of
Wilmington Trust Company, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf
of said corporation, and acknowledged to me that such corporation executed
the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Amanda E. Burger
----------------------------------
Notary Public
[NOTARIAL SEAL]
Notary page to Transfer and Servicing Agreement
STATE OF CALIFORNIA )
: ss.:
COUNTY OF LOS ANGELES )
On the 31st day of May 2005, before me, personally appeared Ruben Avilez,
known to me to be a Vice President of CWABS, Inc., one of the corporations
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Glenda Daniel
----------------------------------
Notary Public
[NOTARIAL SEAL]
Notary page to Transfer and Servicing Agreement
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the 31 of May 2005, before me, a Notary Public in and for
said State, personally appeared Jennifer Hermansader known to me to be a
Associate of Deutsche Bank National Trust Company, one of the corporations
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Manuel Rivas
----------------------------------
Notary Public
[NOTARIAL SEAL]
Notary page to Transfer and Servicing Agreement
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 31st of May 2005, before me, a Notary Public in and for
said State, personally appeared Sandra Whalen known to me to be a
Vice President of Wells Fargo Bank, N.A., a national banking association that
executed the within instrument and also known to me to be the person who
executed it on behalf of said 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.
/s/ Janet M. Jolley
----------------------------------
Notary Public
[NOTARIAL SEAL]
Notary page to Transfer and Servicing Agreement
STATE OF CALIFORNIA )
: ss.:
COUNTY OF LOS ANGELES )
On the 26th of May 2005, before me, a Notary Public in and for
said State, personally appeared John P. Kim known to me to be a Executive
Vice President of Aames Capital Corporation, one of the corporations that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ A. C. Hurtado
----------------------------------
Notary Public
[NOTARIAL SEAL]
Notary page to Transfer and Servicing Agreement
STATE OF CALIFORNIA )
: ss.:
COUNTY OF LOS ANGELES )
On the 26th of May 2005, before me, a Notary Public in and for
said State, personally appeared John P. Kim known to me to be a Executive
Vice President of Aames Investment Corporation, one of the corporations that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ A. C. Hurtado
----------------------------------
Notary Public
[NOTARIAL SEAL]
Notary page to Transfer and Servicing Agreement
EXHIBIT A-1
-----------
FORM OF INITIAL CERTIFICATION
-----------------------------
-----------------
Date
Deutsche Bank National Trust Company Wells Fargo Bank, N.A.
1761 East Saint Andrew Place 9062 Old Annapolis Road
Santa Ana, California 92705 Columbia, Maryland 21045
Attention: Trust Administration, AA0502 Attn: Aames Mortgage Investment
Trust 2005-2
CWABS, Inc. Aames Capital Corporation
4500 Park Granada 350 South Grand Avenue, 43rd Floor
Calabasas, California 91302 Los Angeles, California 90071
Re: Transfer and Servicing Agreement (the "Transfer and Servicing
Agreement") dated as of May 1, 2005 by and among CWABS, Inc., as
Depositor, Deutsche Bank National Trust Company, as Indenture
Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master
Servicer, Aames Mortgage Investment Trust 2005-2, as Issuer, Aames
Capital Corporation, as Servicer, and Aames Investment Corporation,
as Seller
-------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the Transfer and Servicing
Agreement, subject to review of the contents thereof, the undersigned, as
Custodian, hereby certifies that it has received the documents listed in
Section 2.01(b) of the Transfer and Servicing Agreement for each Mortgage File
pertaining to each Mortgage Loan listed on Schedule A to the Transfer and
Servicing Agreement, subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Transfer and
Servicing Agreement. This certificate is subject in all respects to the terms
of Section 2.02 of the Transfer and Servicing Agreement and the Transfer and
Servicing Agreement sections cross-referenced therein.
[Custodian]
By:_____________________________________
Name:
Title:
A-1-1
EXHIBIT A-2
-----------
FORM OF INTERIM CERTIFICATION
-----------------------------
-----------------
Date
Deutsche Bank National Trust Company Wells Fargo Bank, N.A.
