EXHIBIT 4
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ASSET BACKED FUNDING CORPORATION,
Depositor
OCWEN FEDERAL BANK FSB,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2002
ABFC 2002-NC1 Trust
ABFC Asset-Backed Certificates, Series 2002-NC1
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms..................................................
Section 1.02 Accounting.....................................................
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans...................................
Section 2.02 Acceptance by Trustee..........................................
Section 2.03 Repurchase or Substitution of Mortgage Loans by the Seller.....
Section 2.04 [Reserved].....................................................
Section 2.05 Representations, Warranties and Covenants of the Servicer......
Section 2.06 Representations and Warranties of the Depositor................
Section 2.07 Issuance of Certificates and the Uncertificated Regular
Interests....................................................
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer....................................
Section 3.02 Collection of Mortgage Loan Payments...........................
Section 3.03 Realization Upon Defaulted Mortgage Loans......................
Section 3.04 Collection Account and Distribution Account....................
Section 3.05 Permitted Withdrawals From the Collection Account..............
Section 3.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.....................................................
Section 3.07 Permitted Withdrawals From Escrow Account......................
Section 3.08 Payment of Taxes, Insurance and Other Charges; Collections
Thereunder...................................................
Section 3.09 Transfer of Accounts...........................................
Section 3.10 Maintenance of Hazard Insurance................................
Section 3.11 Maintenance of Mortgage Impairment Insurance Policy............
Section 3.12 Fidelity Bond, Errors and Omissions Insurance..................
Section 3.13 Title, Management and Disposition of REO Property..............
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution Agreements....
Section 3.15 Notification of Adjustments....................................
Section 3.16 Optional Purchases of Mortgage Loans by Servicer...............
Section 3.17 Trustee to Cooperate; Release of Files.........................
Section 3.18 Servicing Compensation.........................................
Section 3.19 Annual Statement as to Compliance..............................
Section 3.20 Annual Independent Certified Public Accountants' Reports.......
Section 3.21 Access to Certain Documentation and Information Regarding
the Mortgage Loans...........................................
Section 3.22 Duties of Credit Risk Manager..................................
Section 3.23 Obligations of the Servicer in Respect of Compensating
Interest.....................................................
Section 3.24 Obligations of the Servicer in Respect of Mortgage Interest
Rates and Monthly Payments...................................
Section 3.25 Investment of Funds in the Collection Account and the
Distribution Account.........................................
Section 3.26 Liability of Servicer; Indemnification.........................
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties...................................................
Section 3.28 Protection of Assets...........................................
Section 3.29 Limitation of Liability of the Credit Risk Manager.............
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions.........................................
Section 4.02 Distributions of Principal and Monthly Excess Cashflow
Amounts......................................................
Section 4.03 Allocation of Losses...........................................
Section 4.04 Method of Distribution.........................................
Section 4.05 Distributions on Book-Entry Certificates.......................
Section 4.06 Statements.....................................................
Section 4.07 Remittance Reports; Advances...................................
Section 4.08 REMIC Distributions............................................
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates..............................................
Section 5.02 Registration of Transfer and Exchange of Certificates.........
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.............
Section 5.04 Persons Deemed Owners.........................................
Section 5.05 Appointment of Paying Agent...................................
ARTICLE VI
THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Servicer and the Depositor...................
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the Depositor...............
Section 6.03 Limitation on Liability of the Servicer and Others............
Section 6.04 Servicer Not to Resign........................................
Section 6.05 Delegation of Duties..........................................
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of Termination................................
Section 7.02 Trustee to Act; Appointment of Successor......................
Section 7.03 Waiver of Defaults............................................
Section 7.04 Notification to Certificateholders............................
Section 7.05 Survivability of Servicer Liabilities.........................
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee.............................................
Section 8.02 Certain Matters Affecting the Trustee.........................
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.........
Section 8.04 Trustee May Own Certificates..................................
Section 8.05 Trustee Fees and Expenses.....................................
Section 8.06 Eligibility Requirements for Trustee..........................
Section 8.07 Resignation or Removal of Trustee.............................
Section 8.08 Successor Trustee.............................................
Section 8.09 Merger or Consolidation of Trustee............................
Section 8.10 Appointment of Co-Trustee or Separate Trustee.................
Section 8.11 Limitation of Liability.......................................
Section 8.12 Trustee May Enforce Claims Without Possession of Certificates.
Section 8.13 Suits for Enforcement.........................................
Section 8.14 Waiver of Bond Requirement....................................
Section 8.15 Waiver of Inventory, Accounting and Appraisal Requirement.....
ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01 REMIC Administration..........................................
Section 9.02 Prohibited Transactions and Activities........................
Section 9.03 Indemnification with Respect to Certain Taxes and
Loss of REMIC Status........................................
Section 9.04 REO Property..................................................
Section 9.05 Grantor Trust Administration..................................
ARTICLE X
TERMINATION
Section 10.01 Termination.................................................
Section 10.02 Additional Termination Requirements.........................
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment...................................................
Section 11.02 Recordation of Agreement; Counterparts......................
Section 11.03 Limitation on Rights of Certificateholders..................
Section 11.04 Governing Law; Jurisdiction.................................
Section 11.05 Notices.....................................................
Section 11.06 Severability of Provisions..................................
Section 11.07 Article and Section References..............................
Section 11.08 Notice to the Rating Agencies...............................
Section 11.09 Further Assurances..........................................
Section 11.10 Benefits of Agreement.......................................
Section 11.11 Acts of Certificateholders..................................
Section 11.12 Waiver of Jury Trial........................................
Section 11.13 Limitation on Damages.......................................
EXHIBITS:
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Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit A-IO Form of Class A-IO Certificates
Exhibit B Form of Class B Certificates
Exhibit C-1 Form of Class R Certificate
Exhibit C-2 Form of Class M-1 Certificates
Exhibit C-3 Form of Class M-2 Certificates
Exhibit C-4 Form of Class M-3 Certificates
Exhibit C-5 Form of Class M-4 Certificates
Exhibit C-6 Form of Class CE Certificates
Exhibit C-7 Form of Class P Certificates
Exhibit D-1 Group 1 Mortgage Loan Schedule
Exhibit D-2 Group 2 Mortgage Loan Schedule
Exhibit E Form of Request for Release
Exhibit F-1 Form of Trustee's Initial Certification
Exhibit F-2 Form of Trustee's Final Certification
Exhibit F-3 Form of Receipt of Mortgage Note
Exhibit G Mortgage Loan Purchase Agreement
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Form of Investment Letter
Exhibit K Form of Class R Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M Monthly Information Provided by Servicer
Schedule I Prepayment Charge Schedule
This Pooling and Servicing Agreement is dated as of July 1, 2002
(the "Agreement"), among ASSET BACKED FUNDING CORPORATION, as depositor (the
"Depositor"), OCWEN FEDERAL BANK FSB, as servicer (the "Servicer"), and U.S.
BANK NATIONAL ASSOCIATION, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple Classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Trust Fund created hereunder. The Certificates will consist of eleven
Classes of Certificates, designated as (i) the Class A-1, Class A-2 and Class
A-IO Certificates, (ii) the Class M-1, Class M-2, Class M-3 and Class M-4
Certificates, (iii) the Class B Certificates, (iv) the Class CE Certificates,
(v) the Class P Certificates and (vi) the Class R Certificate.
As provided herein, the Trustee shall elect that the Trust Fund be
treated for federal income tax purposes as six separate real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, "REMIC A," "REMIC
B," "REMIC 1," "REMIC 2," REMIC 3" and "REMIC 4," respectively). The Class
T4-A1IO, Class T4-A2IO, Class T4-M1IO, Class T4-M2IO, Class T4-M3IO, Class
T4-M4IO, Class T4-BIO, Class T4-4, Class T4-11, Class T4-12 and Class T4-13
Interests (such interests, the "REMIC 4 Components"), the Class T4-A1, Class
T4-A2, Class T4-M1, Class T4-M2, Class T4-M3, Class T4-M4 and Class T4-B
Interests and the Class A-IO Certificates represent all of the "regular
interests" in REMIC 4. Each Class of Offered P&I Certificates represents
beneficial ownership of the corresponding REMIC 4 Regular Interest and the right
to receive Cap Carryover Amounts. The Class CE Certificates represent beneficial
ownership of the REMIC 4 Components, subject to the obligation to pay Cap
Carryover Amounts. Each of the Class R-A, Class R-B, Class R-1, Class R-2, Class
R-3 and Class R-4 Interests, represented collectively by the Class R
Certificate, represents the sole Class of "residual interest" in REMIC A, REMIC
B, REMIC 1, REMIC 2, REMIC 3 and REMIC 4, respectively, for purposes of the
REMIC Provisions. There are three Classes of uncertificated REMIC A Regular
Interests (the Class TA-1, Class TA-2 and Class TA-4 Interests), four Classes of
uncertificated REMIC B Regular Interests (the Class TB-1, Class TB-2, Class
TB-AIO and Class TB-4 Interests), five Classes of uncertificated REMIC 1 Regular
Interests (the Class T1-1, Class T1-2, Class T1-3, Class T1-4 and Class T1-AIO
Interests), eight Classes of uncertificated REMIC 2 Regular Interests (the Class
T2-1, Class T2-2, Class T2-3, Class T2-4, Class T2-AIO, Class T2-11, Class T2-12
and Class T2-13 Interests), and twelve Classes of uncertificated REMIC 3 Regular
Interests (the Class T3-A1, Class T3-A2, Class T3-M1, Class T3-M2, Class T3-M3,
Class T3-M4, Class T3-B, Class T3-4, Class T3-AIO, Class T3-11, Class T3-12 and
Class T3-13 Interests). Each Class of REMIC A Regular Interest, REMIC B Regular
Interest, REMIC 1 Regular Interest, REMIC 2 Regular Interest, REMIC 3 Regular
Interest and REMIC 4 Regular Interest and the Class A-IO Certificates are "REMIC
Regular Interests." The REMIC A Regular Interests will be held as assets of
REMIC B. The REMIC B Regular Interests will be held as assets of REMIC 1. The
REMIC 1 Regular Interests will be held as assets of REMIC 2, the REMIC 2 Regular
Interests will be held as assets of REMIC 3 and the REMIC 3 Regular Interests
will be held as assets of REMIC 4. The REMIC 4 Regular Interests will be held as
assets of the Grantor Trust, which will also hold the rights of the Offered P&I
Certificates to receive their respective Cap Carryover Amounts. The Class P
Certificates represent an interest in a grantor trust created hereunder and are
entitled to receive any Prepayment Charges with respect to the Mortgage Loans.
The "latest possible maturity date" for federal income tax purposes of all
interests created hereby will be the Distribution Date in August 2032.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance or Original
Notional Amount, for each Class of Certificates comprising the interests in the
Trust Fund created hereunder:
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Original Class
Certificate
Principal or
Notional Pass-Through Assumed Final
Class Amount Rate Maturity Dates
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A-1 $290,280,000.00 (1) April 25, 2032
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A-2 $95,892,000.00 (2) April 25, 2032
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A-IO $48,272,000.00 (3) N/A
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M-1 $32,584,000.00 (4) March 25, 2032
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M-2 $28,963,000.00 (5) February 25, 2032
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M-3 $19,308,000.00 (6) December 25, 2031
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M-4 $8,448,000.00 (7) June 25, 2032
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B $3,620,000.00 (8) May 25, 2030
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CE (9) N/A N/A
- --------------------------------------------------------------------------------
P N/A N/A N/A
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R N/A N/A N/A
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Total $479,095,000.00(10)
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(1) Interest will accrue on the Class A-1 Certificates during each Interest
Accrual Period at a rate equal to the lesser of: (i) the Class A-1
Pass-Through Rate and (ii) the Pool Cap for such Distribution Date.
(2) Interest will accrue on the Class A-2 Certificates during each Interest
Accrual Period at a rate equal to the lesser of: (i) the Class A-2
Pass-Through Rate and (ii) the Pool Cap for such Distribution Date.
(3) Interest will accrue on the Class A-IO Certificates at a rate per annum
equal to 6.50% for the first ten Distribution Dates, 4.50% for the next
ten Distribution Dates and 2.50% for the next ten Distribution Dates. The
Class A-IO Certificates will not bear interest after the Distribution Date
in January 2005.
(4) Interest will accrue on the Class M-1 Certificates at a rate equal to the
lesser of: (i) the Class M-1 Pass-Through Rate and (ii) the Pool Cap for
such Distribution Date.
(5) Interest will accrue on the Class M-2 Certificates at a rate equal to the
lesser of: (i) the Class M-2 Pass-Through Rate and (ii) the Pool Cap for
such Distribution Date.
(6) Interest will accrue on the Class M-3 Certificates at a rate equal to the
lesser of: (i) the Class M-3 Pass-Through Rate and (ii) the Pool Cap for
such Distribution Date.
(7) Interest will accrue on the Class M-4 Certificates at a rate equal to the
lesser of: (i) the Class M-4 Pass-Through Rate and (ii) the Pool Cap for
such Distribution Date.
(8) Interest will accrue on the Class B Certificates at a rate equal to the
lesser of: (i) the Class B Pass-Through Rate and (ii) the Pool Cap for
such Distribution Date.
(9) The Class CE Certificates represent the beneficial ownership of the REMIC
4 Components in the aggregate.
(10) Exclusive of the Class A-IO Notional Amount.
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Interest on all Classes of REMIC Regular
Interests and Certificates (other than the Class T3-A1 Interest, Class T3-A2
Interest, Class T3-M1 Interest, Class T3-M2 Interest, Class T3-M3 Interest,
Class T3-M4 Interest, Class T4-A1 Interest, Class T4-A2 Interest, Class T4-M1
Interest, Class T4-M2 Interest, Class T4-M3 Interest and Class T4-M4 Interest
and the Class A-1, Class A-2, Class M-1, Class M-2, Class M-3 and Class M-4
Certificates) will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. Interest on the Class T3-A1 Interest, Class T3-A2
Interest, Class T3-M1 Interest, Class T3-M2 Interest, Class T3-M3 Interest,
Class T3-M4 Interest, Class T4-A1 Interest, Class T4-A2 Interest, Class T4-M1
Interest, Class T4-M2 Interest, Class T4-M3 Interest and Class T4-M4 Interest
and the Class A-1, Class A-2, Class M-1, Class M-2, Class M-3 and Class M-4
Certificates will be calculated on the basis of the actual number of days in the
related Interest Accrual Period and a 360-day year.
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan (including each
Mortgage Loan in foreclosure and each Mortgage Loan for which the Mortgagor has
filed for bankruptcy after the Closing Date) with respect to which any portion
of a Monthly Payment is, as of the last day of the prior Collection Period, two
months or more past due and each Mortgage Loan relating to an REO Property. Any
Mortgage Loan which, on a 3-month rolling average basis, has made its scheduled
principal and interest payments will not be considered to be a 60+ Day
Delinquent Loan.
"Account": Either of the Collection Account or the Distribution
Account.
"Accrued Certificate Interest": With respect to each Distribution
Date and Class of Certificates, an amount equal to the interest accrued at the
applicable rate set forth or described opposite such Class in the table in the
Preliminary Statement during the related Interest Accrual Period on the
Certificate Principal Balance (or Notional Amount) of such Class of
Certificates, reduced by such Class's Interest Percentage of Relief Act Interest
Shortfalls for such Distribution Date.
"Adjustable-Rate Mortgage Loan": A Mortgage Loan which has a rate at
which interest accrues that adjusts based on the Index plus a related Gross
Margin, as set forth and subject to the limitations in the related Mortgage
Note.
"Adjusted Weighted Average Net Mortgage Rate": The weighted average
(based on Principal Balances as of the first day of the related Collection
Period or, in the case of the first Distribution Date, the Cut-Off Date) of the
Class TB-1 Interest, the Class TB-2 Interest and the Class TB-4 Interest,
expressed as an annual rate and calculated on the basis of twelve months
consisting of 30 days each and a 360-day year.
"Adjustment Date": With respect to each Adjustable-Rate Mortgage
Loan, each adjustment date, on which the Mortgage Interest Rate of an
Adjustable-Rate Mortgage Loan changes pursuant to the related Mortgage Note. The
first Adjustment Date following the Cut-off Date as to each Adjustable-Rate
Mortgage Loan is set forth in the Mortgage Loan Schedules.
"Advance": As to any Mortgage Loan, any advance made by the Servicer
in respect of any Distribution Date pursuant to Section 4.07.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise and "controlling" and "controlled"
shall have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments
and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all federal,
state and local laws, statutes, rules and regulations applicable thereto.
"Applied Realized Loss Amount": With respect to each Distribution
Date, the excess, if any, of (a) the aggregate of the Certificate Principal
Balances of the Certificates (after giving effect to all distributions on such
Distribution Date) over (b) the Pool Balance as of the end of the related
Collection Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.
"Assumed Final Maturity Date": As to each Class of Certificates, the
date set forth as such in the Preliminary Statement.
"Available Funds": As to any Distribution Date, an amount equal to
the excess of (i) the sum of (a) the aggregate of the Monthly Payments due and
received during the related Collection Period and remitted to the Trustee by the
Servicer one Business Day prior to the related Distribution Date, (b)
Liquidation Proceeds, Insurance Proceeds, Principal Prepayments, Substitution
Adjustment Amounts, the Purchase Price for any repurchased Mortgage Loan, the
Termination Price with respect to the termination of the Trust pursuant to
Section 10.01 hereof and other unscheduled recoveries of principal and interest
(excluding Prepayment Charges and Servicer Prepayment Charge Payment Amounts) in
respect of the Mortgage Loans during the related Prepayment Period, (c) the
aggregate of any amounts received in respect of an REO Property deposited in the
Collection Account for such Distribution Date, (d) any Compensating Interest for
such Distribution Date, and (e) the aggregate of any Advances made by the
Servicer for such Distribution Date over (ii) the sum of (a) amounts
reimbursable or payable to the Servicer pursuant to Sections 3.05 or 6.03, (b)
amounts reimbursable or payable to the Trustee pursuant to Section 8.05 (other
than Trustee Fees), (c) Stayed Funds, (d) the Servicing Fee and (e) amounts
deposited in the Collection Account or the Distribution Account, as the case may
be, in error.
"Bankruptcy Code": Title 11 of the United States Code, as amended.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant," or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A-1, Class A-2, Class A-IO, Class M-1, Class M-2, Class M-3 and
Class M-4 Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in the State of Delaware, the State of New York, the
State of New Jersey, the State of Florida or in the city in which the Corporate
Trust Office of the Trustee is located are authorized or obligated by law or
executive order to be closed.