1761 East Saint Andrew Place 9062 Old Annapolis Road
Santa Ana, California 92705 Columbia, Maryland 21045
Attention: Trust Administration, AA0502 Attn: Aames Mortgage Investment
Trust 2005-2
CWABS, Inc. Aames Capital Corporation
4500 Park Granada 350 South Grand Avenue, 43rd Floor
Calabasas, California 91302 Los Angeles, California 90071
Re: Transfer and Servicing Agreement (the "Transfer and Servicing
Agreement") dated as of May 1, 2005 by and among CWABS, Inc., as
Depositor, Deutsche Bank National Trust Company, as Indenture
Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master
Servicer, Aames Mortgage Investment Trust 2005-2, as Issuer, Aames
Capital Corporation, as Servicer, and Aames Investment Corporation,
as Seller
-------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Transfer and Servicing
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 (or its custodian) has
received the applicable documents listed in Section 2.01(b) of the Transfer
and Servicing 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 identified above and has determined
that each such document appears regular on its face and appears to relate to
the Mortgage Loan identified in such document.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Transfer and Servicing Agreement. This
certificate is qualified in all respects by the terms of said Transfer and
Servicing Agreement including, but not limited to, Section 2.02(b).
[Custodian]
By:_____________________________________
Name:
Title:
A-2-1
EXHIBIT A-3
-----------
FORM OF FINAL CERTIFICATION
---------------------------
-----------------
Date
Deutsche Bank National Trust Company Wells Fargo Bank, N.A.
1761 East Saint Andrew Place 9062 Old Annapolis Road
Santa Ana, California 92705 Columbia, Maryland 21045
Attention: Trust Administration, AA0502 Attn: Aames Mortgage Investment
Trust 2005-2
CWABS, Inc. Aames Capital Corporation
4500 Park Granada 350 South Grand Avenue, 43rd Floor
Calabasas, California 91302 Los Angeles, California 90071
Re: Transfer and Servicing Agreement (the "Transfer and Servicing
Agreement") dated as of May 1, 2005 by and among CWABS, Inc., as
Depositor, Deutsche Bank National Trust Company, as Indenture
Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master
Servicer, Aames Mortgage Investment Trust 2005-2, as Issuer, Aames
Capital Corporation, as Servicer, and Aames Investment Corporation,
as Seller
-------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02(d) of the Transfer and Servicing
Agreement, the undersigned, as Custodian on behalf of the Indenture Trustee,
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 (or its custodian) has received the applicable documents listed in
Section 2.01(b) of the Transfer and Servicing 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 Transfer and Servicing Agreement. This
certificate is qualified in all respects by the terms of said Transfer and
Servicing Agreement.
[Custodian]
By:_____________________________________
Name:
Title:
A-3-1
EXHIBIT A-4
-----------
FORM OF ENDORSEMENT
-------------------
Pay to the order of Deutsche Bank National Trust Company, as indenture
trustee (the "Indenture Trustee") under the Transfer and Servicing Agreement
dated as of May 1, 2005 by and among CWABS, Inc., as Depositor, the Indenture
Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master Servicer,
Aames Mortgage Investment Trust 2005-2, as Issuer, Aames Capital Corporation,
as Servicer, and Aames Investment Corporation, as Seller, relating to Aames
Mortgage Investment Trust 2005-2 Mortgage Backed Notes, Series 2005-2, without
recourse.
----------------------------------
[current signatory on note]
By:_______________________________
Name:
Title:
A-4-1
EXHIBIT B
---------
[Reserved]
B-1
EXHIBIT C
---------
FORM OF LOST NOTE AFFIDAVIT
I, _________________________________________, being duly sworn, do hereby
state under oath that:
1. I am a duly elected ______________________ of Aames Investment
Corporation (the "Company") and am duly authorized to make this affidavit.
2. This affidavit is being delivered in connection with the transfer of
the Mortgage Loan described in Paragraph 3 hereof by the Company pursuant to
the Transfer and Servicing Agreement, dated as of May 1, 2005, among Aames
Mortgage Investment Trust 2005-2, as Issuer, CWABS, Inc., as Depositor, Wells
Fargo Bank, N.A., as Master Servicer and as Trust Administrator, Aames Capital
Corporation, as Servicer, Aames Investment Corporation, as Seller, and
Deutsche Bank National Trust Company, as Indenture Trustee, relating to the
Aames Mortgage Investment Trust 2005-2 Mortgage Backed Notes, Series 2005-2
(the "Agreement").
3. The ______________ is the payee under the following described Mortgage
Note ("Mortgage Note") which evidences the obligation of the borrower(s) to
repay the Mortgage Loan:
Loan Number: ___________________________________
Mortgage Note Date:_____________________________
Borrower(s): ___________________________________
Original Payee (if not the Company): ___________
Original Amount:________________________________
Mortgage Rate: _________________________________
Address of Mortgaged Property: _________________
________________________________________________
4. The Company is the lawful owner of the Mortgage Note and has not
cancelled, altered, assigned or hypothecated the Mortgage Note.
5. A thorough and diligent search for the executed original Mortgage Note
was undertaken and was unsuccessful.
6. Attached hereto is a true and correct copy of the Mortgage Note.
7. The Mortgage Note has not been endorsed by the Company in any manner
inconsistent with its transfer of the Mortgage Loan under the Mortgage Loan
Purchase Agreement.
8. Without limiting the generality of the rights and remedies of the
Indenture Trustee contained in the Agreement, the Company hereby confirms and
agrees that in the event the inability to produce the executed original
Mortgage Note results in a breach of the representations, warranties and
covenants appearing in Section 2 of the Mortgage Loan Purchase Agreement and
Section 3.01 of the Agreement, the Company shall repurchase the Mortgage
C-1
Loan at the Purchase Price and otherwise in accordance with Section 3.03 of
the Agreement. In addition, the Company covenants and agrees to indemnify the
Indenture Trustee and the Trust from and hold them harmless against any and
all losses, liabilities, damages, claims or expenses arising from the
Company's failure to have delivered the Mortgage Note to the Indenture
Trustee, including without limitation any such losses, liabilities, damages,
claims or expenses arising from any action to enforce the indebtedness
evidenced by the Mortgage Note or any claim by any third party who is the
holder of such indebtedness by virtue of possession of the Mortgage Note.
9. In the event that the Company locates the executed original Mortgage
Note, it shall promptly provide the Mortgage Note to the Indenture Trustee.
10. Capitalized terms used but not otherwise defined herein shall have
the meanings given to them in the Agreement.
Date: _______________________
______________________________
(signature)
______________________________
(print name)
______________________________
(print title)
C-2
EXHIBIT D
---------
CUSTODIAL AGREEMENT
D-1
EXHIBIT E
---------
CUSTODIAL ACCOUNT LETTER AGREEMENT
______________ __, ____
To: ______________________
______________________
______________________
(the "Depository")
As Servicer under the Transfer and Servicing Agreement dated as of
May 1, 2005, by and among CWABS, Inc., as Depositor, you, as Indenture
Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master Servicer,
Aames Mortgage Investment Trust 2005-2, as Issuer, Aames Capital Corporation,
as Servicer and Aames Investment Corporation, as Seller (the "Transfer and
Servicing Agreement"), we hereby authorize and request you to establish an
account, as a Custodial Account pursuant to Section 4.02(d) of the Transfer and
Servicing Agreement, designated as "Aames Capital Corporation in trust for
Deutsche Bank National Company, as Indenture Trustee for Aames Mortgage
Investment Trust 2005-2." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Servicer. This letter is submitted
to you in duplicate. Please execute and return one original to us.
AAMES CAPITAL CORPORATION
Servicer
By: _______________________________________________
Name:__________________________________________
Title:_________________________________________
Date:__________________________________________
E-1
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
______________________________________
Depository
By:___________________________________
Name:
Title:
Date:
E-2
EXHIBIT F
---------
ESCROW ACCOUNT LETTER AGREEMENT
______________ __, ____
To: ______________________
______________________
______________________
(the "Depository")
As Servicer under the Transfer and Servicing Agreement dated as of
May 1, 2005, by and among CWABS, Inc., as Depositor, you, as Indenture
Trustee, Wells Fargo Bank, N.A., as Trust Administrator and Master Servicer,
Aames Mortgage Investment Trust 2005-2, as Issuer, Aames Capital Corporation,
as Servicer and Aames Investment Corporation, as Seller (the "Transfer and
Servicing Agreement"), we hereby authorize and request you to establish an
account, as an Escrow Account pursuant to Section 4.02(f) of the Transfer and
Servicing Agreement, designated as "Aames Capital Corporation in trust for
Deutsche Bank National Company, as Indenture Trustee for Aames Mortgage
Investment Trust 2005-2." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Servicer. This letter is submitted
to you in duplicate. Please execute and return one original to us.
AAMES CAPITAL CORPORATION
Servicer
By: _______________________________________________
Name:__________________________________________
Title:_________________________________________
Date:__________________________________________
F-1
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number ______, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.