"Cap Carryover Amount": If on any Distribution Date, the Accrued
Certificate Interest for any Offered Certificate (other than a Class A-IO
Certificate) is based upon the Pool Cap, the excess of (i) the amount of
interest such Certificate would have been entitled to receive on such
Distribution Date based on the related Pass-Through Rate, over (ii) the amount
of interest such Certificate received on such Distribution Date based on the
Pool Cap, together with the unpaid portion of any such excess from prior
Distribution Dates (and interest accrued thereon at the then applicable
Pass-Through Rate on such Certificate).
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificate Custodian": Initially, U.S. Bank National Association;
thereafter any other Certificate Custodian acceptable to the Depository and
selected by the Trustee.
"Certificate Owner": With respect to each Book-Entry Certificate,
any beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of
Certificates (other than the Class A-IO, Class CE, Class P and Class R
Certificates) and any Distribution Date, the Original Class Certificate
Principal Balance reduced by the sum of (i) all amounts actually distributed in
respect of principal of such Class on all prior Distribution Dates and (ii)
Applied Realized Loss Amounts allocated thereto. The Class A-IO, Class CE, Class
P and Class R Certificates do not have a Certificate Principal Balance. With
respect to any Certificate (other than a Class A-IO, Class CE, Class P or Class
R Certificate) of a Class and any Distribution Date, the portion of the
Certificate Principal Balance of such Class represented by such Certificate
equal to the product of the Percentage Interest evidenced by such Certificate
and the Certificate Principal Balance of such Class.
"Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of the Class
R Certificate for any purpose hereof.
"Class": Collectively, Certificates or REMIC Regular Interests which
have the same priority of payment and bear the same class designation and the
form of which is identical except for variation in the Percentage Interest
evidenced thereby.
"Class A-1 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 0.300% per annum, and (ii) following the
Optional Termination Date, 0.600% per annum.
"Class A-1 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the related LIBOR Determination Date, plus
the Class A-1 Certificate Margin and (b) the Maximum Rate Cap.
"Class A-1 Principal Distribution Amount": As of any Distribution
Date, the lesser of (i) the Certificate Principal Balance of the Class A-1
Certificates immediately prior to such Distribution Date and (ii) the Group 1
Principal Percentage of the Senior Principal Distribution Amount.
Class A-1 REMIC Pass-Through Rate": The lesser of (a) the Class A-1
Pass-Through Rate and (b) the Pool Cap.
"Class A-2 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 0.330% per annum, and (ii) following the
Optional Termination Date, 0.660% per annum.
"Class A-2 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the related LIBOR Determination Date, plus
the Class A-2 Certificate Margin and (b) the Maximum Rate Cap.
"Class A-2 Principal Distribution Amount": As of any Distribution
Date, the lesser of (i) the Certificate Principal Balance of the Class A-2
Certificates immediately prior to such Distribution Date and (ii) the Group 2
Principal Percentage of the Senior Principal Distribution Amount.
"Class A-2 REMIC Pass-Through Rate": The lesser of (a) the Class A-2
Pass-Through Rate and (b) the Pool Cap.
"Class A-IO Certificate": A regular interest in REMIC 4 that has a
Notional Amount equal to the Class TA-2 Principal Amount and bears interest at
the Class A-IO Pass-Through Rate.
"Class A-IO Pass-Through Rate": For each Distribution Date (i)
through and including the Distribution Date in May 2003, 6.50% per annum, (ii)
from and including the Distribution Date in June 2003 through and including the
Distribution Date in March 2004, 4.50% per annum, (iii) from and including the
Distribution Date in April 2004 through and including the Distribution Date in
January 2005, 2.50% per annum, and (iv) after the Distribution Date in January
2005, 0%.
"Class A Certificate": Any one of the Certificates with an "A"
designated on the face thereof substantially in the form annexed hereto as
Exhibits A-1, A-2 and A-IO, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the right
to distributions as set forth herein and therein.
"Class A Certificateholders": Collectively, the Holders of the Class
A Certificates.
"Class B Certificate": Any one of the Certificates with a "B"
designated on the face thereof substantially in the form annexed hereto as
Exhibit B, executed by the Trustee on behalf of the Trust and authenticated and
delivered by the Certificate Registrar, representing the right to distributions
as set forth herein and therein.
"Class B Certificateholders": Collectively, the Holders of the Class
B Certificates.
"Class B Pass-Through Rate": For each Distribution Date, 7.000% per
annum.
"Class B Principal Distribution Amount": As of any Distribution Date
on or after the Stepdown Date and as long as a Trigger Event is not in effect,
the excess of (x) the sum of (i) the sum of the Certificate Principal Balances
of the Class A Certificates (after taking into account the payment of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the payment of the Class M-2 Principal Distribution
Amount on such Distribution Date), (iv) the Certificate Principal Balance of the
Class M-3 Certificates (after taking into account the payment of the Class M-3
Principal Distribution Amount on such Distribution Date), (v) the Certificate
Principal Balance of the Class M-4 Certificates (after taking into account the
payment of the Class M-4 Principal Distribution Amount on such Distribution
Date) and (vi) the Certificate Principal Balance of the Class B Certificates
immediately prior to such Distribution Date) over (y) the lesser of (A) the
product of (i) 98.50% and (ii) the Pool Balance as of the last day of the
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of 0.50% and the Pool Balance on the
Cut-off Date.
"Class B Realized Loss Amortization Amount": As to the Class B
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xvi) hereof, in each
case for such Distribution Date.
"Class B REMIC Pass-Through Rate": The lesser of (a) the Class B
Pass-Through Rate and (b) the Pool Cap.
"Class CE Certificates": Any one of the Class CE Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-6, executed by the Trustee on behalf of the Trust and authenticated
and delivered by the Certificate Registrar, representing the right to
distributions as set forth herein and therein.
"Class CE Distributable Amount": With respect to any Distribution
Date, the aggregate of amounts distributable on the REMIC 4 Components for such
Distribution Date remaining after the distributions in Section
4.02(b)(i)-(xviii).
"Class M Certificate": Any one of the Certificates with an "M"
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-2, Exhibit C-3, Exhibit C-4 and Exhibit C-5, executed by the Trustee
on behalf of the Trust and authenticated and delivered by the Certificate
Registrar, representing the right to distributions as set forth herein and
therein.
"Class M Certificateholders": Collectively, the Holders of the Class
M Certificates.
"Class M-1 Applied Realized Loss Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class M-1 Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of (i) the Applied Realized Loss Amount as
of such Distribution Date over (ii) the sum of the Class M-2 Applied Realized
Loss Amount, the Class M-3 Applied Realized Loss Amount, the Class M-4 Applied
Realized Loss Amount and the Class B Applied Realized Loss Amount, in each case
as of such Distribution Date.
"Class M-1 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 0.680% per annum, and (ii) following the
Optional Termination Date, 1.020% per annum.
"Class M-1 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the related LIBOR Determination Date, plus
the Class M-1 Certificate Margin and (b) the Maximum Rate Cap.
"Class M-1 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Senior
Principal Distribution Amount on such Distribution Date) and (ii) the
Certificate Principal Balance of the Class M-1 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 73.50% and
(ii) the Pool Balance as of the last day of the related Collection Period and
(B) the Pool Balance as of the last day of the related Collection Period minus
the product of 0.50% and the Pool Balance on the Cut-off Date.
"Class M-1 Realized Loss Amortization Amount": As to the Class M-1
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-1 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (iv) hereof, in each case
for such Distribution Date.
"Class M-1 REMIC Pass-Through Rate": The lesser of (a) the Class M-1
Pass-Through Rate and (b) the Pool Cap.
"Class M-2 Applied Realized Loss Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class M-2 Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of (i) the related Applied Realized Loss
Amount as of such Distribution Date over (ii) the sum of the Class M-3 Applied
Realized Loss Amount, the Class M-4 Applied Realized Loss Amount and the Class B
Applied Realized Loss Amount as of such Distribution Date.
"Class M-2 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 1.250% per annum, and (ii) following the
Optional Termination Date, 1.875% per annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the related LIBOR Determination Date, plus
the Class M-2 Certificate Margin and (b) the Maximum Rate Cap.
"Class M-2 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date) and (iii) the Certificate Principal Balance of the Class M-2 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 85.50% and (ii) the Pool Balance as of the last day of the
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of 0.50% and the Pool Balance on the
Cut-off Date.
"Class M-2 Realized Loss Amortization Amount": As to the Class M-2
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-2 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (vii) hereof, in each
case for such Distribution Date.
"Class M-2 REMIC Pass-Through Rate": The lesser of (a) the Class M-2
Pass-Through Rate and (b) the Pool Cap.
"Class M-3 Applied Realized Loss Amount": As to the Class M-3
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class M-3 Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of (i) the related Applied Realized Loss
Amount as of such Distribution Date over (ii) the sum of the Class M-4 Applied
Realized Loss Amount and the Class B Applied Realized Loss Amount as of such
Distribution Date.
"Class M-3 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 2.000% per annum, and (ii) following the
Optional Termination Date, 3.000% per annum.
"Class M-3 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the related LIBOR Determination Date, plus
the Class M-3 Certificate Margin and (b) the Maximum Rate Cap.
"Class M-3 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the sum of the Certificate Principal
Balances of the Class A Certificates (after taking into account the payment of
the Senior Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date), and (iv) the Certificate
Principal Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 93.50% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of 0.50% and the Pool Balance on the Cut-off Date.
"Class M-3 Realized Loss Amortization Amount": As to the Class M-3
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-3 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (x) hereof, in each case
for such Distribution Date.
"Class M-3 REMIC Pass-Through Rate": The lesser of (a) the Class M-3
Pass-Through Rate and (b) the Pool Cap.
"Class M-4 Applied Realized Loss Amount": As to the Class M-4
Certificates and as of any Distribution Date, the lesser of (x) the Certificate
Principal Balance thereof (after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date, but prior to the
application of the Class M-4 Applied Realized Loss Amount, if any, on such
Distribution Date) and (y) the excess of (i) the related Applied Realized Loss
Amount as of such Distribution Date over (ii) the Class B Applied Realized Loss
Amount as of such Distribution Date.
"Class M-4 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 2.300% per annum, and (ii) following the
Optional Termination Date, 3.450% per annum.
"Class M-4 Pass-Through Rate": For each Distribution Date, the
lesser of (a) One-Month LIBOR as of the related LIBOR Determination Date, plus
the Class M-4 Certificate Margin and (b) the Maximum Rate Cap.
"Class M-4 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the sum of the Certificate Principal
Balances of the Class A Certificates (after taking into account the payment of
the Senior Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the payment of
the Class M-3 Principal Distribution Amount on such Distribution Date) and (v)
the Certificate Principal Balance of the Class M-4 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
97.00% and (ii) the Pool Balance as of the last day of the related Collection
Period and (B) the Pool Balance as of the last day of the related Collection
Period minus the product of 0.50% and the Pool Balance on the Cut-off Date.
"Class M-4 Realized Loss Amortization Amount": As to the Class M-4
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-4 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xiii) hereof, in each
case for such Distribution Date.
"Class M-4 REMIC Pass-Through Rate": The lesser of (a) the Class M-4
Pass-Through Rate and (b) the Pool Cap.
"Class P Certificate": Any one of the Certificates with a "P"
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-7, executed by the Trustee on behalf of the Trust and authenticated
and delivered by the Certificate Registrar, representing the right to
distributions as set forth herein and therein.
"Class R Certificate": The Class R Certificate executed by the
Trustee on behalf of the Trust, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit C-1
and evidencing the ownership of the Residual Interest in each of REMIC A, REMIC
B, REMIC 1, REMIC 2, REMIC 3 and REMIC 4. The Class R Certificate represents the
ownership of the Class R-A Interest, Class R-B Interest, Class R-1 Interest,
Class R-2 Interest, Class R-3 Interest and Class R-4 Interest.
"Class R-A Interest": The uncertificated residual interest in REMIC
"Class R-B Interest": The uncertificated residual interest in REMIC
"Class R-1 Interest": The uncertificated residual interest in REMIC
"Class R-2 Interest": The uncertificated residual interest in REMIC
"Class R-3 Interest": The uncertificated residual interest in REMIC
"Class R-4 Interest": The uncertificated residual interest in REMIC
"Class TA-1 Interest": A regular interest in REMIC A that is held as
an asset of REMIC B and has a principal balance equal to the Class TA-1
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.
"Class TA-1 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to (a) the Pool Balance minus (b) the sum of (1) the Remaining
Initial Overcollateralization Amount and (2) the Class TA-2 Principal Amount.
"Class TA-2 Interest": A regular interest in REMIC A that is held as
an asset of REMIC B and has a principal balance equal to the Class TA-2
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.
"Class TA-2 Principal Amount": As of any Distribution Date, an
amount equal to (a) $48,272,000 minus (b) any principal payments and Applied
Realized Loss Amounts previously applied to reduce the Class TA-2 Principal
Amount.
"Class TA-4 Interest": A regular interest in REMIC A that is held as
an asset of REMIC B and has a principal balance equal to the Class TA-4
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.
"Class TA-4 Principal Amount": As of any Distribution Date, an
amount equal to (a) the Initial Overcollateralization Amount minus (b) any
principal payments and Realized Losses and accreted interest allocated to the
Class T1-4 Interest as set forth in Section 4.08(d).
"Class TB-1 Interest": A regular interest in REMIC B that is held as
an asset of REMIC 1 and has a principal balance equal to the Class TA-1
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.
"Class TB-2 Interest": A regular interest in REMIC B that is held as
an asset of REMIC 1 and has a principal balance equal to the Class TA-2
Principal Amount and bears interest at a rate equal to the excess of (a) the
Weighted Average Net Mortgage Rate over (b) the Class A-IO Pass-Through Rate.
"Class TB-AIO Interest": A regular interest in REMIC B that is held
as an asset of REMIC 1 and has a notional balance equal to the Class TA-2
Principal Amount and bears interest at the Class A-IO Pass-Through Rate.
"Class TB-4 Interest": A regular interest in REMIC B that is held as
an asset of REMIC 1 and has a principal balance equal to the Class TA-4
Principal Amount and bears interest at the Weighted Average Net Mortgage Rate.
"Class T1-1 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-1
Principal Amount and bears interest at the Adjusted Weighted Average Net
Mortgage Rate.
"Class T1-1 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to 98% of (a) the Pool Balance minus (b) the Remaining Initial
Overcollateralization Amount.
"Class T1-2 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-2
Principal Amount and bears interest at the Adjusted Weighted Average Net
Mortgage Rate.
"Class T1-2 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to 1% of the excess of (a) the excess of (i) the Pool Balance over
(ii) the Remaining Initial Overcollateralization Amount over (b) the Subsequent
Overcollateralization Amount.
"Class T1-3 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class T1-3
Principal Amount and bears interest at the Adjusted Weighted Average Net
Mortgage Rate.
"Class T1-3 Principal Amount": As of any Distribution Date, after
the application of principal payments and Applied Realized Loss Amounts, an
amount equal to 1% of the sum of (a) the excess of (i) the Pool Balance over
(ii) the Remaining Initial Overcollateralization Amount and (b) the Subsequent
Overcollateralization Amount.
"Class T1-4 Interest": A regular interest in REMIC 1 that is held as
an asset of REMIC 2 and has a principal balance equal to the Class TA-4
Principal Amount and bears interest at the Adjusted Weighted Average Net
Mortgage Rate.
"Class T1-AIO Interest": A regular interest in REMIC 1 that is held
as an asset of REMIC 2 and has a notional balance equal to the Class TA-2
Principal Amount and bears interest at the Class A-IO Pass-Through Rate.
"Class T1-4 Principal Amount": As of any Distribution Date, an
amount equal to (a) the Initial Overcollateralization Amount minus (b) any
principal payments and Realized Losses and accreted interest allocated to the
Class T1-4 Interest as set forth in Section 4.08(d).
"Class T2-1 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-1
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.
"Class T2-2 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-2
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.
"Class T2-3 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-3
Principal Amount and bears interest at the REMIC 2 Pass-Through Rate.
"Class T2-4 Interest": A regular interest in REMIC 2 that is held as
an asset of REMIC 3 and has a principal balance equal to the Class T1-4
Principal Amount and bears interest at the Adjusted Weighted Average Net
Mortgage Rate.
"Class T2-11 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-1
Principal Amount and bears interest at (a) the Adjusted Weighted Average Net
Mortgage Rate minus (b) the REMIC 2 Pass-Through Rate.
"Class T2-12 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-2
Principal Amount and bears interest at (a) the Adjusted Weighted Average Net
Mortgage Rate minus (b) the REMIC 2 Pass-Through Rate.
"Class T2-13 Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class T1-3
Principal Amount and bears interest at (a) the Adjusted Weighted Average Net
Mortgage Rate minus (b) the REMIC 2 Pass-Through Rate.
"Class T2-AIO Interest": A regular interest in REMIC 2 that is held
as an asset of REMIC 3 and has a notional balance equal to the Class TA-2
Principal Amount and bears interest at the Class A-IO Pass-Through Rate.
"Class T3-A1 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class A-1 Certificates and bears interest at the Pool
Cap.
"Class T3-A2 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class A-2 Certificates and bears interest at the Pool
Cap.
"Class T3-AIO Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class TA-2
Principal Amount and bears interest at the Class A-IO Pass-Through Rate.
"Class T3-B Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class B Certificates and bears interest at the Adjusted
Weighted Average Net Mortgage Rate.
"Class T3-M1 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class M-1 Certificates and bears interest at the Pool
Cap.
"Class T3-M2 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class M-2 Certificates and bears interest at the Pool
Cap.
"Class T3-M3 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class M-3 Certificates and bears interest at the Pool
Cap.
"Class T3-M4 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a principal balance equal to the Certificate
Principal Balance of the Class M-4 Certificates and bears interest at the Pool
Cap.
"Class T3-4 Interest": A regular interest in REMIC 3 that is held as
an asset of REMIC 4 and has a principal balance equal to the Class T1-4
Principal Amount and bears interest at the Adjusted Weighted Average Net
Mortgage Rate.
"Class T3-11 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-1
Principal Amount and is entitled to all interest distributions on the Class
T2-11 Interest.
"Class T3-12 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-2
Principal Amount and is entitled to all interest distributions on the Class
T2-12 Interest.