______________________________________
Depository
By:___________________________________
Name:
Title:
Date:
F-2
EXHIBIT G-1
-----------
FORM OF MONTHLY REMITTANCE ADVICE
FIELD NAME DESCRIPTION FORMAT
- ---------- ----------- ------
INVNUM INVESTOR LOAN NUMBER Number no decimals
SERVNUM SERVICER LOAN NUMBER, REQUIRED Number no decimals
BEGSCHEDBAL BEGINNING SCHEDULED BALANCE FOR SCHED/SCHED Number two decimals
BEGINNING TRIAL BALANCE FOR ACTUAL/ACTUAL, REQUIRED
SCHEDPRIN SCHEDULED PRINCIPAL AMOUNT FOR SCHEDULED/SCHEDULED ACTUAL PRINCIPAL Number two decimals
COLLECTED FOR ACTUAL/ACTUAL, REQUIRED, .00 IF NO COLLECTIONS
CURT1 CURTAILMENT 1 AMOUNT, .00 IF NOT APPLICABLE Number two decimals
CURT1DATE CURTAILMENT 1 DATE, BLANK IF NOT APPLICABLE DD-MM-YY
CURT1ADJ CURTAILMENT 1 ADJUSTMENT, .00 IF NOT APPLICABLE Number two decimals
CURT2 CURTAILMENT 2 AMOUNT, .00 IF NOT APPLICABLE Number two decimals
CURT2DATE CURTAILMENT 2 DATE, BLANK IF NOT APPLICABLE DD-MM-YY
CURT2ADJ CURTAILMENT 2 ADJUSTMENT, .00 IF NOT APPLICABLE Number two decimals
LIQPRIN PAYOFF, LIQUIDATION PRINCIPAL, .00 IF NOT APPLICABLE Number two decimals
OTHPRIN OTHER PRINCIPAL, .00 IF NOT APPLICABLE Number two decimals
PRINREMIT TOTAL PRINCIPAL REMITTANCE AMOUNT, .00 IF NOT APPLICABLE Number two decimals
INTREMIT NET INTEREST REMIT, INCLUDE PAYOFF INTEREST, Number two decimals
.00 IF NOT APPLICABLE
TOTREMIT TOTAL REMITTANCE AMOUNT, .00 IF NOT APPLICABLE Number two decimals
ENDSCHEDBAL ENDING SCHEDULED BALANCE FOR SCHEDULED/SCHEDULED ENDING TRIAL BALANCE Number two decimals
FOR ACTUAL/ACTUAL .00 IF PAIDOFF, LIQUIDATED OR FULL CHARGEOFF
ENDACTBAL ENDING TRIAL BALANCE Number two decimals
.00 IF PAIDOFF, LIQUIDATED OR FULL CHARGEOFF
ENDDUEDATE ENDING ACTUAL DUE DATE, NOT LAST PAID INSTALLMENT DD-MM-YY
ACTCODE 60 IF PAIDOFF, BLANK IF NOT APPLICABLE Number no decimals
ACTDATE ACTUAL PAYOFF DATE, BLANK IF NOT APPLICABLE DD-MM-YY
G-1-1
INTRATE INTEREST RATE, REQUIRED Number seven decimals
Example .0700000 for 7.00%
SFRATE SERVICING ADMINISTRATON FEE RATE, REQUIRED Number seven decimals
Example .0025000 for .25%
PTRATE PASS THRU RATE, REQUIRED Number seven decimals
Example .0675000 for 6.75%
PIPMT P&I CONSTANT, REQUIRED .00 IF PAIDOFF Number two decimals
G-1-2
EXHIBIT G-1A
------------
FIELD NAME FORMAT
- ---------- ------
Servicer Termination Trigger Event Indicate [Pass/Fail]
Seller Financial Covenant Event Indicate [Pass/Fail]
G-1-3
EXHIBIT G-2
-----------
STANDARD LAYOUT FOR MONTHLY DEFAULTED LOAN REPORT
1. Deal Identifier by Loan
2. SBO Loan Number
3. Loan Number
4. Investor Loan Number
5. Street Address
6. City
7. State
8. Zip Code
9. Original Loan Amount
10. Origination Date
11. First Payment Date
12. Current Loan Amount
13. Current Interest Rate
14. Current P&I Payment Amount
15. [Reserved]
16. [Reserved]
17. Next Rate Adjustment Date
18. Next Payment Adjustment Date
19. Loan Term
20. Loan Type
21. [Reserved]
22. Product Type
23. Property Type
24. Ownership Code
25. Actual Due Date
26. Delinquency Status
27. [Reserved]
28. FC Flag
29. Date Loan Reinstated
30. FC Suspended Date
G-2-1
31. Reason Suspended
32. FC Start Date (referral date)
33. Actual Notice of Intent Date
34. Actual First Legal Date
35. [Reserved]
36. Date F/C Sale Scheduled
37. Foreclosure Actual Sale Date
38. Actual Redemption End Date
39. Occupancy Status
40. Occupancy Status Date
41. Actual Eviction Start Date
42. Actual Eviction Complete Date
43. Loss Mit Workstation Status
44. Loss Mit Flag
45. Loss Mit Type
46. Loss Mit Start Date
47. Loss Mit Approval Date
48. Loss Mit Removal Date
49. REO Flag
50. Actual REO Start Date
51. REO List Date
52. REO List Price
53. Date REO Offer Received
54. Date REO Offer Accepted
55. REO Scheduled Close Date
56. REO Actual Closing Date
57. REO Net Sales proceeds
58. REO Sales Price
59. Paid Off Code
60. Paid in Full Date
61. MI Certificate Number
62. [Reserved]
63. [Reserved]
G-2-2
64. [Reserved]
65. [Reserved]
66. [Reserved]
67. [Reserved]
68. [Reserved]
69. [Reserved]
70. [Reserved]
71. [Reserved]
72. Actual Claim Filed Date
73. Actual Claim Amount Filed
74. Claim Amount Paid
75. Claim Funds Received Date
76. Realized Gain or Loss
77. BK Flag
78. Bankruptcy Chapter
79. Actual Bankruptcy Start Date
80. Actual Payment Plan Start Date
81. Actual Payment Plan End Date
82. Date POC Filed
83. Date Filed Relief/Dismissal
84. Relief/Dismissal Hearing Date
85. Date Relief/Dismissal Granted
86. Post Petition Due Date
87. Prepayment Flag
88. Prepayment Waived
89. Prepayment Premium Collected
90. Partial Prepayment Amount Collected
91. Prepayment Expiration Date
92. Origination Value Date
93. Origination Value Source
94. Original Value Amount
95. FC Valuation Amount
96. FC Valuation Source
G-2-3
97. FC Valuation Date
98. REO Value Source
99. REO Value(As-is)
100. REO Repaired Value
101. REO Value Date
102. Investor/Security Billing Date Sent
G-2-4
Exhibit G-3
Form 332 Realized Loss Report
WELLS FARGO BANK, N.A.
Purpose
To provide the Servicer with a form for the calculation of any Realized Loss
(or gain) as a result of a Mortgage Loan having been foreclosed and
Liquidated.
Distribution
The Servicer will prepare the form in duplicate and send the original together
with evidence of conveyance of title and appropriate supporting documentation
to the Master Servicer with the Monthly Accounting Reports which supports the
Mortgage Loan's removal from the Mortgage Loan Activity Report. The Servicer
will retain the duplicate for its own records.
Due Date
With respect to any liquidated Mortgage Loan, the form will be submitted to
the Master Servicer no later than the date on which statements are due to the
Master Servicer under Section 4.02 of this Agreement (the "Statement Date") in
the month following receipt of final liquidation proceeds and supporting
documentation relating to such liquidated Mortgage Loan; provided, that if
such Statement Date is not at least 30 days after receipt of final liquidation
proceeds and supporting documentation relating to such liquidated Mortgage
Loan, then the form will be submitted on the first Statement Date occurring
after the 30th day following receipt of final liquidation proceeds and
supporting documentation.
Preparation Instructions
The numbers on the form correspond with the numbers listed below.
1. The actual Unpaid Principal Balance of the Mortgage Loan.
2. The Total Interest Due less the aggregate amount of servicing fee
that would have been earned if all delinquent payments had been
made as agreed.
3-7. Complete as necessary. All line entries must be supported by
copies of appropriate statements, vouchers, receipts, canceled
checks, etc., to document the expense. Entries not properly
documented will not be reimbursed to the Servicer.
8. Accrued Servicing Fees based upon the Stated Principal Balance of
the Mortgage Loan as calculated on a monthly basis.