"Class T3-13 Interest": A regular interest in REMIC 3 that is held
as an asset of REMIC 4 and has a notional balance equal to the Class T1-3
Principal Amount and is entitled to all interest distributions on the Class
T2-13 Interest.
"Class T4-A1 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class A-1 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class A-1
Certificates and bears interest at the Class A-1 REMIC Pass-Through Rate.
"Class T4-A1IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class A-1
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class A-1 REMIC Pass-Through Rate.
"Class T4-A2 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class A-2 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class A-2
Certificates and bears interest at the Class A-2 REMIC Pass-Through Rate.
"Class T4-A2IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class A-2
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class A-2 REMIC Pass-Through Rate.
"Class T4-B Interest": A regular interest in REMIC 4 that has a
principal balance equal to the Certificate Principal Balance of the Class B
Certificates and bears interest at the Class B REMIC Pass-Through Rate.
"Class T4-BIO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class B
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Adjusted Weighted Average Net Mortgage Rate over (ii) the Class B REMIC
Pass-Through Rate.
"Class T4-M1 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class M-1 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class M-1
Certificates and bears interest at the Class M-1 REMIC Pass-Through Rate.
"Class T4-M1IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class M-1
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class M-1 REMIC Pass-Through Rate.
"Class T4-M2 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class M-2 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class M-2
Certificates and bears interest at the Class M-2 REMIC Pass-Through Rate.
"Class T4-M2IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class M-2
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class M-2 REMIC Pass-Through Rate.
"Class T4-M3 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class M-3 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class M-3
Certificates and bears interest at the Class M-3 REMIC Pass-Through Rate.
"Class T4-M3IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class M-3
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class M-3 REMIC Pass-Through Rate.
"Class T4-M4 Interest": A regular interest in REMIC 4, beneficial
ownership of which is represented by the Class M-4 Certificates that has a
principal balance equal to the Certificate Principal Balance of the Class M-4
Certificates and bears interest at the Class M-4 REMIC Pass-Through Rate.
"Class T4-M4IO Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Certificate Principal Balance of the Class M-4
Certificates and bears interest at a rate equal to the excess, if any, of (i)
the Pool Cap over (ii) the Class M-4 REMIC Pass-Through Rate.
"Class T4-4 Interest": A regular interest in REMIC 4 that has a
principal balance equal to the Class T1-4 Principal Amount and bears interest at
the Adjusted Weighted Average Net Mortgage Rate.
"Class T4-11 Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Class T1-1 Principal Amount and is entitled to all
interest distributions on the Class T3-11 Interest.
"Class T4-12 Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Class T1-2 Principal Amount and is entitled to all
interest distributions on the Class T3-12 Interest.
"Class T4-13 Interest": A regular interest in REMIC 4 that has a
notional balance equal to the Class T1-3 Principal Amount and is entitled to all
interest distributions on the Class T3-13 Interest.
"Closing Date": July 30, 2002.
"Code": The Internal Revenue Code of 1986, as it may be amended from
time to time.
"Collection Account": The account or accounts created and maintained
by the Servicer pursuant to Section 3.04, which shall be entitled "Collection
Account, Ocwen Federal Bank FSB, as Servicer for the Trust under the Pooling and
Servicing Agreement dated as of July 1, 2002 among Asset Backed Funding
Corporation, as Depositor, Ocwen Federal Bank FSB, as Servicer, and U.S. Bank
National Association, as Trustee, in trust for registered Holders of ABFC
2002-NC1 Trust, ABFC Asset-Backed Certificates, Series 2002-NC1," and which must
be an Eligible Account.
"Collection Period": With respect to any Distribution Date, the
period from the second day of the calendar month preceding the month in which
such Distribution Date occurs through the first day of the month in which such
Distribution Date occurs.
"Compensating Interest": As defined in Section 3.23 hereof.
"Condemnation Proceeds": All awards or settlements in respect of a
taking of a Mortgaged Property by exercise of the power of eminent domain or
condemnation.
"Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 180 East Fifth Street, St.
Paul, Minnesota 55101, Attention: Structured Finance, ABFC 2002-NC1 or at such
other address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor and the Servicer.
"Corresponding Classes": With respect to REMIC 3 and REMIC 4, the
following Classes shall be Corresponding Classes:
- --------------------------------------------------------------------------------
CORRESPONDING REMIC 3 CLASSES CORRESPONDING REMIC 4 CLASSES
- --------------------------------------------------------------------------------
T3-A1 T4-A1 and T4-A1IO, in the aggregate
- --------------------------------------------------------------------------------
T3-A2 T4-A2 and T4-A2IO, in the aggregate
- --------------------------------------------------------------------------------
T3-AIO Class A-IO Certificates
- --------------------------------------------------------------------------------
T3-M1 T4-M1 and T4-M1IO, in the aggregate
- --------------------------------------------------------------------------------
T3-M2 T4-M2 and T4-M2IO, in the aggregate
- --------------------------------------------------------------------------------
T3-M3 T4-M3 and T4-M3IO, in the aggregate
- --------------------------------------------------------------------------------
T3-M4 T4-M4 and T4-M4IO, in the aggregate
- --------------------------------------------------------------------------------
T3-B T4-B and T4-BIO, in the aggregate
- --------------------------------------------------------------------------------
T3-4 T4-4
- --------------------------------------------------------------------------------
"Credit Risk Manager": The Murrayhill Company, a Colorado
corporation.
"Credit Risk Manager Fee": The fee payable to the Credit Risk
Manager on each Distribution Date for its services as Credit Risk Manager, in an
amount equal to the product of (i) one-twelfth of the Credit Risk Manager Fee
Rate and (ii) the Pool Balance as of the opening of business on the first day of
the related Collection Period.
"Credit Risk Manager Fee Rate": With respect to any Distribution
Date, 0.0175% per annum.
"Credit Risk Management Agreement": The Credit Risk Management
Agreement between the Servicer and the Credit Risk Manager dated as of July 1,
2002.
"Cut-off Date": July 1, 2002.
"Cut-off Date Aggregate Principal Balance": The aggregate of the
Cut-off Date Principal Balances of the Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date after application of
funds received or advanced on or before such date (or as of the applicable date
of substitution with respect to an Eligible Substitute Mortgage Loan).
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be
replaced by one or more Eligible Substitute Mortgage Loans.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 5.02(c) hereof.
"Delinquent": Any Mortgage Loan with respect to which the Monthly
Payment due on a Due Date is not made by the close of business on the next
scheduled Due Date for such Mortgage Loan.
"Depositor": Asset Backed Funding Corporation, a Delaware
corporation, or any successor in interest.
"Depository": The initial depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the
10th day of the calendar month in which such Distribution Date occurs or, if
such 10th day is not a Business Day, the Business Day immediately preceding such
10th day.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust other than through an
Independent Contractor; provided, however, that the Trustee (or the Servicer
under this Agreement) shall not be considered to Directly Operate an REO
Property solely because the Trustee (or the Servicer under this Agreement)
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the United
States, any state or political subdivision thereof, any possession of the United
States, any foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (ii) any organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless such organization is subject to the tax
imposed by Section 511 of the Code, (iii) any organization described in Section
1381(a)(2)(C) of the Code, or (iv) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided by nationally recognized counsel to
the Trustee that the holding of an ownership interest in the Class R Certificate
by such Person may cause the Trust Fund or any Person having an ownership
interest in any Class of Certificates (other than such Person) to incur
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in the Class R Certificate
to such Person. A corporation will not be treated as an instrumentality of the
United States or of any state or political subdivision thereof if all of its
activities are subject to tax and a majority of its board of directors is not
selected by a governmental unit. The term "United States," "state" and
"international organization" shall have the meanings set forth in Section 7701
of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b) which shall be entitled
"Distribution Account, U.S. Bank National Association, as Trustee, in trust for
the registered Holders of ABFC 2002-NC1 Trust, ABFC Asset-Backed Certificates,
Series 2002-NC1" and which must be an Eligible Account.
"Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in August 2002.
"Due Date": With respect to each Mortgage Loan and any Distribution
Date, the day of the calendar month in which such Distribution Date occurs on
which the Monthly Payment for such Mortgage Loan was due, exclusive of any grace
period.
"Eligible Account": Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated "A-1" (or the equivalent) by each of the Rating Agencies at the time any
amounts are held on deposit therein, (ii) an account or accounts the deposits in
which are fully insured by the FDIC (to the limits established by such
corporation), the uninsured deposits in which account are otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each
Rating Agency, the Certificateholders will have a claim with respect to the
funds in such account or a perfected first priority security interest against
such collateral (which shall be limited to Permitted Investments) securing such
funds that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, (iii) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution, national banking association or trust company
acting in its fiduciary capacity or (iv) an account otherwise acceptable to each
Rating Agency without reduction or withdrawal of their then current ratings of
the Certificates as evidenced by a letter from each Rating Agency to the
Trustee. Eligible Accounts may bear interest.
"Eligible Substitute Mortgage Loan": A mortgage loan substituted for
a Defective Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of, and not more than 5% less
than, the outstanding principal balance of the Defective Mortgage Loan as of the
Due Date in the calendar month during which the substitution occurs, (ii) have a
Mortgage Interest Rate, with respect to a Fixed-Rate Mortgage Loan, not less
than the Mortgage Interest Rate of the Defective Mortgage Loan and not more than
1% in excess of the Mortgage Interest Rate of such Defective Mortgage Loan,
(iii) have the same Due Date as the Defective Mortgage Loan, (iv) if an
Adjustable-Rate Mortgage Loan, have a Maximum Mortgage Interest Rate not less
than the Maximum Mortgage Interest Rate for the Defective Mortgage Loan, (v) if
an Adjustable-Rate Mortgage Loan, have a Minimum Mortgage Interest Rate not less
than the Minimum Mortgage Interest Rate of the Defective Mortgage Loan, (vi) if
an Adjustable-Rate Mortgage Loan, have a Gross Margin equal to or greater than
the Gross Margin of the Defective Mortgage Loan, (vii) if an Adjustable-Rate
Mortgage Loan, have a next Adjustment Date not more than two months later than
the next Adjustment Date on the Defective Mortgage Loan, an Eligible Substitute
Mortgage Loan must have all Adjustment Dates occurring during the same Interest
Accrual Period during which Adjustment Dates occur with respect to the
substituted Mortgage Loan, (viii) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Defective Mortgage Loan,
(ix) be current as of the date of substitution, (x) have a Loan-to-Value Ratio
as of the date of substitution equal to or lower than the Loan-to-Value Ratio of
the Defective Mortgage Loan as of such date, (xi) have a risk grading determined
by the Seller at least equal to the risk grading assigned on the Defective
Mortgage Loan, (xii) have been underwritten or reunderwritten in accordance with
the same underwriting criteria and guidelines as the Defective Mortgage Loan and
(xiii) conform to each representation and warranty set forth in Section 3.01 of
the Mortgage Loan Purchase Agreement applicable to the Defective Mortgage Loan.
In the event that one or more mortgage loans are substituted for one or more
Defective Mortgage Loans, the amounts described in clause (i) hereof shall be
determined on the basis of aggregate principal balances, the Mortgage Interest
Rates described in clause (ii) hereof shall be determined on the basis of
weighted average Mortgage Interest Rates, the risk gradings described in clause
(xi) 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 (xiii) hereof must be satisfied as to each Eligible
Substitute Mortgage Loan or in the aggregate, as the case may be. Any Defective
Mortgage Loan that is a Group 1 Mortgage Loan or Group 2 Mortgage Loan must be
replaced by an Eligible Substitute Mortgage Loan that will be a Group 1 or Group
2 Mortgage Loan, as applicable.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA-Restricted Certificates": Any of the Class B, Class CE, Class
P and Class R Certificates.
"Escrow Account": The account or accounts created and maintained
pursuant to Section 3.06.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of real
property.
"Expense Fee Rate": The sum of (i) the Trustee Fee Rate, (ii) the
Servicing Fee Rate and (iii) the Credit Risk Manager Fee Rate.
"Extended Period": As defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any Distribution Date,
the lesser of (x) the Monthly Excess Interest Amount for such Distribution Date
and (y) the Overcollateralization Deficiency for such Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Fidelity Bond": Shall have the meaning assigned thereto in Section
3.12.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
(i) purchased by the Seller pursuant to or as contemplated by Section 2.03, (ii)
purchased by the Servicer pursuant to Section 3.16, or (iii) purchased by the
Majority Class CE Certificateholders or the Servicer pursuant to Section 10.01),
a determination made by the Servicer that all Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its reasonable
good faith judgment, expects to be finally recoverable in respect thereof have
been so recovered. The Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.
"Fitch": Fitch Ratings and its successors, and if such company shall
for any reason no longer perform the functions of a securities rating agency,
"Fitch" shall be deemed to refer to any other "nationally recognized statistical
rating organization" as set forth on the most current list of such organizations
released by the Securities and Exchange Commission.
"Fixed-Rate Mortgage Loan": A Mortgage Loan which has a constant
annual rate at which interest accrues in accordance with the provisions of the
related Mortgage Note.
"Foreclosure Price": The amount reasonably expected to be received
from the sale of the related Mortgaged Property net of any expenses associated
with foreclosure proceedings.
"Grantor Trust": That portion of the Trust exclusive of REMIC A,
REMIC B, REMIC 1, REMIC 2, REMIC 3 and REMIC 4 which holds (a) the REMIC 4
Regular Interests, (b) any Prepayment Charges received in respect of the
Mortgage Loans, any Servicer Prepayment Charge Payment Amounts and the right of
the Class P Certificateholders to receive such Prepayment Charges and Servicer
Prepayment Charge Payment Amounts, (c) the right of the Offered Certificates
(other than the Class A-IO Certificates) to receive Cap Carryover Amounts and
(d) the obligation of the Class CE Certificates to pay such Cap Carryover
Amounts.
"Gross Margin": With respect to each Adjustable-Rate Mortgage Loan,
the fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Interest Rate for such Mortgage
Loan.
"Group 1 Class A-IO Accrued Certificate Interest": For the Class
A-IO Certificates and each Distribution Date, an amount equal to (i) the Accrued
Certificate Interest for the Class A-IO Certificates for such Distribution Date
multiplied by (ii) a fraction, the numerator of which is Accrued Certificate
Interest for the Class A-1 Certificates and the denominator of which is the sum
of the Accrued Certificate Interest for the Class A-1 and Class A-2
Certificates.
"Group 1 Class A-IO Interest Carry Forward Amount": For the Class
A-IO Certificates and any Distribution Date, the product of (i) the sum of (a)
the excess, if any, of the Accrued Certificate Interest and any Interest Carry
Forward Amount for such Class for the prior Distribution Date, over the amount
in respect of interest actually distributed on such Class on such prior
Distribution Date and (b) interest on such excess at the applicable Pass-Through
Rate, on the basis of 360-day year consisting of twelve 30-day months multiplied
by (ii) a fraction, the numerator of which is the Accrued Certificate Interest
for the Class A-1 Certificates and the denominator of which is the sum of the
Accrued Certificate Interest for the Class A-1 and Class A-2 Certificates.
"Group 1 Interest Remittance Amount": As of any Determination Date,
the sum, without duplication, of (i) all interest due and collected or advanced
with respect to the related Collection Period on the Group 1 Mortgage Loans
(less the Servicing Fee, amounts available for reimbursement of Advances and
Servicing Advances pursuant to Section 3.05 and expenses reimbursable pursuant
to Section 6.03), (ii) all Compensating Interest paid by the Servicer on such
Determination Date with respect to such Mortgage Loans and (iii) the portion of
any payment in connection with any Principal Prepayment, substitution, Purchase
Price, Termination Price or Net Liquidation Proceeds relating to interest with
respect to such Mortgage Loans received during the related Prepayment Period.
"Group 1 Mortgage Loan": Each Mortgage Loan listed on Exhibit D-1
hereto. Each Group 1 Mortgage Loan had, as of the Cut-off Date, a Principal
Balance that conforms to Fannie Mae and Freddie Mac guidelines.
"Group 1 Principal Percentage": With respect to any Distribution
Date and the Class A-1 Certificates, the percentage equivalent to a fraction,
the numerator of which is the amount of principal collections (including any
principal advanced by the Servicer) allocable to the Group 1 Mortgage Loans for
the related Collection Period or Prepayment Period, as applicable, and the
denominator of which is the amount of principal collections (including any
principal advanced by the Servicer) allocable to the Mortgage Loans for the
related Collection Period or Prepayment Period, as applicable.
"Group 2 Class A-IO Accrued Certificate Interest": For the Class
A-IO Certificates and each Distribution Date, an amount equal to (i) the Accrued
Certificate Interest for the Class A-IO Certificates for such Distribution Date
multiplied by (ii) a fraction, the numerator of which is Accrued Certificate
Interest for the Class A-2 Certificates and the denominator of which is the sum
of the Accrued Certificate Interest for the Class A-1 and Class A-2
Certificates.
"Group 2 Class A-IO Interest Carry Forward Amount": For the Class
A-IO Certificates and any Distribution Date, the product of (i) the sum of (a)
the excess, if any, of the Accrued Certificate Interest and any Interest Carry
Forward Amount for such Class for the prior Distribution Date, over the amount
in respect of interest actually distributed on such Class on such prior
Distribution Date and (b) interest on such excess at the applicable Pass-Through
Rate, on the basis of 360-day year consisting of twelve 30-day months multiplied
by (ii) a fraction, the numerator of which is the Accrued Certificate Interest
for the Class A-2 Certificates and the denominator of which is the sum of the
Accrued Certificate Interest for the Class A-1 and Class A-2 Certificates.
"Group 2 Interest Remittance Amount": As of any Determination Date,
the sum, without duplication, of (i) all interest due and collected or advanced
with respect to the related Collection Period on the Group 2 Mortgage Loans
(less the Servicing Fee, amounts available for reimbursement of Advances and
Servicing Advances pursuant to Section 3.05 and expenses reimbursable pursuant
to Section 6.03), (ii) all Compensating Interest paid by the Servicer on such
Determination Date with respect to such Mortgage Loans and (iii) the portion of
any payment in connection with any Principal Prepayment, substitution, Purchase
Price, Termination Price or Net Liquidation Proceeds relating to interest with
respect to such Mortgage Loans received during the related Prepayment Period.
"Group 2 Mortgage Loan": Each Mortgage Loan listed on Exhibit D-2
hereto. Each Group 2 Mortgage Loan had, as of the Cut-off Date, a Principal
Balance that does not conform to Fannie Mae and Freddie Mac guidelines.