10. The total of lines 1 through 9.
Credits
11-17. Complete as necessary. All line entries must be supported by
copies of the appropriate claims forms, statements, payment
checks, etc. to document the credit. If the Mortgage Loan is
subject to a Bankruptcy Deficiency, the difference between the
Unpaid Principal Balance of the Note prior to the Bankruptcy
Deficiency and the
G-3-1
Unpaid Principal Balance as reduced by the Bankruptcy Deficiency
should be input on line 16.
18. The total of lines 11 through 17.
Total Realized Loss (or Amount of Any Gain)
19. The total derived from subtracting line 18 from 10. If the amount
represents a realized gain, show the amount in parenthesis ( ).
G-3-2
WELLS FARGO BANK, N.A.
CALCULATION OF REALIZED LOSS
- -----------------------------------------------------------------------------------------------
WELLS FARGO BANK, N.A. Trust: __________________________
Prepared by: Date:
------------------------------ -----------------------------
Phone:
------------------------------------
----------------------- ----------------------- ----------------------
Servicer Loan No. Servicer Name Servicer Address
----------------------- ----------------------- ----------------------
WELLS FARGO BANK, N.A.
Loan No._______________________________
Borrower's Name:_______________________
Property
Address:_______________________________
Liquidation and Acquisition Expenses:
Actual Unpaid Principal Balance of Mortgage Loan $ (1)
--------------------------
Interest accrued at Net Rate (2)
---------------------------
Attorney's Fees (3)
---------------------------
Taxes (4)
---------------------------
Property Maintenance (5)
---------------------------
MI/Hazard Insurance Premiums (6)
---------------------------
Hazard Loss Expenses (7)
---------------------------
Accrued Servicing Fees (8)
---------------------------
Other (itemize) (9)
---------------------------
$
- ---------------------------------------------------------------- -----------------------------
- ---------------------------------------------------------------- ------------------------------
- ---------------------------------------------------------------- ------------------------------
- ---------------------------------------------------------------- ------------------------------
Total Expenses $ (10)
--------------------------
Credits:
Escrow Balance $ (11)
--------------------------
HIP Refund (12)
---------------------------
Rental Receipts (13)
---------------------------
Hazard Loss Proceeds (14)
---------------------------
Primary Mortgage Insurance Proceeds (15)
---------------------------
Proceeds from Sale of Acquired Property (16)
---------------------------
Other (itemize) (17)
---------------------------
--------------------------------------------------------- ---------------------------
--------------------------------------------------------- ---------------------------
Total Credits $ (18)
--------------------------
Total Realized Loss (or of Gain) $ (19)
--------------------------
G-3-3
Data must be submitted to Wells Fargo Bank in an Excel spreadsheet format
with fixed field names and data type. The Excel spreadsheet should be used as
a template consistently every month when submitting data for all loans that
are 60 days + delinquent and/or in bankruptcy, foreclosure or REO.
Table: Delinquency
Name Type Max Character Size
- --- ---- ------------------
Servicer Loan # Number 10
Investor Loan # Number 10
Servicer Investor # Text 3
Borrower Name Text 20
Address Text 30
State Text 2
Zip Text 5
Due Date Date/Time 8
Loan Type Text 8
BK Filed Date Date/Time 8
BK Chapter Text 6
BK Case Number Text 30 Maximum
Post Petition Due Date/Time 8
Motion for Relief Date/Time 8
Lift of Stay Date/Time 8
BK Discharge/Dismissal Date Date/Time 8
Loss Mit Approval Date Date/Time 8
Loss Mit Type Text 5
Loss Mit Code Number 2
Loss Mit Estimated Completion Date Date/Time 8
Loss Mit Actual Completion Date Date/Time 8
FC Approval Date Date/Time 8
File Referred to Attorney Date/Time 8
NOD Date/Time 8
Complaint Filed Date/Time 8
Scheduled Sale Date Date/Time 8
Actual Sale Date Date/Time 8
F/C Sale Amount Currency 8
Eviction Start Date Date/Time 8
Eviction Completed Date Date/Time 8
List Price Currency 8
List Date Date/Time 8
Accepted Offer Price Currency 8
Accepted Offer Date Date/Time 8
Estimated REO Closing Date Date/Time 8
Actual REO Sale Date Date/Time 8
Occupant Code Text 10
Property Condition Code Text 2
G-3-4
Property Inspection Date Date/Time 8
Property Value Date Date/Time 8
Current Property Value Currency 8
Repaired Property Value Currency 8
Current LTV Currency 8
FNMA Delinquent Status Code Text 2
FNMA Delinquent Reason Code Text 3
If applicable:
- --------------
MI Cancellation Date Date/Time 8
MI Claim Filed Date Date/Time 8
MI Claim Amount Currency 8
MI Claim Reject Date Date/Time 8
MI Claim Resubmit Date Date/Time 8
MI Claim Paid Date Date/Time 8
MI Claim Amount Paid Currency 8
Pool Claim Filed Date Date/Time 8
Pool Claim Amount Currency 8
Pool Claim Reject Date Date/Time 8
Pool Claim Paid Date Date/Time 8
Pool Claim Amount Paid Currency 8
Pool Claim Resubmit Date Date/Time 8
FHA Part A Claim Filed Date Date/Time 8
FHA Part A Claim Amount Currency 8
FHA Part A Claim Paid Date Date/Time 8
FHA Part A Claim Paid Amount Currency 8
FHA Part B Claim Filed Date Date/Time 8
FHA Part B Claim Amount Currency 8
FHA Part B Claim Paid Date Date/Time 8
FHA Part B Claim Paid Amount Currency 8
VA Claim Filed Date Date/Time 8
VA Claim Paid Date Date/Time 8
VA Claim Paid Amount Currency 8
G-3-5
The Loss Mit Type field should show the approved Loss Mitigation arrangement.
The following are acceptable:
o ASUM- Approved Assumption
o BAP- Borrower Assistance Program
o CO- Charge Off
o DIL- Deed-in-Lieu
o FFA- Formal Forbearance Agreement
o MOD- Loan Modification
o PRE- Pre-Sale
o SS- Short Sale
o MISC- Anything else approved by the PMI or Pool Insurer
Wells Fargo Bank will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation
Types other than those above are used, the Servicer must supply Wells Fargo
Bank with a description of each of the Loss Mitigation Types prior to sending
the file.
The Occupant Code field should show the current status of the property. The
acceptable codes are:
o Mortgagor
o Tenant
o Unknown
o Vacant
The Property Condition field should show the last reported condition of the
property. The acceptable codes are:
o Damaged
o Excellent
o Fair
o Gone
o Good
o Poor
o Special Hazard
o Unknown
The FNMA Delinquent Reason Code field should show the Reason for Default. The
following FNMA Delinquency Reason Codes to be used are below.
---------------------- -----------------------------------------------
Delinquency Code Delinquency Description
---------------------- -----------------------------------------------
001 FNMA-Death of principal mortgagor
---------------------- -----------------------------------------------
002 FNMA-Illness of principal mortgagor
---------------------- -----------------------------------------------
003 FNMA-Illness of mortgagor's family member
---------------------- -----------------------------------------------
004 FNMA-Death of mortgagor's family member
---------------------- -----------------------------------------------
005 FNMA-Marital difficulties
---------------------- -----------------------------------------------
G-3-6
---------------------- -----------------------------------------------
006 FNMA-Curtailment of income
---------------------- -----------------------------------------------
007 FNMA-Excessive Obligation
---------------------- -----------------------------------------------
008 FNMA-Abandonment of property
---------------------- -----------------------------------------------
009 FNMA-Distant employee transfer
---------------------- -----------------------------------------------
011 FNMA-Property problem
---------------------- -----------------------------------------------
012 FNMA-Inability to sell property
---------------------- -----------------------------------------------
013 FNMA-Inability to rent property
---------------------- -----------------------------------------------
014 FNMA-Military Service
---------------------- -----------------------------------------------
015 FNMA-Other
---------------------- -----------------------------------------------
016 FNMA-Unemployment
---------------------- -----------------------------------------------
017 FNMA-Business failure
---------------------- -----------------------------------------------
019 FNMA-Casualty loss
---------------------- -----------------------------------------------
022 FNMA-Energy environment costs
---------------------- -----------------------------------------------
023 FNMA-Servicing problems
---------------------- -----------------------------------------------
026 FNMA-Payment adjustment
---------------------- -----------------------------------------------
027 FNMA-Payment dispute
---------------------- -----------------------------------------------
029 FNMA-Transfer of ownership pending
---------------------- -----------------------------------------------
030 FNMA-Fraud
---------------------- -----------------------------------------------
031 FNMA-Unable to contact borrower
---------------------- -----------------------------------------------
INC FNMA-Incarceration
---------------------- -----------------------------------------------
The FNMA Delinquent Status Code field should show the Status of Default. The
following FNMA Delinquency Status Codes to be used are below.