"Group 2 Principal Percentage": With respect to any Distribution
Date and the Class A-2 Certificates, the percentage equivalent to a fraction,
the numerator of which is the amount of principal collections (including any
principal advanced by the Servicer) allocable to the Group 2 Mortgage Loans for
the related Collection Period or Prepayment Period, as applicable, and the
denominator of which is the amount of principal collections (including any
principal advanced by the Servicer) allocable to the Mortgage Loans for the
related Collection Period or Prepayment Period, as applicable.
"Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Depositor, the Servicer and
their respective Affiliates, (ii) does not have any direct financial interest in
or any material indirect financial interest in the Depositor or the Servicer or
any Affiliate thereof, and (iii) is not connected with the Depositor or the
Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor or the Servicer or any Affiliate thereof merely because such Person is
the beneficial owner of 1% or less of any class of securities issued by the
Depositor or the Servicer or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the
Servicer) that would be an "independent contractor" with respect to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund were
a real estate investment trust (except that the ownership tests set forth in
that section shall be considered to be met by any Person that owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so long as the
Trust Fund does not receive or derive any income from such Person and provided
that the relationship between such Person and the Trust Fund is at arm's length,
all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Servicer) if the Trustee has received an Opinion of
Counsel, which Opinion of Counsel shall be an expense of the Trust Fund, to the
effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Index": With respect to each Adjustable-Rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.
"Initial Certificate Principal Balance": With respect to any
Certificate of a Class other than a Class A-IO, Class CE, Class P or Class R
Certificate, the amount designated "Initial Certificate Principal Balance" on
the face thereof.
"Initial Notional Amount": With respect to a Class A-IO Certificate,
the amount designated "Initial Notional Amount" on the face thereof.
"Initial Overcollateralization Amount": $3,620,139.21.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Servicer
would follow in servicing mortgage loans held for its own account, subject to
the terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date and
(i) the Class A-1, Class A-2, Class M-1, Class M-2, Class M-3 and Class M-4
Certificates and the Class T3-A1, Class T3-A2, Class T3-M1, Class T3-M2, Class
T3-M3, Class T3-M4, Class T4-A1, Class T4-A2, Class T4-M1, Class T4-M2, Class
T4-M3 and Class T4-M4 Interests, the period from the preceding Distribution Date
to the day prior to the current Distribution Date (or, in the case of the first
Distribution Date, the period from the Closing Date through August 25, 2002),
and (ii) the Class A-IO and Class B Certificates and the REMIC Regular Interests
(other than the Class T3-A1, Class T3-A2, Class T3-M1, Class T3-M2, Class T3-M3,
Class T3-M4, Class T4-A1, Class T4-A2, Class T4-M1, Class T4-M2, Class T4-M3 and
Class T4-M4 Interests), the calendar month immediately preceding the month in
which such Distribution Date occurs.
"Interest Carry Forward Amount": For any Class of Certificates
(other than the Class CE, Class P and Class R Certificates) and any Distribution
Date, the sum of (a) the excess, if any, of the Accrued Certificate Interest and
any Interest Carry Forward Amount for the prior Distribution Date, over the
amount in respect of interest actually distributed on such Class on such prior
Distribution Date and (b) interest on such excess at the applicable Pass-Through
Rate (x) with respect to the Offered Certificates (other than the Class A-IO and
Class B Certificates), for the actual number of days elapsed on the basis of a
360-day year since the prior Distribution Date, and (y) with respect to the
Class A-IO and Class B Certificates, on the basis of a 360-day year consisting
of twelve 30-day months.
"Interest Percentage": With respect to any Class of Certificates and
any Distribution Date, the ratio (expressed as a decimal carried to six places)
of the Accrued Certificate Interest for such Class to the sum of the Accrued
Certificate Interest for all Classes, in each case with respect to such
Distribution Date, without regard to Relief Act Interest Shortfalls.
"Interest Remittance Amount": As of any Determination Date, the sum
of the Group 1 Interest Remittance Amount and the Group 2 Interest Remittance
Amount.
"Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any related
Collection Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent on a
contractual basis for such Collection Period and not previously recovered.
"LIBOR Business Day": Any day on which banks in London, England and
The City of New York are open and conducting transactions in foreign currency
and exchange.
"LIBOR Determination Date": With respect to the Offered Certificates
(other than the Class A-IO and Class B Certificates), (i) for the first
Distribution Date, the second LIBOR Business Day preceding the Closing Date and
(ii) for each subsequent Distribution Date, the second LIBOR Business Day prior
to the immediately preceding Distribution Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any
Mortgage Loan in respect of which the Servicer has determined, in accordance
with the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds and Insurance Proceeds which it
expects to recover with respect to the liquidation of the Mortgage Loan or
disposition of the related REO Property have been recovered.
"Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received by
the Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation or (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise.
"Liquidation Report": The report with respect to a Liquidated
Mortgage Loan in such form as is agreed to by the Servicer and the Trustee
listing (i) the sale price of the related Mortgaged Property or amount of the
REO Disposition, (ii) the amount of any Realized Loss (or gain) with respect to
such Liquidated Mortgage Loan, (iii) the expenses relating to the liquidation of
such Liquidated Mortgage Loan and (iv) such other information as is agreed to by
the Servicer and the Trustee.
"Loan-to-Value Ratio": As of any date and Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Principal
Balance of the Mortgage Loan and the denominator of which is the Value of the
related Mortgaged Property.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note and indemnifying the Trust against any loss, cost or
liability resulting from the failure to deliver the original Mortgage Note) in
the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting Rights.
"Majority Class CE Certificateholders": The Holders of Class CE
Certificates evidencing at least a 51% Percentage Interest in the Class CE
Certificates.
"Maximum Mortgage Interest Rate": With respect to each
Adjustable-Rate Mortgage Loan, the percentage set forth in the related Mortgage
Note as the maximum Mortgage Interest Rate thereunder.
"Maximum Rate Cap": With respect to any Distribution Date and any
Class of Offered Certificates (other than the Class A-IO Certificates), a per
annum rate, adjusted (other than in the case of the Class B Certificates) by
multiplying such rate by a fraction equal to 30 over the actual number of days
in the related Interest Accrual Period, equal to (i) the average of the Net
Maximum Mortgage Interest Rates for the Adjustable-Rate Mortgage Loans and the
Net Mortgage Interest Rates for the Fixed-Rate Mortgage Loans, weighted on the
basis of the Principal Balances of the Mortgage Loans as of the first day of the
related Collection Period, less (ii) the Pass-Through Rate of the Class A-IO
Certificates for such Distribution Date multiplied by a fraction (expressed as a
percentage) the numerator of which is the Notional Amount of the Class A-IO
Certificates immediately prior to such Distribution Date and the denominator of
which is the Pool Balance as of the first day of the related Collection Period.
"Minimum Mortgage Interest Rate": With respect to each
Adjustable-Rate Mortgage Loan, the percentage set forth in the related Mortgage
Note as the minimum Mortgage Interest Rate thereunder.
"Monthly Excess Cashflow Amount": The sum of the Monthly Excess
Interest Amount, the Overcollateralization Release Amount and (without
duplication) any portion of the Principal Distribution Amount remaining after
principal distributions on the Offered Certificates.
"Monthly Excess Interest Amount": With respect to each Distribution
Date, the amount, if any, by which the Interest Remittance Amount for such
Distribution Date exceeds the aggregate amount distributed on such Distribution
Date pursuant to paragraphs (i) through (x) under Section 4.01.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act or similar state laws; (b) without giving effect to any extension
granted or agreed to by the Servicer pursuant to Section 3.01; and (c) on the
assumption that all other amounts, if any, due under such Mortgage Loan are paid
when due.
"Moody's": Moody's Investors Service, Inc., and its successors, and
if such company shall for any reason no longer perform the functions of a
securities rating agency, "Moody's" shall be deemed to refer to any other
"nationally recognized statistical rating organization" as set forth on the most
current list of such organizations released by the Securities and Exchange
Commission.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Interest Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate (i) in
the case of each Fixed-Rate Mortgage Loan shall remain constant at the rate set
forth in the applicable Mortgage Loan Schedule as the Mortgage Interest Rate in
effect immediately following the Cut-off Date and (ii) in the case of each
Adjustable-Rate Mortgage Loan (A) as of any date of determination until the
first Adjustment Date following the Cut-off Date shall be the rate set forth in
the applicable Mortgage Loan Schedule as the Mortgage Interest Rate in effect
immediately following the Cut-off Date and (B) as of any date of determination
thereafter shall be the rate as adjusted on the most recent Adjustment Date, to
equal the sum, rounded as provided in the Mortgage Note, of the Index,
determined as set forth in the related Mortgage Note, plus the related Gross
Margin subject to the limitations set forth in the related Mortgage Note. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to time held as
a part of the Trust Fund, the Mortgage Loans so held being identified in the
Mortgage Loan Schedules.
"Mortgage Loan Purchase Agreement": The agreement between the Seller
and the Depositor, dated as of July 1, 2002, regarding the transfer of the
Mortgage Loans by the Seller to or at the direction of the Depositor.
"Mortgage Loan Schedule": As of any date with respect to the
Mortgage Loans, the lists of such Mortgage Loans included in the Trust Fund on
such date, separately identifying the Fixed-Rate Mortgage Loans and the
Adjustable-Rate Mortgage Loans, attached hereto as Exhibits D-1 and D-2. The
Mortgage Loan Schedules shall set forth the following information with respect
to each Mortgage Loan:
(1) the Mortgage Loan identifying number;
(2) the city, state, and zip code of the Mortgaged Property;
(3) the type of Residential Dwelling constituting the Mortgaged
Property or a designation that the Mortgaged Property is a multi-family
property;
(4) the occupancy status of the Mortgaged Property at origination;
(5) the original months to maturity;
(6) the date of origination;
(7) the first payment date;
(8) the stated maturity date;
(9) the stated remaining months to maturity;
(10) the original principal amount of the Mortgage Loan;
(11) the Principal Balance of each Mortgage Loan as of the Cut-off
Date;
(12) the Mortgage Interest Rate of the Mortgage Loan as of the
Cut-off Date;
(13) the current principal and interest payment of the Mortgage Loan
as of the Cut-off Date;
(14) the contractual interest paid to date of the Mortgage Loan;
(15) the Loan-to-Value Ratio at origination and as of the Cut-off
Date;
(16) a code indicating the loan performance status of the Mortgage
Loan as of the Cut-off Date;
(17) a code indicating the Index that is associated with such
Mortgage Loan;
(18) the Gross Margin;
(19) the Periodic Rate Cap;
(20) the Minimum Mortgage Interest Rate;
(21) the Maximum Mortgage Interest Rate;
(22) a code indicating whether the Mortgage Loan has a Prepayment
Charge and the type of Prepayment Charge and the term;
(23) the first Adjustment Date immediately following the Cut-off
Date;
(24) the rate adjustment frequency;
(25) the payment adjustment frequency; and
(26) the purpose of the Mortgage Loan.
The Mortgage Loan Schedules shall set forth the following
information, as of the Cut-off Date, with respect to the Mortgage Loans in the
aggregate, for the Fixed-Rate Mortgage Loans and for the Adjustable-Rate
Mortgage Loans: (1) the number of Mortgage Loans; (2) the current Principal
Balance of the Mortgage Loans; (3) the weighted average Mortgage Interest Rate
of the Mortgage Loans; and (4) the weighted average maturity of the Mortgage
Loans. The Mortgage Loan Schedules shall be amended from time to time in
accordance with the provisions of this Agreement. With respect to any Eligible
Substitute Mortgage Loan, Cut-off Date shall refer to the applicable date of
substitution.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Exhibits
D-1 and D-2 from time to time, and any REO Properties acquired in respect
thereof.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan or any other disposition of related Mortgaged Property (including REO
Property) the related Liquidation Proceeds net of unreimbursed Advances,
unreimbursed Servicing Advances, Servicing Fees and any other accrued and unpaid
servicing fees received and retained in connection with the liquidation of such
Mortgage Loan or Mortgaged Property.
"Net Maximum Mortgage Interest Rate": With respect to any
Adjustable-Rate Mortgage Loan, the applicable Maximum Mortgage Interest Rate
minus the Expense Fee Rate.
"Net Mortgage Interest Rate": With respect to any Mortgage Loan, the
Mortgage Interest Rate borne by such Mortgage Loan minus the Expense Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan that, in
the good faith business judgment of the Servicer, will not or, in the case of a
proposed Advance or Servicing Advance, would not be ultimately recoverable from
Late Collections on such Mortgage Loan as provided herein.
"Notional Amount": With respect to the Class A-IO Certificates and
any Distribution Date (through the January 2005 Distribution Date), the lesser
of (i) $48,272,000 and (ii) the aggregate Principal Balance of the Mortgage
Loans as of the first day of the related Collection Period.
"Offered Certificates": The Class A-1, Class A-2, Class A-IO, Class
M-1, Class M-2, Class M-3, Class M-4 and Class B Certificates.
"Offered P&I Certificates": The Class A-1, Class A-2, Class M-1,
Class M-2, Class M-3, Class M-4 and Class B Certificates.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.
"One-Month LIBOR": With respect to each Interest Accrual Period, the
rate determined by the Trustee on the related LIBOR Determination Date on the
basis of the offered rate for one-month United States dollar deposits, as such
rate appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such
LIBOR Determination Date. If no such quotations are available on an LIBOR
Determination Date, One-Month LIBOR for the related Interest Accrual Period will
be established by the Trustee as follows:
(i) If on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 0.001%);
(ii) If on such LIBOR Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of the rates quoted
by one or more major banks in New York City, selected by the Trustee after
consultation with the Depositor, as of 11:00 A.M., New York City time, on
such date for loans in U.S. Dollars to leading European banks for a period
of one month in amounts approximately equal to the aggregate Certificate
Principal Balance of the Offered Certificates (other than the Class B
Certificates); and
(iii) If no such quotations can be obtained, One-Month LIBOR for the
related Interest Accrual Period shall be One-Month LIBOR for the prior
Distribution Date.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Servicer except that
any opinion of counsel relating to (a) the qualification of any REMIC as a REMIC
or (b) compliance with the REMIC Provisions must be an opinion of Independent
counsel.
"Optional Termination Date": The first Distribution Date on which
the Majority Class CE Certificateholders or Servicer may opt to terminate the
Mortgage Pool pursuant to Section 10.01.
"Original Notional Amount": The Notional Amount of the Class A-IO
Certificates on the Closing Date, as set forth opposite such Class in the
Preliminary Statement.
"Original Class Certificate Principal Balance": With respect to each
Class of Certificates, the Certificate Principal Balance thereof on the Closing
Date, as set forth opposite such Class in the Preliminary Statement, except with
respect to the Class A-IO, Class CE, Class P and Class R Certificates, which
have an Original Class Certificate Principal Balance of zero.
"Overcollateralization Amount": As of any Distribution Date, the
excess, if any, of (x) the Pool Balance as of the last day of the related
Collection Period over (y) the aggregate Certificate Principal Balances of all
Classes of Offered Certificates (after taking into account all distributions of
principal on such Distribution Date).
"Overcollateralization Deficiency": As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of all
Classes of Offered Certificates resulting from the distribution of the Principal
Distribution Amount (but not the Extra Principal Distribution Amount) on such
Distribution Date, but prior to taking into account any Applied Realized Loss
Amounts on such Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date on which a Trigger Event is not in
effect, the excess, if any, of (i) the Overcollateralization Amount for such
Distribution Date, assuming that 100% of the Principal Remittance Amount is
applied as a principal payment on the Offered Certificates on such Distribution
Date, over (ii) the Targeted Overcollateralization Amount for such Distribution
Date. With respect to any Distribution Date on which a Trigger Event is in
effect, the Overcollateralization Release Amount will be zero.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"P&I Regular Interest": Any of the Class T4-A1 Interest, Class T4-A2
Interest, Class T4-M1 Interest, Class T4-M2 Interest, Class T4-M3 Interest,
Class T4-M4 Interest or Class T4-B Interest.
"Pass-Through Rate": Any of the Class A-1 Pass-Through Rate, the
Class A-2 Pass-Through Rate, the Class A-IO Pass-Through Rate, the Class M-1
Pass-Through Rate, the Class M-2 Pass-Through Rate, Class M-3 Pass-Through Rate,
the Class M-4 Pass-Through Rate and the Class B Pass-Through Rate.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05.
"Percentage Interest": With respect to any Certificate (other than a
Class A-IO, Class CE, Class P or Class R Certificate), a fraction, expressed as
a percentage, the numerator of which is the Initial Certificate Principal
Balance, as the case may be, represented by such Certificate and the denominator
of which is the Original Class Certificate Principal Balance of the related
Class. With respect to a Class A-IO Certificate, the undivided percentage
interest obtained by dividing the Initial Notional Amount evidenced by such
Certificate by the Original Notional Amount of such Class. With respect to a
Class CE or Class P Certificate, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate; provided,
however, that the sum of all such percentages for each such Class totals 100%.
With respect to the Class R Certificate, 100%.
"Periodic Rate Cap": With respect to each Adjustable-Rate Mortgage
Loan and any Adjustment Date therefor, the fixed percentage set forth in the
related Mortgage Note, which is the maximum amount by which the Mortgage
Interest Rate for such Mortgage Loan may increase or decrease (without regard to
the Maximum Mortgage Interest Rate or the Minimum Mortgage Interest Rate) on
such Adjustment Date from the Mortgage Interest Rate in effect immediately prior
to such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued or managed by the Depositor, the Servicer, the
Trustee or any of their respective Affiliates or for which an Affiliate of the
Trustee serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents acting
in their respective commercial capacities) incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so long
as, at the time of such investment or contractual commitment providing for
such investment, such depository institution or trust company or its
ultimate parent has a short-term uninsured debt rating in one of the two
highest available rating categories of S&P and Moody's and the highest
available rating category of Fitch and provided that each such investment
has an original maturity of no more than 365 days and (B) any other demand
or time deposit or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered
into with a depository institution or trust company (acting as principal)
rated A or higher by S&P and Fitch and A2 or higher by Moody's, provided,
however, that collateral transferred pursuant to such repurchase
obligation must be of the type described in clause (i) above and must (A)
be valued daily at current market prices plus accrued interest or (B)
pursuant to such valuation, be equal, at all times, to 105% of the cash
transferred by the Trustee in exchange for such collateral and (C) be
delivered to the Trustee or, if the Trustee is supplying the collateral,
an agent for the Trustee, in such a manner as to accomplish perfection of
a security interest in the collateral by possession of certificated
securities;
(iv) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United States
of America or any State thereof and that are rated by each Rating Agency
in its highest long-term unsecured rating categories at the time of such
investment or contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or
on a specified date not more than 30 days after the date of acquisition
thereof) that is rated by each Rating Agency in its highest short-term
unsecured debt rating available at the time of such investment;
(vi) units of money market funds registered under the Investment
Company Act of 1940 including funds managed or advised by the Trustee or
affiliates thereof having the highest rating category by the applicable
Rating Agency; and
(vii) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to the Rating Agencies in
writing as a permitted investment of funds backing securities having
ratings equivalent to its highest initial rating of the Class A
Certificates;
provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any transferee of a Class R Certificate
other than a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Balance": As of any date of determination, the aggregate
Principal Balance of the Mortgage Loans.
"Pool Cap": As of any Distribution Date and any Class of Offered
Certificates (other than the Class A-IO Certificates), a per annum rate,
adjusted (other than in the case of the Class B Certificates) by multiplying
such rate by a fraction equal to 30 over the actual number of days in the
related Interest Accrual Period, equal to (i) the Weighted Average Net Mortgage
Interest Rates for the Mortgage Loans less (ii) the Pass-Through Rate of the
Class A-IO Certificates for such Distribution Date multiplied by a fraction,
expressed as a percentage, the numerator of which is the Notional Amount of the
Class A-IO Certificates immediately prior to such Distribution Date and the
denominator of which is the Pool Balance as of the first day of the related
Collection Period.
"Prepayment Charge": With respect to any Prepayment Period, any
prepayment premium, penalty or charge collected by the Servicer from a Mortgagor
in connection with any voluntary Principal Prepayment in full pursuant to the
terms of the related Mortgage Note as from time to time held as a part of the
Trust Fund, the Prepayment Charges so held being identified in the Mortgage Loan
Schedules (other than any Servicer Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of any date, the list of Prepayment
Charges included in the Trust Fund on such date, attached hereto as Schedule I
(including the prepayment charge summary attached thereto) as supplemented by
each schedule of Eligible Substitute Mortgage Loans which by their terms have
related Prepayment Charges. The Prepayment Charge Schedule shall set forth the
following information with respect to each Prepayment Charge:
(a) the Mortgage Loan identifying number;
(b) a code indicating the type of Prepayment Charge;
(c) the date on which the first Monthly Payment was due on the
related Mortgage Loan;
(d) the term of the Prepayment Charge;
(e) the original Principal Balance of the related Mortgage Loan;
and
(f) the Cut-off Date Principal Balance of the related Mortgage
Loan.
The Prepayment Charge Schedule shall be amended from time to time by the
Depositor in accordance with the provisions of this Agreement.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full that was applied by the Servicer to
reduce the outstanding principal balance of such loan on a date preceding the
related Due Date, an amount equal to interest at the applicable Mortgage
Interest Rate (net of the Servicing Fee Rate) on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Prepayment Period.
"Prepayment Period": With respect to any Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs.
"Primary Insurance Policy": Each policy of primary guaranty mortgage
insurance issued by a Qualified Insurer in effect with respect to any Mortgage
Loan, or any replacement policy therefor obtained by the Servicer pursuant to
Section 3.08.
"Principal Balance": As to any Mortgage Loan and any day, other than
a Liquidated Mortgage Loan, the related Cut-off Date Principal Balance, minus
the sum of (i) all collections and other amounts credited against the principal
balance of any such Mortgage Loan, (ii) the principal portion of Advances, (iii)
any Deficient Valuation and (iv) any principal reduction resulting from a
Servicer Modification. For purposes of this definition, a Liquidated Mortgage
Loan shall be deemed to have a Principal Balance equal to the Principal Balance
of the related Mortgage Loan as of the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter. As to any REO Property and
any day, the Principal Balance of the related Mortgage Loan immediately prior to
such Mortgage Loan becoming REO Property minus any REO Principal Amortization
received with respect thereto on or prior to such day.
"Principal Distribution Amount": As to any Distribution Date, the
sum of (i) the Principal Remittance Amount minus, for Distribution Dates
occurring on and after the Stepdown Date and for which a Trigger Event is not in
effect, the Overcollateralization Release Amount, if any, and (ii) the Extra
Principal Distribution Amount, if any.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.
"Principal Remittance Amount": With respect to any Distribution
Date, to the extent of funds available therefor, the sum (less amounts available
for reimbursement of Advances and Servicing Advances pursuant to Section 3.05
and expenses reimbursable pursuant to Section 6.03) of: (i) each payment of
principal on a Mortgage Loan due during the related Collection Period and
received by the Servicer on or prior to the related Determination Date, and any
Advances with respect thereto, (ii) all full and partial Principal Prepayments
received by the Servicer during the related Prepayment Period, (iii) the Net
Liquidation Proceeds allocable to principal actually collected by the Servicer
during the related Prepayment Period, (iv) with respect to Defective Mortgage
Loans repurchased with respect to such Prepayment Period, the portion of the
Purchase Price allocable to principal, (v) any Substitution Adjustment Amounts
received on or prior to the previous Determination Date and not yet distributed
and (vi) on the Distribution Date on which the Trust is to be terminated in
accordance with Section 10.01 hereof, that portion of the Termination Price in
respect of principal.
"Private Certificates": Any of the Class B, Class CE, Class P and
Class R Certificates.
"Property Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are received by the Servicer and are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the Servicer's servicing procedures, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement dated
July 19, 2002 relating to the public offering of the Offered Certificates, other
than the Class B Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property
to be purchased pursuant to or as contemplated by Section 2.03 or 10.01, an
amount equal to the sum of (i) 100% of the Principal Balance thereof as of the
date of purchase (or such other price as provided in Section 10.01), (ii) in the
case of (x) a Mortgage Loan, accrued interest on such Principal Balance at the
applicable Mortgage Interest Rate in effect from time to time from the Due Date
as to which interest was last covered by a payment by the Mortgagor or an
Advance by the Servicer, which payment or Advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, its fair
market value, determined in good faith by the Servicer, (iii) any unreimbursed
Servicing Advances and Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Section 3.13, and (v) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the
Servicer or the Trustee in respect of the breach or defect giving rise to the
purchase obligation.
"Qualified Insurer": Any insurance company acceptable to Fannie Mae
or Freddie Mac.
"Rating Agency or Rating Agencies": Fitch, Moody's and S&P, or their
respective successors. If such agencies or their successors are no longer in
existence, "Rating Agencies" shall be such nationally recognized statistical
rating organizations as set forth on the most current list of such organizations
released by the Securities and Exchange Commission and designated by the
Depositor, notice of which designation shall be given to the Trustee and the
Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan, the
amount by which the remaining unpaid principal balance of the Mortgage Loan
exceeds the amount of Net Liquidation Proceeds applied to the principal balance
of the related Mortgage Loan. With respect to any Mortgage Loan, a Deficient
Valuation or a reduction in the Principal Balance thereof resulting from a
Servicer Modification.
"Realized Loss Amortization Amount": Any of the Class M-1 Realized
Loss Amortization Amount, the Class M-2 Realized Loss Amortization Amount, the
Class M-3 Realized Loss Amortization Amount, the Class M-4 Realized Loss
Amortization Amount and the Class B Realized Loss Amortization Amount.
"Record Date": With respect to all of the Certificates (other than
the Class A-IO and Private Certificates), the Business Day immediately preceding
such Distribution Date; provided, however, that if any such Certificate becomes
a Definitive Certificate, the Record Date for such Certificate shall be the last
Business Day of the month immediately preceding the month in which the related
Distribution Date occurs. With respect to the Class A-IO and Private
Certificates, the last Business Day of the month immediately preceding the month
in which the related Distribution Date occurs (or the Closing Date, in the case
of the first Distribution Date).
"Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not controlling, under the control of or under
common control with the Depositor or the Trustee, (iii) whose quotations appear
on the Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Trustee; provided, however, that if
fewer than two of such banks provide a One-Month LIBOR rate, then any leading
banks selected by the Trustee which are engaged in transactions in United States
dollar deposits in the international Eurocurrency market.
"Regular Certificate": Any of the Offered Certificates and the Class
CE Certificates.
"Related Documents": With respect to any Mortgage Loan, the related
Mortgage Notes, Mortgages and other related documents.
"Relief Act": The Soldiers' and Sailors Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution
Date, for any Mortgage Loan with respect to which there has been a reduction in
the amount of interest collectible thereon for the most recently ended
Collection Period as a result of the application of the Relief Act or similar
state laws, the amount by which (i) interest collectible on such Mortgage Loan
during such Collection Period is less than (ii) one month's interest on the
Principal Balance of such Mortgage Loan at the Mortgage Interest Rate for such
Mortgage Loan before giving effect to the application of the Relief Act or
similar state laws.
"Remaining Initial Overcollateralization Amount": As of any
Distribution Date, an amount equal to (a) the Initial Overcollateralization
Amount minus (b) the sum of (i) any Overcollateralization Release Amounts
distributed and (ii) Realized Losses allocated to the Class T1-4 Interest.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC 1 Regular Interests": The Class T1-AIO Interest, Class T1-1
Interest, Class T1-2 Interest, Class T1-3 Interest and Class T1-4 Interest.
"REMIC 2 Pass-Through Rate": With respect to any Distribution Date,
a rate obtained by dividing (A) the product of (i) 2 times (ii) the Adjusted
Weighted Average Net Mortgage Rate times (iii) the Class T1-2 Principal Amount
by (B) the sum of (x) the Class T1-2 Principal Amount and (y) the Class T1-3
Principal Amount, such principal balances being determined before any reductions
of principal balance or allocation of Realized Losses made on such Distribution
Date.
"REMIC 2 Regular Interests": The Class T2-AIO Interest, Class T2-1
Interest, Class T2-2 Interest, Class T2-3 Interest, Class T2-4 Interest, Class
T2-11 Interest, Class T2-12 Interest and Class T2-13 Interest.
"REMIC 3 Regular Interests": The Class T3-AIO Interest, Class T3-A1
Interest, Class T3-A2 Interest, Class T3-M1 Interest, Class T3-M2 Interest,
Class T3-M3 Interest, Class T3-M4 Interest, Class T3-B Interest, Class T3-4
Interest, Class T3-11 Interest, Class T3-12 Interest and Class T3-13 Interest.
"REMIC 4 Components": The Class T4-4, Class T4-11, Class T4-12,
Class T4-13, Class T4-A1IO, Class T4-A2IO, Class T4-M1IO, Class T4-M2IO, Class
T4-M3IO, Class T4-M4IO and Class T4-BIO Interests. Each of the REMIC 4
Components represents a regular interest in REMIC 4.
"REMIC 4 Regular Interests": The Class T4-A1 Interest, Class T4-A2
Interest, Class T4-M1 Interest, Class T4-M2 Interest, Class T4-M3 Interest,
Class T4-M4 Interest and Class T4-B Interest and the REMIC 4 Components.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and rulings promulgated thereunder, as the foregoing
may be in effect from time to time.
"REMIC Regular Interest": As defined in the Preliminary Statement.
"Remittance Report": A report prepared by the Servicer and delivered
to the Trustee pursuant to Section 4.07, containing the information attached
hereto as Exhibit M.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Disposition": The sale or other disposition of an REO Property
on behalf of the Trust.
"REO Principal Amortization": With respect to any REO Property, for
any calendar month, the aggregate of all amounts received in respect of such REO
Property during such calendar month, whether in the form of rental income, sale
proceeds (including, without limitation, that portion of the Termination Price
paid in connection with a purchase of all of the Mortgage Loans and REO
Properties pursuant to Section 10.01 that is allocable to such REO Property) or
otherwise, net of any portion of such amounts (i) payable pursuant to Section
3.13 in respect of the proper operation, management and maintenance of such REO
Property or (ii) payable or reimbursable to the Servicer pursuant to Section
3.13 for unpaid Servicing Fees in respect of the related Mortgage Loan and
unreimbursed Servicing Advances and Advances in respect of such REO Property or
the related Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Trust through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.13.
"Request for Release": A release signed by a Servicing Officer, in
the form of Exhibit E attached hereto.
"Residential Dwelling": Any one of the following: (i) a one-family
dwelling, (ii) a two- to four-family dwelling, (iii) a one-family dwelling unit
in a Fannie Mae eligible condominium project, (iv) a one-family dwelling in a
planned unit development, which is not a co-operative, or (v) a mobile or
manufactured home (as defined in 42 United States Code, Section 5402(6)).
"Residual Interest": The sole Class of "residual interests" in each
REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and in each case having direct responsibility for the
administration of this Agreement.
"S&P": Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., and its successors, and if such company shall for any reason no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other "nationally recognized statistical rating organization" as
set forth on the most current list of such organizations released by the
Securities and Exchange Commission.
"Seller": Banc of America Mortgage Capital Corporation, or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.
"Senior Certificates": The Class A-1, Class A-2 and Class A-IO
Certificates.
"Senior Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balances of the Subordinated Certificates and (ii) the
Overcollateralization Amount, in each case after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date by
(y) the Pool Balance as of the last day of the related Collection Period.
"Senior Principal Distribution Amount": For any Distribution Date
(i) before the Stepdown Date or as to which a Trigger Event is in effect, the
lesser of (x) the Principal Distribution Amount and (y) the sum of the
Certificate Principal Balances of the Class A Certificates immediately prior to
such Distribution Date and (ii) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of the Certificate
Principal Balances of the Class A Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 60.00% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of (i) 0.50% and (ii) the Pool Balance on the Cut-off Date.
"Senior Specified Enhancement Percentage": On any date of
determination thereof, 40.00%.
"Servicer": Ocwen Federal Bank FSB, a federally chartered savings
bank, or any successor servicer appointed as herein provided, in its capacity as
Servicer hereunder.
"Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Servicer or which is 50% or more owned by the
Servicer and (ii) which is qualified to service residential mortgage loans.
"Servicer Event of Termination": One or more of the events described
in Section 7.01.
"Servicer Modification": A modification to the terms of a Mortgage
Loan, in accordance with the terms of Section 3.01, as to which the Mortgagor is
in default or as to which, in the judgement of the Servicer, default is
reasonably foreseeable.
"Servicer Prepayment Charge Payment Amount": The amount payable by
the Servicer in respect of any waived Prepayment Charges pursuant to Section
3.01, which amount shall be equal to the difference between the amount of
Prepayment Charge due by a Mortgagor before any waiver and the actual amount of
the Prepayment Charge that was paid by the Mortgagor.
"Servicer Remittance Date": With respect to any Distribution Date,
one Business Day prior to such Distribution Date.
"Servicing Advances": All customary, reasonable and necessary "out
of pocket" costs and expenses incurred by the Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Section 3.08.
"Servicing Fee": With respect to each Mortgage Loan (including each
REO Property) and for any calendar month, an amount equal to one month's
interest (or in the event of any payment of interest which accompanies a
Principal Prepayment in full made by the Mortgagor during such calendar month,
interest for the number of days covered by such payment of interest) at the
Servicing Fee Rate on the same principal amount on which interest on such
Mortgage Loan accrues for such calendar month.
"Servicing Fee Rate": With respect to each Mortgage Loan, 0.50% per
annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers furnished by the
Servicer to the Trustee and the Depositor on the Closing Date, as such list may
from time to time be amended.
"Servicing Standard": The standards set forth in Section 3.01.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms of
the Certificates and this Agreement but which is not remitted by the Servicer
because the Servicer is the subject of a proceeding under the Bankruptcy Code
and the making of such remittance is prohibited by Section 362 of the Bankruptcy
Code.
"Stepdown Date": The earlier to occur of (i) the Distribution Date
on which the aggregate Certificate Principal Balance of the Class A Certificates
is reduced to zero and (ii) the later to occur of (x) the Distribution Date in
August 2005 and (y) the Distribution Date on which the Senior Enhancement
Percentage (after taking into account distributions of principal on such
Distribution Date) is greater than or equal to the Senior Specified Enhancement
Percentage.
"Subordinated Certificates": The Class M-1, Class M-2, Class M-3,
Class M-4, Class B, Class CE and Class R Certificates.
"Subsequent Overcollateralization Amount": As of any Distribution
Date, after the application of principal payments and Applied Realized Loss
Amounts, an amount equal to the excess, if any of (a) the Pool Balance over (b)
the sum of (i) the Certificate Principal Balance of each Class of Offered
Certificates and (ii) the Remaining Initial Overcollateralization Amount.
"Substitution Adjustment Amount": As defined in Section 2.03(d)
hereof.
"Targeted Overcollateralization Amount": As of any Distribution
Date, (x) prior to the Stepdown Date, 0.75% of the initial Pool Balance and (y)
on and after the Stepdown Date, (i) if a Trigger Event has not occurred, the
greater of (A) 1.50% of the Pool Balance as of the last day of the related
Collection Period and (B) 0.50% of the initial Pool Balance and (ii) if a
Trigger Event has occurred, the Targeted Overcollateralization Amount for the
immediately preceding Distribution Date.
"Tax Matters Person": The tax matters person appointed pursuant to
Section 9.01(e) hereof.
"Tax Returns": The federal income tax returns on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of the Trust for each of the six REMICs created
pursuant to this Agreement under the REMIC Provisions, together with any and all
other information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Telerate Page 3750": The display page currently so designated on
the Bridge Telerate Service (or such other page as may replace the Telerate Page
3750 page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Termination Price": As defined in Section 10.01(a) hereof.
"Trigger Event": With respect to any Distribution Date, if (i) the
six-month rolling average of 60+ Day Delinquent Loans equals or exceeds 42% of
the Senior Enhancement Percentage or (ii) the aggregate amount of Realized
Losses incurred since the Cut-off Date through the last day of the related
Collection Period divided by the initial Pool Balance exceeds the applicable
percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE OCCURRING IN PERCENTAGE
------------------------------ ----------
August 2002 through July 2005 2.50%
August 2005 through July 2006 3.75%
August 2006 through July 2007 4.75%
August 2007 through July 2008 5.25%
August 2008 and thereafter 5.50%
"Trust": ABFC 2002-NC1 Trust, the trust created hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to a portion of which six REMIC elections are to be made, such
entire Trust Fund consisting of: (i) such Mortgage Loans as from time to time
are subject to this Agreement, together with the Mortgage Files relating
thereto, and together with all collections thereon and proceeds thereof, (ii)
any REO Property, together with all collections thereon and proceeds thereof,
(iii) the Trustee's rights with respect to the Mortgage Loans under all
insurance policies required to be maintained pursuant to this Agreement and any
proceeds thereof, (iv) the Depositor's rights under the Mortgage Loan Purchase
Agreement (including any security interest created thereby) and (v) the
Collection Account and the Distribution Account and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto.