---------------------- -----------------------------------------------
Status Code Status Description
---------------------- -----------------------------------------------
09 Forbearance
---------------------- -----------------------------------------------
17 Pre-foreclosure Sale Closing Plan Accepted
---------------------- -----------------------------------------------
24 Government Seizure
---------------------- -----------------------------------------------
26 Refinance
---------------------- -----------------------------------------------
27 Assumption
---------------------- -----------------------------------------------
28 Modification
---------------------- -----------------------------------------------
29 Charge-Off
---------------------- -----------------------------------------------
30 Third Party Sale
---------------------- -----------------------------------------------
31 Probate
---------------------- -----------------------------------------------
32 Military Indulgence
---------------------- -----------------------------------------------
43 Foreclosure Started
---------------------- -----------------------------------------------
44 Deed-in-Lieu Started
---------------------- -----------------------------------------------
49 Assignment Completed
---------------------- -----------------------------------------------
61 Second Lien Considerations
---------------------- -----------------------------------------------
62 Veteran's Affairs-No Bid
---------------------- -----------------------------------------------
63 Veteran's Affairs-Refund
---------------------- -----------------------------------------------
64 Veteran's Affairs-Buydown
---------------------- -----------------------------------------------
65 Chapter 7 Bankruptcy
---------------------- -----------------------------------------------
66 Chapter 11 Bankruptcy
---------------------- -----------------------------------------------
67 Chapter 13 Bankruptcy
---------------------- -----------------------------------------------
G-3-7
EXHIBIT H
---------
FORM OF CERTIFICATION TO BE PROVIDED TO
THE MASTER SERVICER BY THE SERVICER
Wells Fargo Bank, N.A.
P.O. Box 98
Columbia, Maryland 21046
Attention: Aames 2005-2
Re: Aames Mortgage Investment Trust 2005-2 Mortgage Backed Notes, Series 2005-2
---------------------------------------------------------------------------
Aames Capital Corporation, as Servicer hereby certifies to the Seller,
the Master Servicer, the Indenture Trustee and the Trust Administrator that:
1. To our knowledge, the information in the Annual Statement of
Compliance, the Annual Independent Public Accountant's Servicing Report and
all servicing reports, officer's certificates and other information relating
to the servicing of the Mortgage Loans submitted to the Master Servicer taken
as a whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading as of
the last day of the period covered by such reports;
2. To our knowledge, the servicing information required to be provided to
the Master Servicer by the Servicer under the Transfer and Servicing Agreement
has been provided to the Master Servicer;
3. Based upon the review required by the Transfer and Servicing
Agreement, and except as disclosed in the Annual Statement of Compliance or
the Annual Independent Public Accountant's Servicing Report, the Servicer has,
as of the last day of the period covered by such reports fulfilled the
obligations of the Servicer under the Transfer and Servicing Agreement; and
4. The Servicer has disclosed to the Master Servicer all significant
deficiencies relating to the Servicer's compliance with the minimum servicing
standards in accordance with a review conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers or similar standard as set
forth in the Transfer and Servicing Agreement.
Capitalized terms used but not defined herein have the meanings ascribed
to them in the Transfer and Servicing Agreement, dated as of May 1, 2005 (the
"Transfer and Servicing Agreement"), among Aames Mortgage Investment Trust
2005-2, as issuer (the "Issuer"), CWABS, Inc., as depositor (the "Depositor"),
Deutsche Bank National Trust Company, as indenture trustee (the "Indenture
Trustee"), Aames Capital Corporation, as servicer (the "Servicer"), Aames
Investment Corporation, as seller (the "Seller") and Wells Fargo Bank, N.A.,
as master servicer (the "Master Servicer") and trust administrator (the "Trust
Administrator").
H-1
AAMES CAPITAL CORPORATION, as Servicer
By:_________________________________
Name:
Title:
Date:
H-2
SCHEDULE A
----------
MORTGAGE LOAN SCHEDULE
[On file with the Custodian.]
Schedule A-1