"Trustee": U.S. Bank National Association, a national banking
association, or any successor Trustee appointed as herein provided.
"Trustee Fee": With respect to any Distribution Date, the product of
(x) one-twelfth of the Trustee Fee Rate and (y) the aggregate of the Principal
Balances of all Mortgage Loans as of the opening of business on the first day of
the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date, 0.01% per
annum.
"United States Person" or "U.S. Person": (i) A citizen or resident
of the United States, (ii) a corporation, partnership or other entity treated as
a corporation or partnership for United States federal income tax purposes
organized in or under the laws of the United States or any state thereof or the
District of Columbia (unless, in the case of a partnership, Treasury regulations
provide otherwise), (iii) an estate the income of which is includible in gross
income for United States tax purposes, regardless of its source, or (iv) a trust
if a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in Treasury regulations, certain
Trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons will also be a U.S. Person; provided, that for purposes of the
definition of a "Permitted Transferee," a U.S. Person shall not include any
person whose income is attributable to a foreign permanent establishment or
fixed base, within the meaning of an applicable income tax treaty, of such
Person or any other Person.
"Unpaid Realized Loss Amount": For any Class M-1, Class M-2, Class
M-3, Class M-4 and Class B Certificates and as to any Distribution Date, the
excess of (x) the aggregate Applied Realized Loss Amounts applied with respect
to such Class for all prior Distribution Dates over (y) the aggregate Realized
Loss Amortization Amounts with respect to such Class for all prior Distribution
Dates.
"Value": With respect to any Mortgaged Property, the value thereof
as determined by an independent appraisal made at the time of the origination of
the related Mortgage Loan or the sale price, if the appraisal is not available.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights allocated
among Holders of the Offered Certificates (other than the Class A-IO
Certificates) shall be 98%, and shall be allocated among each such Class
according to the fraction, expressed as a percentage, the numerator of which is
the aggregate Certificate Principal Balance of all the Certificates of such
Class then outstanding and the denominator of which is the aggregate Certificate
Principal Balance of all the Offered Certificates then outstanding. The Voting
Rights allocated to each such Class of Certificates shall be allocated among all
holders of each such Class in proportion to the outstanding Certificate
Principal Balance of such Certificates; provided, however, that any Certificate
registered in the name of the Servicer, the Depositor or the Trustee or any of
their respective affiliates shall not be included in the calculation of Voting
Rights; provided that only such Certificates as are known by a Responsible
Officer of the Trustee to be so registered will be so excluded. The percentage
of all the Voting Rights allocated among the Holders of the Class CE Certificate
shall be 1%. The percentage of all the Voting Rights allocated among the Holders
of the Class P Certificate shall be 1%. The Class A-IO and Class R Certificates
shall have no Voting Rights.
"Weighted Average Net Mortgage Rate": The weighted average (based on
Principal Balance as of the first day of the related Collection Period or, in
the case of the first Distribution Date, the Cut-Off Date) of the Net Mortgage
Interest Rates of the Mortgage Loans, expressed for each Mortgage Loan as an
annual rate and calculated on the basis of twelve months consisting of 30 days
each and a 360-day year.
"Written Order to Authenticate": A written order by which the
Depositor directs the Trustee to execute, authenticate and deliver the
Certificates.
Section 1.02 Accounting.
Unless otherwise specified herein, for the purpose of any definition
or calculation, whenever amounts are required to be netted, subtracted or added
or any distributions are taken into account such definition or calculation and
any related definitions or calculations shall be determined without duplication
of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee, on
behalf of the Trust, without recourse for the benefit of the Certificateholders
all the right, title and interest of the Depositor, including any security
interest therein for the benefit of the Depositor, in and to (i) each Mortgage
Loan identified on the Mortgage Loan Schedules, including the related Cut-off
Date Principal Balance, all interest accruing thereon after the Cut-off Date and
all collections in respect of interest and principal due after the Cut-off Date;
(ii) property which secured each such Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of foreclosure; (iii) its interest in any
insurance policies in respect of the Mortgage Loans; (iv) all other assets
included or to be included in the Trust Fund; (v) all proceeds of any of the
foregoing; and (vi) the rights of the Depositor under the Mortgage Loan Purchase
Agreement. Such assignment includes all interest and principal due to the
Depositor or the Servicer after the Cut-off Date with respect to the Mortgage
Loans.
In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with the Trustee, or its designated agent, the
following documents or instruments with respect to each Mortgage Loan (a
"Mortgage File") so transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank or (B) in
the following form: "Pay to the order of U.S. Bank National
Association, as Trustee under the Pooling and Servicing Agreement,
dated as of July 1, 2002, among Asset Backed Funding Corporation,
Ocwen Federal Bank FSB and U.S. Bank National Association, ABFC
Asset-Backed Certificates, Series 2002-NC1, without recourse," or
with respect to any lost Mortgage Note, an original Lost Note
Affidavit, together with a copy of the related Mortgage Note;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed
pursuant to a power of attorney, with evidence of recording thereon
or, if such Mortgage or power of attorney has been submitted for
recording but has not been returned from the applicable public
recording office, has been lost or is not otherwise available, a
copy of such Mortgage or power of attorney, as the case may be,
certified to be a true and complete copy of the original submitted
for recording;
(iii) an original Assignment of Mortgage, in form and substance acceptable
for recording. The Mortgage shall be assigned either (A) in blank or
(B) to "U.S. Bank National Association, as Trustee under the Pooling
and Servicing Agreement, dated as of July 1, 2002, among Asset
Backed Funding Corporation, Ocwen Federal Bank FSB and U.S. Bank
National Association, ABFC Asset-Backed Certificates, Series
2002-NC1, without recourse";
(iv) an original copy of any intervening assignment of Mortgage showing a
complete chain of assignments;
(v) the original or a certified copy of lender's title insurance policy;
and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
The Trustee agrees to execute and deliver to the Depositor on or
prior to the Closing Date an acknowledgment of receipt of the original Mortgage
Note (with any exceptions noted), substantially in the form attached as Exhibit
F-3 hereto.
The Trustee shall promptly (and in no event later than thirty days
following the receipt of each original recorded document referred to in Section
2.01(ii) and/or (iv) above) submit or cause to be submitted for recording, at
the Depositor's expense and at no expense to the Trust Fund or the Trustee, in
the appropriate public office for real property records, each Assignment
required to be recorded as provided below. In the event that any such Assignment
is lost or returned unrecorded because of a defect therein, the Depositor shall
cause the Seller to promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded.
If any of the documents referred to in Section 2.01(ii), (iii) or
(iv) above has as of the Closing Date been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Depositor to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Trustee no later than the
Closing Date, of a copy of each such document certified by the Seller in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Seller, delivery to the
Trustee, promptly upon receipt thereof of either the original or a copy of such
document certified by the applicable public recording office to be a true and
complete copy of the original. The Depositor shall deliver or cause to be
delivered to the Trustee promptly upon receipt thereof any other documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Seller
shall have 120 days to cure such defect or 150 days following the Closing Date,
in the case of missing Mortgages or Assignments or deliver such missing document
to the Trustee. If the Seller does not cure such defect or deliver such missing
document within such time period, the Seller shall either repurchase or
substitute for such Mortgage Loan in accordance with Section 2.03.
The Depositor shall cause the Assignments of Mortgage which were
delivered in blank to be completed. No Assignments referred to in Section
2.01(iii) hereof shall be recorded except any Assignment which related to a
Mortgage Loan on a Mortgaged Property in a state where recordation is required
by any Rating Agency to obtain the initial ratings on the Certificates, which
states, as of the date hereof, are Florida and Maryland. In the event that any
Assignment is lost or returned unrecorded because of a defect therein, the
Depositor shall promptly have a substitute Assignment prepared or have such
defect cured, as the case may be, and thereafter cause each such Assignment to
be duly recorded. In the event that any Mortgage Note is endorsed in blank as of
the Closing Date, promptly following the Closing Date the Depositor shall cause
to be completed such endorsements "Pay to the order of U.S. Bank National
Association, as Trustee under the Pooling and Servicing Agreement, dated as of
July 1, 2002, among Asset Backed Funding Corporation, Ocwen Federal Bank FSB and
U.S. Bank National Association, ABFC Asset-Backed Certificates, Series 2002-NC1,
without recourse."
The Depositor herewith delivers to the Trustee an executed copy of
the Mortgage Loan Purchase Agreement.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges the receipt of, subject to the provisions
of Section 2.01 and subject to the review described below and any exceptions
noted on the exception report described in the next paragraph below, the
documents referred to in Section 2.01 above and all other assets included in the
definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "Trust Fund" in trust for the exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File within 60 days after the Closing Date (or, with
respect to any document delivered after the Startup Day, within 60 days of
receipt and with respect to any Qualified Substitute Mortgage, within 60 days
after the assignment thereof) and to certify in substantially the form attached
hereto as Exhibit F-1 that, as to each Mortgage Loan listed in the Mortgage Loan
Schedules (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the exception report annexed thereto as not being
covered by such certification), (i) all documents required to be delivered to it
pursuant to Section 2.01 of this Agreement are in its possession, (ii) such
documents have been reviewed by it and have not been mutilated, damaged or torn
and relate to such Mortgage Loan and (iii) based on its examination and only as
to the foregoing, the information set forth in the Mortgage Loan Schedules that
corresponds to items (1), (2), (3), (6), (7), (8), (10) and (22) of the Mortgage
Loan Schedules accurately reflects information set forth in the Mortgage File.
It is herein acknowledged that, in conducting such review, the Trustee is under
no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.
Prior to the first anniversary date of this Agreement the Trustee
shall deliver to the Depositor and the Servicer a final certification in the
form annexed hereto as Exhibit F-2 evidencing the completeness of the Mortgage
Files, with any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
finds any document or documents constituting a part of a Mortgage File to be
missing or defective in any material respect, at the conclusion of its review
the Trustee shall so notify the Seller, the Depositor and the Servicer. In
addition, upon the discovery by the Seller, the Depositor, the Trustee or the
Servicer (or upon receipt by the Trustee of written notification of such breach)
of a breach of any of the representations and warranties made by the Seller in
the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of the related
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties.
The Depositor and the Trustee intend that the assignment and
transfer herein contemplated constitute a sale of the Mortgage Loans and the
Related Documents, conveying good title thereto free and clear of any liens and
encumbrances, from the Depositor to the Trustee and that such property not be
part of the Depositor's estate or property of the Depositor in the event of any
insolvency by the Depositor. In the event that such conveyance is deemed to be,
or to be made as security for, a loan, the parties intend that the Depositor
shall be deemed to have granted and does hereby grant to the Trustee, on behalf
of the Trust, a first priority perfected security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans and the
Related Documents, and that this Agreement shall constitute a security agreement
under applicable law.
Section 2.03 Repurchase or Substitution of Mortgage Loans by the
Seller.
(a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan, Prepayment Charge
or the interest therein of the Certificateholders, the Trustee shall promptly
notify the Seller and the Servicer of such defect, missing document or breach
and request that the Seller deliver such missing document or cure such defect or
breach within 120 days or 150 days following the Closing Date, in the case of
missing Mortgages or Assignments from the date the Seller was notified of such
missing document, defect or breach, and if the Seller does not deliver such
missing document or cure such defect or breach in all material respects during
such period, the Trustee shall enforce the Seller's obligation under the
Mortgage Loan Purchase Agreement and cause the Seller to repurchase such
Mortgage Loan from the Trust Fund at the Purchase Price on or prior to the
Determination Date following the expiration of such 120 day period (subject to
Section 2.03(d)); provided that, in connection with any such breach that could
not reasonably have been cured within such 120 day or 150 day period, if the
Seller shall have commenced to cure such breach within such 120 day or 150 day
period, the Seller shall be permitted to proceed thereafter diligently and
expeditiously to cure the same within the additional period provided under the
Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account, and the Trustee,
upon receipt of written notice from the Servicer of such deposit, shall release
to the Seller the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Seller shall furnish to it and as shall be necessary to vest in the Seller any
Mortgage Loan released pursuant hereto and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, the Seller may cause such Mortgage Loan to
be removed from the Trust Fund (in which case it shall become a Defective
Mortgage Loan) and substitute one or more Eligible Substitute Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.03(c). It is
understood and agreed that the obligation of the Seller to cure or to repurchase
(or to substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy against the
Seller respecting such omission, defect or breach available to the Trustee on
behalf of the Certificateholders.
With respect to the representations and warranties set forth in the
Mortgage Loan Purchase Agreement that are made to the best of the Seller's
knowledge or as to which the Seller has no knowledge, if it is discovered by the
Depositor, the Servicer or the Trustee that the substance of such representation
and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of the related Mortgage Loan, Prepayment Charge or the interest
therein of the Certificateholders then, notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
It is understood and agreed that the representations and warranties
set forth in the Mortgage Loan Purchase Agreement shall survive delivery of the
Mortgage Files to the Trustee and shall inure to the benefit of the
Certificateholders notwithstanding any restrictive or qualified endorsement or
assignment. It is understood and agreed that the obligations of the Seller set
forth in this Section 2.03(a) to cure, substitute for or repurchase a Mortgage
Loan pursuant to the Mortgage Loan Purchase Agreement constitute the sole
remedies available to the Certificateholders and to the Trustee on their behalf
respecting a breach of the representations and warranties contained in the
Mortgage Loan Purchase Agreement.
(b) Within 90 days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation, warranty
or covenant of the Servicer set forth in Section 2.05 which materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the Servicer shall cure such breach in all material respects.
(c) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the last Business Day that is within two years after the Closing Date. As to
any Defective Mortgage Loan for which the Seller substitutes a Eligible
Substitute Mortgage Loan or Loans, such substitution shall be effected by the
Seller delivering to the Trustee for such Eligible Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Eligible Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Adjustment Amount (as described below), if any, in
connection with such substitution. The Trustee shall acknowledge receipt for
such Eligible Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, shall review such documents as specified in Section 2.02 and deliver
to the Servicer, with respect to such Eligible Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit F-1,
with any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Servicer a certification
substantially in the form of Exhibit F-2 hereto with respect to such Eligible
Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon.
Monthly Payments due with respect to Eligible Substitute Mortgage Loans in the
month of substitution are not part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will
reflect the collections and recoveries in respect of such Defective Mortgage
Loan in the Collection Period or Prepayment Period, as applicable, preceding the
date of substitution and the Depositor or the Seller, as the case may be, shall
thereafter be entitled to retain all amounts subsequently received in respect of
such Defective Mortgage Loan. The Depositor shall give or cause to be given
written notice to the Certificateholders that such substitution has taken place,
shall amend the applicable Mortgage Loan Schedule (and Prepayment Charge
Schedule, if applicable) to reflect the removal of such Defective Mortgage Loan
from the terms of this Agreement and the substitution of the Eligible Substitute
Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan
Schedule to the Trustee. Upon such substitution, such Eligible Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be
subject in all respects to the terms of this Agreement and, in the case of a
substitution effected by the Seller, the Mortgage Loan Purchase Agreement,
including, in the case of a substitution effected by the Seller, all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement, as of the date of substitution.
For any month in which the Seller substitutes one or more Eligible
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Servicer
will determine the amount (the "Substitution Adjustment Amount"), if any, by
which the aggregate Purchase Price of all such Defective Mortgage Loans exceeds
the aggregate, as to each such Eligible Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Mortgage
Interest Rate. On the date of such substitution, the Seller will deliver or
cause to be delivered to the Servicer for deposit in the Collection Account an
amount equal to the Substitution Adjustment Amount, if any, and the Trustee,
upon receipt of the related Eligible Substitute Mortgage Loan or Loans and
notice by the Servicer of such deposit, shall release to the Seller the related
Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall
deliver to it and as shall be necessary to vest therein any Defective Mortgage
Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and deliver
to the Trustee an Opinion of Counsel to the effect that such substitution will
not cause (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(l) of the Code or on "contributions after the startup date" under
Section 860G(d)(l) of the Code, or (b) any REMIC to fail to qualify as a REMIC
at any time that any Certificate is outstanding. If such Opinion of Counsel can
not be delivered, then such substitution may only be effected at such time as
the required Opinion of Counsel can be given.
(d) Upon discovery by the Seller, the Servicer or the Trustee that
any Mortgage Loan does not constitute a "qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code, the party discovering such fact shall within
two Business Days give written notice thereof to the other parties. In
connection therewith, the Seller shall repurchase or, subject to the limitations
set forth in Section 2.03(c), substitute one or more Eligible Substitute
Mortgage Loans for the affected Mortgage Loan within 90 days of the earlier of
discovery or receipt of such notice with respect to such affected Mortgage Loan.
In addition, upon discovery that a Mortgage Loan is defective in a manner that
would cause it to be a "defective obligation" within the meaning of Treasury
regulations relating to REMICs, the Seller shall cure the defect or make the
required purchase or substitution no later than 90 days after the discovery of
the defect. Any such repurchase or substitution shall be made in the same manner
as set forth in Section 2.03(a), if made by the Seller. The Trustee shall
reconvey to the Seller the Mortgage Loan to be released pursuant hereto in the
same manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty.
Section 2.04 [Reserved].
Section 2.05 Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee and the Certificateholders and
to the Depositor that as of the Closing Date or as of such date specifically
provided herein:
(i) The Servicer is a federally chartered savings bank, validly
existing, and in good standing under the federal laws of the United States
of America and has all licenses necessary to carry on its business as now
being conducted, except for such licenses, certificates and permits the
absence of which, individually or in the aggregate, would not have a
material adverse effect on the ability of the Servicer to conduct its
business as it is presently conducted, and is licensed, qualified and in
good standing in the states where the Mortgaged Property is located if the
laws of such state require licensing or qualification in order to conduct
business of the type conducted by the Servicer or to ensure the
enforceability or validity of each Mortgage Loan; the Servicer has the
power and authority to execute and deliver this Agreement and to perform
in accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Servicer and the consummation of the
transactions contemplated hereby have been duly and validly authorized;
and all requisite corporate action has been taken by the Servicer to make
this Agreement valid and binding upon the Servicer in accordance with its
terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer and will
not result in the breach of any term or provision of the charter or
by-laws of the Servicer or result in the breach of any term or provision
of, or conflict with or constitute a default under or result in the
acceleration of any obligation under, any agreement, indenture or loan or
credit agreement or other instrument to which the Servicer or its property
is subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Servicer or its property is
subject;
(iii) The Servicer is an approved seller/servicer of conventional
mortgage loans for Fannie Mae and Freddie Mac and has the facilities,
procedures and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans. The Servicer is,
and shall remain for as long as it is servicing the Mortgage Loans
hereunder, servicing mortgage loans for Fannie Mae or Freddie Mac, and no
event has occurred, including but not limited to a change in insurance
coverage, which would make the Servicer unable to comply with Fannie Mae
or Freddie Mac eligibility requirements or which would require
notification to either Fannie Mae or Freddie Mac;
(iv) This Agreement, and all documents and instruments contemplated
hereby which are executed and delivered by the Servicer, constitute and
will constitute valid, legal and binding obligations of the Servicer,
enforceable in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally (whether considered in a proceeding at law
or in equity);
(v) The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained
in this Agreement;
(vi) There is no action, suit, proceeding or investigation pending
or, to its knowledge, threatened against the Servicer that, either
individually or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or
assets of the Servicer, or in any material impairment of the right or
ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer, or
that would draw into question the validity or enforceability of this
Agreement or of any action taken or to be taken in connection with the
obligations of the Servicer contemplated herein, or that would be likely
to impair materially the ability of the Servicer to perform under the
terms of this Agreement;
(vii) No consent, approval or order of any court or governmental
agency or body is required for the execution, delivery and performance by
the Servicer of or compliance by the Servicer with this Agreement or the
consummation of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations and orders, if any, that have
been obtained;
(viii) No information in this Agreement provided by the Servicer nor
any information, certificate of an officer, statement furnished in writing
or report delivered to the Trustee by the Servicer in connection with the
transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading; and
(ix) The Servicer is an "insured depository institution" as that
term is defined in Section 1813(c)(2) of Title 12 of the Code.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Servicer or the Trustee of a breach of any of the foregoing representations,
warranties and covenants which materially and adversely affects the value of any
Mortgage Loan, Prepayment Charge or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the other parties hereto.
Section 2.06 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the Trustee
on behalf of the Certificateholders and to the Servicer as follows:
(i) This agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the Depositor
to the Trustee on behalf of the Trust of each Mortgage Loan, the Depositor
had good and marketable title to each Mortgage Loan (insofar as such title
was conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title interest in the Mortgage Loans to the Trustee on behalf of
the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or defraud
any of its creditors;
(v) The Depositor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with full corporate power and authority to own its assets and conduct its
business as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Depositor is a party or by which it or its
properties may be bound, which default might result in any material
adverse changes in the financial condition, earnings, affairs or business
of the Depositor or which might materially and adversely affect the
properties or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement by
the Depositor, and the consummation of the transactions contemplated
thereby, do not and will not result in a material breach or violation of
any of the terms or provisions of, or, to the knowledge of the Depositor,
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a
party or by which the Depositor is bound or to which any of the property
or assets of the Depositor is subject, nor will such actions result in any
violation of the provisions of the articles of incorporation or by-laws of
the Depositor or, to the best of the Depositor's knowledge without
independent investigation, any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Depositor or any of its properties or assets (except for such conflicts,
breaches, violations and defaults as would not have a material adverse
effect on the ability of the Depositor to perform its obligations under
this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body of the United States or any other jurisdiction is required for the
issuance of the Certificates, or the consummation by the Depositor of the
other transactions contemplated by this Agreement, except such consents,
approvals, authorizations, registrations or qualifications as (a) may be
required under State securities or Blue Sky laws, (b) have been previously
obtained or (c) the failure of which to obtain would not have a material
adverse effect on the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a party
or of which any of its properties is the subject: (a) which if determined
adversely to the Depositor would have a material adverse effect on the
business, results of operations or financial condition of the Depositor;
(b) asserting the invalidity of this Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the consummation by
the Depositor of any of the transactions contemplated by this Agreement,
as the case may be; (d) which might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement.
Section 2.07 Issuance of Certificates and the Uncertificated
Regular Interests.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to it of the Mortgage Files, subject to the provisions of
Sections 2.01 and 2.02, and the Trustee acknowledges the assignment to it of all
other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee, pursuant to the Written Order to Authenticate executed by
an officer of the Depositor, has executed, and the Certificate Registrar has
authenticated and delivered to or upon the order of the Depositor, the
Certificates (other than the Class CE, Class P and Class R Certificates) in
minimum dollar denominations or $25,000 and integral dollar multiples of $1 in
excess. The Class CE and Class P and Class R Certificates are issuable only in
minimum Percentage Interests of 10%. The Class R Certificate is issuable only as
a single certificate. The Trustee acknowledges the issuance of the
uncertificated REMIC A Regular Interests, the uncertificated REMIC B Regular
Interests, the uncertificated REMIC 1 Regular Interests, the uncertificated
REMIC 2 Regular Interests, the uncertificated REMIC 3 Regular Interests, and
declares that it hold such regular interests as assets of REMIC B, REMIC 1,
REMIC 2, REMIC 3 and REMIC 4, respectively. The Trustee acknowledges the
issuance of the uncertificated Class T4-A1, Class T4-A2, Class T4-M1, Class
T4-M2, Class T4-M3, Class T4-M4 Interests and Class T4-B Interests and the
obligation of the Class CE Certificates to pay Cap Carryover Amounts, and
declares that it hold the same as assets of the Grantor Trust on behalf of the
Holders of the Class A-1, Class A-2, Class M-1, Class M-2, Class M-3, Class M-4
and Class B Certificates, respectively. The interests evidenced by the
Certificates constitute the entire beneficial ownership interest in the Trust
Fund.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and the normal
and usual standards of practice of prudent mortgage servicers servicing similar
mortgage loans, and shall have full power and authority, acting alone, to do or
cause to be done any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement (the "Servicing Standards").
Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Certificateholders; provided, however, that the Servicer shall not make future
advances and (unless the Mortgagor is in default with respect to the Mortgage
Loan or such default is, in the judgment of the Servicer, reasonably
foreseeable) the Servicer shall not permit any modification with respect to any
Mortgage Loan that would (i) change the Mortgage Interest Rate, defer or forgive
the payment thereof of any principal or interest payments, reduce the
outstanding principal amount (except for actual payments of principal) or extend
the final maturity date with respect to such Mortgage Loan, (ii) affect
adversely the status of any REMIC as a REMIC or (iii) cause any REMIC to be
subject to a tax on "prohibited transactions" or "contributions" pursuant to the
REMIC Provisions. Notwithstanding the foregoing, the Servicer shall not permit
any modification with respect to any Mortgage Loan that would both (x) effect an
exchange or reissuance of such Mortgage Loan under Section 1.860G-2(b) of the
Treasury Regulations and (y) cause any REMIC constituting part of the Trust Fund
to fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the Startup Day under the
REMIC Provisions. Without limiting the generality of the foregoing, the Servicer
shall continue, and is hereby authorized and empowered to execute and deliver on
behalf of itself, and the Trustee, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Property. The Servicer shall make all required Servicing Advances and
shall service and administer the Mortgage Loans in accordance with Applicable
Regulations, and shall provide to the Mortgagor any reports required to be
provided to them thereby. The Trustee shall execute, upon request, any powers of
attorney furnished to it by the Servicer empowering 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 any Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to the
Mortgage Loans or the Mortgaged Properties, in accordance with this Agreement,
and the Trustee shall execute and deliver such other documents as the Servicer
may request, necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans and carry out its duties hereunder, in each case
in accordance with Servicing Standard (and the Trustee shall have no liability
for misuse of any such powers of attorney by the Servicer). Notwithstanding
anything contained herein to the contrary, the Servicer shall not without the
Trustee's written consent: (i) initiate any action, suit or proceeding solely
under the Trustee's name without indicating the Servicer's representative
capacity, or (ii) take any action with the intent to cause, and which results
in, the Trustee being registered to do business in any state.
In servicing and administering the Mortgage Loans, the Servicer
shall employ procedures including collection procedures and exercise the same
care that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Certificateholders'
reliance on the Servicer.
The Servicer shall give prompt notice to the Trustee of any action,
of which the Servicer has actual knowledge, to (i) assert a claim against the
Trust Fund or (ii) assert jurisdiction over the Trust Fund.
Notwithstanding anything in this Agreement to the contrary, in the
event of a voluntary Principal Prepayment in full of a Mortgage Loan, the
Servicer may not waive any Prepayment Charge or portion thereof required by the
terms of the related Mortgage Note unless (i) the Servicer determines that such
waiver would maximize recovery of Liquidation Proceeds for such Mortgage Loan,
taking into account the value of such Prepayment Charge, or (ii) (A) the
enforceability thereof is limited (1) by bankruptcy, insolvency, moratorium,
receivership, or other similar law relating to creditors' rights generally or
(2) due to acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or prohibited by then
applicable law. If the Servicer has waived or does not collect all or a portion
of a Prepayment Charge relating to a voluntary Principal Prepayment in full due
to any action or omission of the Servicer, other than as provided above, the
Servicer shall, within 90 days of the date on which the Principal Prepayment in
full is remitted to the Trustee, deliver to the Trustee the amount of such
Prepayment Charge (or such portion thereof as had been waived) for deposit into
the Distribution Account for distribution in accordance with the terms of this
Agreement.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest
on all Mortgage Loans are paid in full, the Servicer will diligently collect all
payments due under each Mortgage Loan when the same shall become due and payable
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any related Primary Insurance Policy and
Applicable Regulations, follow such collection procedures as it follows with
respect to mortgage loans comparable to the Mortgage Loans and held for its own
account. Further, the Servicer will take special care in ascertaining and
estimating annual ground rents, taxes, assessments, water rates, fire and hazard
insurance premiums, mortgage insurance premiums, and all other charges that, as
provided in the Mortgage, will become due and payable to that end that the
installments payable by the Mortgagors will be sufficient to pay such charges as
and when they become due and payable.
Section 3.03 Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Mortgage Loan is not
paid when the same becomes due and payable, or in the event the Mortgagor fails
to perform any other covenant or obligation under the Mortgage Loan and such
failure continues beyond any applicable grace period, the Servicer shall take
such action as it shall deem to be in the best interest of the
Certificateholders. With respect to any defaulted Mortgage Loan, the Servicer
shall have the right to review the status of the related forbearance plan and,
subject to the second paragraph of Section 3.01, may modify such forbearance
plan; including extending the Mortgage Loan repayment date for a period of one
year or reducing the Mortgage Interest Rate up to 50 basis points.
In connection with a foreclosure or other conversion, the Servicer
shall exercise such rights and powers vested in it hereunder and use the same
degree of care and skill in its exercise as prudent mortgage servicers would
exercise or use under the circumstances in the conduct of their own affairs and
consistent with Applicable Regulations and the Servicing Standards, including,
without limitation, advancing funds for the payment of taxes and insurance
premiums.
Notwithstanding the foregoing provisions of this Section 3.03, with
respect to any Mortgage Loan as to which the Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property, the Servicer shall not either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property if, as a result of any such action, the
Trust would be considered to hold title to, to be a mortgagee-in-possession of,
or to be an owner or operator of such Mortgaged Property within the meaning of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
A. such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic interest of
the Certificateholders to take such actions as are necessary to bring the
Mortgaged Property into compliance therewith; and
B. there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any federal, state or local law or regulation, or that if any
such materials are present for which such action could be required, that it
would be in the best economic interest of the Certificateholders to take such
actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 3.03 shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.05(ii).
If the Servicer determines, as described above, that it is in the
best economic interest of the Certificateholders to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Certificateholders. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.05(ii).
Section 3.04 Collection Account and Distribution Account.
(a) The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Collection
Accounts. Each Collection Account shall be an Eligible Account.
The Servicer shall deposit in the Collection Account on a daily
basis within one Business Day of receipt, and retain therein, the following
payments and collections received or made by it after the Cut-off Date with
respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Interest Rate less the Servicing Fee Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 3.10, other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Servicer's
normal servicing procedures, the loan documents or applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law;
(vi) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Section 3.13; and
(vii) all Prepayment Charges collected by the Servicer in connection
with the voluntary Principal Prepayment in full of any Mortgage Loan.
Any interest paid on funds deposited in the Collection Account,
subject to Section 3.25, shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Collection Account pursuant to Section 3.05(v). The foregoing requirements for
deposit from the Collection Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of late payment charges, prepayment charges that are not Prepayment
Charges or Servicer Prepayment Charge Payment Amounts, and assumption fees need
not be deposited by the Servicer in the Collection Account.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders. On behalf of
the Trust Fund, the Servicer shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account by the close of business
New York time on the Servicer Remittance Date, (i) that portion of the Available
Funds (calculated without regard to the references in the definition thereof to
amounts that may be deposited to the Distribution Account from a different
source as provided herein) then on deposit in the Collection Account, (ii) the
amount of all Prepayment Charges collected by the Servicer in connection with
the voluntary Principal Prepayment in full of any of the Mortgage Loans then on
deposit in the Collection Account (other than any such Prepayment Charges
received after the related Prepayment Period) and (iii) any Servicer Prepayment
Charge Payment Amount. Amounts in the Distribution Account shall be deemed to be
held on behalf of the related REMICs and the Grantor Trust in accordance with
the REMIC distributions set forth in Section 4.08. The Trustee shall be entitled
to withdraw from the Distribution Account any amounts owing to it pursuant to
Section 8.05 and Section 9.01(c) prior to the distribution of any amounts on
deposit to the Certificateholder; provided, however, in the case of amounts
owing to it other than the Trustee Fee, the Trustee shall provide the Depositor
and the Servicer with a written account of such amounts five Business Days prior
to withdrawing such funds.
(c) Funds in the Collection Account and the Distribution Account may
be invested in Permitted Investments in accordance with the provisions set forth
in Section 3.25. The Servicer shall give notice to the Trustee of the location
of the Collection Account maintained by it when established and prior to any
change thereof. The Trustee shall give notice to the Servicer and the Depositor
of the location of the Distribution Account when established and prior to any
change thereof.
(d) In the event the Servicer shall deliver to the Trustee for
deposit in the Distribution Account any amount not required to be deposited
therein, it may at any time request that the Trustee withdraw such amount from
the Distribution Account and remit to the Servicer any such amount, any
provision herein to the contrary notwithstanding. In addition, the Servicer
shall deliver to the Trustee from time to time for deposit, and the Trustee
shall so deposit, in the Distribution Account in respect of REMIC A:
(i) any Advances, as required pursuant to Section 4.07;
(ii) any Stayed Funds, as soon as permitted by the federal
bankruptcy court having jurisdiction in such matters;
(iii) any amounts required to be deposited in the Distribution
Account by the Servicer pursuant to Sections 2.03, 3.04, 3.13, 3.15, 3.16,
3.23, 3.24, 4.07 or 10.01; and
(iv) any amounts required to be deposited by the Servicer pursuant
to Section 3.11 in connection with the deductible clause in any blanket
hazard insurance policy, such deposit being made from the Servicer's own
funds, without reimbursement therefor.
(e) Promptly upon receipt of any Stayed Funds, whether from the
Servicer, a trustee in bankruptcy, or federal bankruptcy court or other source,
the Trustee shall notify the Servicer of such receipt and deposit such funds in
the Distribution Account, subject to withdrawal thereof as permitted hereunder.
In addition, the Trustee shall deposit in the Distribution Account any amounts
required to be deposited pursuant to Section 3.25(b) in connection with losses
realized on Permitted Investments with respect to funds held in the Distribution
Account.
(f) Any Prepayment Charges and Servicer Prepayment Charge Payment
Amounts deposited pursuant to Section 3.04(a)(vii) shall not be assets of any
REMIC created hereunder, but shall be considered assets of the Grantor Trust
held by the Trustee for the benefit of the Class P Certificateholders.
Section 3.05 Permitted Withdrawals From the Collection Account.
The Servicer may, from time to time, withdraw from the Collection
Account for the following purposes:
(i) to remit to the Trustee for deposit in the Distribution Account
the amounts required to be so remitted pursuant to Section 3.04(b) or
permitted to be so remitted pursuant to the first sentence of Section
3.04(d);
(ii) to reimburse itself for Advances and Servicing Advances; the
Servicer's right to reimburse itself pursuant to this subclause (ii) being
limited to amounts received on the related Mortgage Loan which represent
payments of (a) principal and/or interest respecting which any such
Advance was made or (b) Condemnation Proceeds, Insurance Proceeds or Net
Liquidation Proceeds respecting which any such Servicing Advance was made;
(iii) to reimburse itself for any unpaid Servicing Fees and for
unreimbursed Advances and unreimbursed Servicing Advances, to the extent
that such amounts are deemed to be Nonrecoverable Advances, and to
reimburse itself for such amounts to the extent that such amounts are
nonrecoverable from the disposition of REO Property pursuant to Section
3.03 or Section 3.13 hereof;
(iv) to reimburse itself for any amounts paid pursuant to Section
3.03 (and not otherwise previously reimbursed);
(v) to pay to itself as servicing compensation (a) any interest
earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each Servicer Remittance Date) and (b)
the Servicing Fee from that portion of any payment or recovery as to
interest to a particular Mortgage Loan to the extent not retained pursuant
to Section 3.04(ii);
(vi) to pay or reimburse itself for any amounts payable or paid
pursuant to Section 6.03 (and not otherwise previously reimbursed); and
(vii) to clear and terminate the Collection Account upon the
termination of this Agreement.
The foregoing requirements for withdrawal from the Collection
Account shall be exclusive. In the event the Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.
Section 3.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time deposit
or demand accounts. A copy of such letter agreement shall be furnished to the
Trustee upon request. The Escrow Account shall be an Eligible Account.
The Servicer shall deposit in the Escrow Account or Accounts on a
daily basis within one Business Days of receipt, and retain therein, (i) all
Escrow Payments collected on account of the Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement, and (ii) all Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only to effect such payments as are required under this
Agreement, and for such other purposes as shall be set forth in, or in
accordance with, Section 3.07. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid to
the Mortgagor and, to the extent required by the related Mortgage Loan or
Applicable Regulations, the Servicer shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account is non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 3.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer (i)
to effect timely payments of ground rents, taxes, assessments, water rates,
fire, flood and hazard insurance premiums, Primary Insurance Policy premiums, if
applicable, and comparable items, (ii) to reimburse the Servicer for any
Servicing Advance made by the Servicer with respect to a related Mortgage Loan
but only from amounts received on the related Mortgage Loan which represent late
payments or Late Collections of Escrow Payments thereunder, (iii) to refund to
the Mortgagor any funds as may be determined to be overages, (iv) for transfer
to the Collection Account in accordance with the terms of this Agreement, (v)
for application to restoration or repair of the Mortgaged Property, (vi) to pay
to the Servicer, or to the Mortgagor to the extent required by the related
Mortgage Loan or Applicable Regulations, any interest paid on the funds
deposited in the Escrow Account, (vii) to clear and terminate the Escrow Account
on the termination of this Agreement, or (viii) to transfer to the Collection
Account any insurance proceeds. As part of its servicing duties, the Servicer
shall pay to the Mortgagor interest on funds in the Escrow Account, to the
extent required by the related Mortgage Loan or Applicable Regulations, and to
the extent that interest earned on funds in the Escrow Account is insufficient,
shall pay such interest from its own funds, without any reimbursement therefor.
In the event the Servicer shall deposit in the Escrow Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Escrow Account, any provision herein to the contrary
notwithstanding.
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
With respect to each first lien Mortgage Loan, the Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of Primary Insurance Policy premiums and
fire, flood and hazard insurance coverage and shall obtain, from time to time,
all bills for the payment of such charges (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty or termination date and
at a time appropriate for securing maximum discounts allowable, employing for
such purpose deposits of the Mortgagor in the Escrow Account which shall have
been estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage or Applicable Regulations.
To the extent that the Mortgage does not provide for Escrow Payments, the
Servicer shall determine that any such payments are made by the Mortgagor at the
time they first become due. The Servicer assumes full responsibility for the
timely payment of all such bills and shall effect timely payments of all such
bills irrespective of the Mortgagor's faithful performance in the payment of
same or the making of the Escrow Payments and shall make Servicing Advances from
its own funds to effect such payments.
The Servicer, on behalf of the Trustee, as mortgagee, will maintain
in full force and effect (to the extent a Mortgage Loan has a Primary Insurance
Policy) a Primary Insurance Policy issued by a Qualified Insurer with respect to
each Mortgage Loan for which such coverage is required. Such coverage will be
maintained until the Loan-to-Value Ratio of the related Mortgage Loan is reduced
to 80% or less. The Servicer will not cancel or refuse to renew any Primary
Insurance Policy in effect on the Closing Date that is required to be kept in
force under this Agreement unless a replacement Primary Insurance Policy for
such cancelled or non-renewed policy is obtained from and maintained with a
Qualified Insurer. The Servicer shall not take any action which would result in
non-coverage under any applicable Primary Insurance Policy of any loss which,
but for the actions of the Servicer, would have been covered thereunder. In
connection with any assumption or substitution agreement entered into or to be
entered into pursuant to Section 3.14, the Servicer shall promptly notify the
insurer under the related Primary Insurance Policy, if any, of such assumption
or substitution of liability in accordance with the terms of such policy and
shall take all actions which may be required by such insurer as a condition to
the continuation of coverage under the Primary Insurance Policy. If such Primary
Insurance Policy is terminated as a result of such assumption or substitution of
liability, the Servicer shall obtain a replacement Primary Insurance Policy as
provided above.
In connection with its activities as servicer, the Servicer agrees
to prepare and present, on behalf of itself and the Trustee, claims to the
insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Section 3.04, any amounts
collected by the Servicer under any Primary Insurance Policy shall be deposited
in the Collection Account, subject to withdrawal pursuant to Section 3.05.
Section 3.09 Transfer of Accounts.
The Servicer may transfer the Collection Account or the Escrow
Account to a different depository institution from time to time. Upon such
transfer, the Servicer shall deliver to the Trustee and the Depositor, a
certification or letter agreement, as the case may be, as required pursuant to
Sections 3.04 and 3.06.
Section 3.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each first lien
Mortgage Loan fire and hazard insurance with extended coverage as is customary
in the area where the Mortgaged Property is located in an amount which is at
least equal to the lesser of (i) the amount necessary to fully compensate for
any damage or loss to the improvements which are a part of such property on a
replacement cost basis or (ii) the Principal Balance of the Mortgage Loan, in
each case in an amount not less than such amount as is necessary to prevent the
Mortgagor and/or the Mortgagee from becoming a co-insurer. If the Mortgaged
Property is in an area identified in the Federal Register by the Flood Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Servicer will cause to be maintained a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration with a generally acceptable insurance carrier, in an
amount representing coverage not less than the least of (i) the Principal
Balance of the Mortgage Loan, (ii) the maximum insurable value of the
improvements securing such Mortgage Loan or (iii) the maximum amount of
insurance which is available under the National Flood Insurance Act of 1968, as
amended. The Servicer shall also maintain on the REO Property for the benefit of
the Certificateholders, (x) fire and hazard insurance with extended coverage in
an amount which is at least equal to the replacement cost of the improvements
which are a part of such property, (y) public liability insurance and, (z) to
the extent required and available under the National Flood Insurance Act of
1968, as amended, flood insurance in an amount as provided above. Any amounts
collected by the Servicer under any such policies other than amounts to be
deposited in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or REO Property, or released to the Mortgagor in accordance
with the Servicer's normal servicing procedures, shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.05. It is
understood and agreed that no earthquake or other additional insurance is
required to be maintained by the Servicer or the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
Applicable Regulations as shall at any time be in force and as shall require
such additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer and shall provide for at
least thirty days prior written notice of any cancellation, reduction in the
amount of or material change in coverage to the Servicer. The Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting either his
insurance carrier or agent, provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies currently reflect a general policy rating of B:VI or better in Best's
Key Rating Guide and are licensed to do business in the state wherein the
property subject to the policy is located.
Section 3.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket
policy issued by an insurer that has a general policy rating of B:VI or better
in Best's Key Rating Guide insuring against hazard losses on all of the Mortgage
Loans, then, to the extent such policy provides coverage in an amount equal to
the amount required pursuant to Section 3.10 and otherwise complies with all
other requirements of Section 3.10, it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 3.10, it being understood and
agreed that such policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with Section 3.10,
and there shall have been a loss which would have been covered by such policy,
deliver to the Trustee for deposit in the Distribution Account the amount not
otherwise payable under the blanket policy because of such deductible clause,
which amount shall not be reimbursable to the Servicer from the Trust Fund. In
connection with its activities as servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of the Trustee, claims under any such
blanket policy in a timely fashion in accordance with the terms of such policy.
Upon request of the Trustee, the Servicer shall cause to be delivered to the
Trustee a certified true copy of such policy and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without thirty days prior written notice to the Trustee.
Section 3.12 Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity
bond (the "Fidelity Bond") and an errors and omissions insurance policy, with
broad coverage with financially responsible companies on all officers, employees
or other persons acting in any capacity with regard to the Mortgage Loans to
handle funds, money, documents and papers relating to the Mortgage Loans. The
Fidelity Bond and errors and omissions insurance shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons. Such Fidelity Bond shall also protect and insure
the Servicer against losses in connection with the failure to maintain any
insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 3.12 requiring the
Fidelity Bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. The
minimum coverage under any such bond and insurance policy shall be at least
equal to the corresponding amounts required by Fannie Mae in the Fannie Mae MBS
Selling and Servicing Guide or by Freddie Mac in the Freddie Mac Servicer's
Guide. Upon request of the Trustee, the Servicer shall cause to be delivered to
the requesting party a certified true copy of the Fidelity Bond and errors and
omissions insurance policy and a statement from the surety and the insurer that
such Fidelity Bond and errors and omissions insurance policy shall in no event
be terminated or materially modified without thirty days' prior written notice
to the Trustee.
Section 3.13 Title, Management and Disposition of REO Property.
(a) In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken (pursuant to a limited power of attorney to be provided by the
Trustee to the Servicer) in the name of the Trustee or its nominee, on behalf of
the Certificateholders, or in the event the Trustee is not authorized or
permitted to hold title to real property in the state where the REO Property is
located, or would be adversely affected under the "doing business" or tax laws
of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
Opinion of Counsel obtained by the Servicer from an attorney duly licensed to
practice law in the state where the REO Property is located. Any Person or
Persons holding such title other than the Trustee shall acknowledge in writing
that such title is being held as nominee for the benefit of the Trustee.
(b) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such REO Property before the end of
the third calendar year beginning after the year of its acquisition by the Trust
Fund for purposes of Section 860G(a)(8) of the Code or, at the expense of the
Trust Fund, request from the Internal Revenue Service, more than 60 days before
the day on which the above-mentioned grace period would otherwise expire, an
extension of the above-mentioned grace period, unless the Servicer obtains an
Opinion of Counsel, addressed to the Servicer and the Trustee, to the effect
that the holding by the Trust Fund of such REO Property subsequent to such
period will not: (i) result in the imposition of any tax on "prohibited
transactions" as defined in Section 860F of the Code; or (ii) cause any REMIC
constituting any part of the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such REO Property (subject to any conditions contained in such
Opinion of Counsel). The Servicer shall be entitled to be reimbursed from the
Collection Account for any costs incurred in obtaining such Opinion of Counsel,
as provided in Section 3.05.
Subject to compliance with applicable laws and regulations as shall
at any time be in force, and notwithstanding any other provisions of this
Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the Trust
Fund in such a manner or pursuant to any terms that would: (i) cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code; or (ii) subject any REMIC constituting part of
the Trust Fund to the imposition of any federal income taxes on the income
earned from such REO Property, including any taxes imposed by reason of Sections
860F or 860G(c) of the Code, unless the Servicer has agreed to indemnify and
hold harmless the Trust Fund with respect to the imposition of any such taxes.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders and the Trust Fund solely for the purpose of
its prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by the related REMIC of
any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code, or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions. The Servicer shall cause each
REO Property to be inspected promptly upon the acquisition of title thereto and
shall cause each REO Property to be inspected at least annually thereafter. The
Servicer shall make or cause to be made a written report of each such
inspection. Such reports shall be retained in the Mortgage Servicing File and
copies thereof shall be forwarded by the Servicer to the Trustee upon request.
The Servicer shall attempt to sell the same (and may temporarily rent the same)
on such terms and conditions as the Servicer deems to be in the best interest of
the Certificateholders and the Trust Fund.
With respect to each REO Property, the Servicer shall account
separately for each REO Property with respect to all funds collected and
received in connection with the operation of such REO Property.
The Servicer shall deposit or cause to be deposited, on a daily
basis, within one Business Day of receipt, in the Collection Account, all
revenues received with respect to each REO Property and shall withdraw therefrom
funds necessary for the proper operation, management and maintenance of the
related REO Property, including the cost of maintaining any hazard insurance
pursuant to Section 3.10 hereof and the fees of any managing agent acting on
behalf of the Servicer.
The Servicer shall furnish to the Trustee, on each Servicer
Remittance Date, an operating statement for each REO Property covering the
operation of each REO Property for the previous month. Such operating statement
shall be accompanied by such other information as the Trustee shall reasonably
request.
The Servicer shall use its best efforts to dispose of the REO
Property as promptly as is practically consistent with protecting the
Certificateholders' interests.
Each REO Disposition shall be carried out by the Servicer at such
price and upon such terms and conditions as the Servicer deems to be in the best
interest of the Certificateholders. If as of the date title to any REO Property
was acquired by the Servicer there were outstanding unreimbursed Servicing
Advances with respect to the REO Property, the Servicer, upon an REO Disposition
of such REO Property, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances from proceeds received in connection with such
REO Disposition. The proceeds from the REO Disposition, net of any payment to
the Servicer as provided above, shall be deposited in the Collection Account for
transfer to the Distribution Account on the succeeding Servicer Remittance Date
in accordance with Section 3.04(a)(vi).
Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration and an Opinion of Counsel is obtained by the Servicer to the
effect that such sale shall not cause any REMIC constituting part of the Trust
Fund to fail to qualify as a REMIC).
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law. An Opinion of Counsel at
the expense of the Servicer (which expense shall constitute a Servicing Advance)
delivered to the Trustee and the Depositor to the foregoing effect shall
conclusively establish the reasonableness of such belief. In such event, the
Servicer shall make reasonable efforts to enter into an assumption and
modification agreement with the Person to whom such property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and, unless prohibited by applicable law or the Mortgage, the
Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Servicer is authorized to enter into a substitution of
liability agreement with such Person, pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the Note. The Mortgage Loan, as assumed, shall conform in
all respects to the requirements, representations and warranties of this
Agreement. The Servicer shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement (indicating the
Mortgage File to which it relates) which copy shall be added by the Trustee to
the related Mortgage File and which shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. The Servicer shall be responsible for
recording any such assumption or substitution agreements. In connection with any
such assumption or substitution agreement, the Monthly Payment on the related
Mortgage Loan shall not be changed but shall remain as in effect immediately
prior to the assumption or substitution, the stated maturity or outstanding
principal amount of such Mortgage Loan shall not be changed nor shall any
required monthly payments of principal or interest be deferred or forgiven. Any
fee collected by the Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.15 Notification of Adjustments.
On each Adjustment Date, the Servicer shall make Mortgage Interest
Rate adjustments for each Adjustable-Rate Mortgage Rate Loan in compliance with
the requirements of the related Mortgage and Mortgage Note and Applicable
Regulations. The Servicer shall execute and deliver the notices required by each
Mortgage and Mortgage Note and Applicable Regulations regarding Mortgage
Interest Rate adjustments. Upon the discovery by the Servicer or the Trustee
that the Servicer has failed to adjust or has incorrectly adjusted a Mortgage
Interest Rate or a Monthly Payment pursuant to the terms of the related Mortgage
Note and Mortgage, the Servicer shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any interest loss caused
thereby without reimbursement therefor; provided, however, the Servicer shall be
held harmless with respect to any Mortgage Interest Rate adjustments made by any
servicer prior to the Servicer.
Section 3.16 Optional Purchases of Mortgage Loans by Servicer.
The Servicer may, at its option, repurchase a Mortgage Loan or REO
Property which becomes 120 or more days Delinquent or for which the Servicer has
accepted a deed in lieu of foreclosure. Prior to repurchase pursuant to this
Section 3.16, the Servicer shall be required to continue to make monthly
advances pursuant to Section 4.07. The Servicer shall not use any procedure in
selecting Mortgage Loans to be repurchased which is materially adverse to the
interests of the Certificateholders. The Servicer shall purchase such (i)
Delinquent Mortgage Loan at a price equal to the Principal Balance of the
Mortgage Loan plus accrued interest thereon at the Mortgage Interest Rate (net
of the Servicing Fee Rate) from the date to which interest has last been paid to
the Trust Fund to the date of purchase plus any unreimbursed Servicing Advances
and Advances or (ii) REO Property at its fair market value as determined in good
faith by the Servicer. The Servicer will not be entitled to any Servicing Fee
with respect to any such repurchased Mortgage Loan. Any such repurchase of a
Mortgage Loan or REO Property pursuant to this Section 3.16 shall be
accomplished by delivery to the Trustee for deposit in the Distribution Account
of the amount of the purchase price. The Trustee shall immediately effectuate
the conveyance of such delinquent Mortgage Loan or REO Property to the Servicer
to the extent necessary, including the prompt delivery of all documentation to
the Servicer.
Section 3.17 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise, or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes), the Servicer shall deliver to the
Trustee an executed copy of a completed "Request for Release" in the form of
Exhibit E. Upon receipt of such Request for Release of Documents, the Trustee
shall promptly release the related Mortgage File, in trust, to (i) the Servicer,
or (ii) such other party identified in the related Request for Release. Upon any
such payment in full, or the receipt of such notification that such funds have
been placed in escrow, the Servicer shall direct the Trustee in writing to
execute an instrument of satisfaction (or assignment of Mortgage without
recourse) regarding the Mortgaged Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account. In lieu of executing any such satisfaction
or assignment, as the case may be, the Servicer may prepare and submit to the
Trustee a satisfaction (or assignment without recourse, if requested by the
Person or Persons entitled thereto) in form for execution by the Trustee with
all requisite information completed by the Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related Mortgage File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any insurance policy relating
to a Mortgage Loan, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related Mortgage File is released to an escrow
agent or an employee, agent or attorney of the Trustee), upon written request of
the Servicer and delivery to the Trustee of an executed copy of a "Request for
Release" in the form of Exhibit E signed by a Servicing Officer, release the
related Mortgage File to the Servicer and shall execute such documents as shall
be necessary to the prosecution of any such proceedings, including, without
limitation, an assignment without recourse of the related Mortgage to the
Servicer. Such receipt shall obligate the Servicer to return the Mortgage File
to the Trustee when the need therefor by the Servicer no longer exists unless
the Mortgage Loan shall be liquidated, in which case, upon receipt of a Request
for Release evidencing such liquidation, the receipt shall be released by the
Trustee to the Servicer.
(c) Subject to Section 3.01, the Servicer shall have the right to
accept applications of Mortgagors for consent to (i) partial releases of
Mortgages, (ii) alterations, (iii) removal, demolition or division of properties
subject to Mortgages and (iv) second mortgage subordination agreements. No
application for approval shall be considered by the Servicer unless: (w) it has
received an Opinion of Counsel, addressed to the Trustee (which opinion shall
not be an expense of the Trustee or the Trust Fund) that such sale, disposition,
substitution, acquisition or contribution will not affect adversely the status
of any REMIC constituting part of the Trust Fund as a REMIC or cause any REMIC
constituting part of the Trust Fund to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions; (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not exceed
the maximum Loan-to-Value Ratio and debt-to-income ratio established in
accordance with the underwriting standards of the Mortgage Loans; and (z) the
lien priority of the related Mortgage is not affected. Upon receipt by the
Trustee of a Servicing Officer's certificate setting forth the action proposed
to be taken in respect of a particular Mortgage Loan and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to the Servicer the consent or partial
release so requested by the Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Servicing Officer's certificate
delivered by the Servicer pursuant to this paragraph.
Section 3.18 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Mortgage
Loan (including REO Properties). The Servicer shall be entitled to retain
additional servicing compensation in the form of release fees, bad check
charges, assumption fees, modification or extension fees, late payment charges,
prepayment charges that are not Prepayment Charges or Servicer Prepayment Charge
Payment Amounts, or any other service-related fees and similar items, to the
extent collected from Mortgagors.
Section 3.19 Annual Statement as to Compliance.
(a) The Servicer, at its own expense, will deliver to the Trustee
and the Depositor, not later than 90 days following the end of each fiscal year
of the Servicer which as of the Startup Day ends on the last day of December,
commencing with the fiscal year ending in 2002, a Servicing Officer's
certificate stating, as to each signer thereof, that (i) a review of the
activities of the Servicer during such preceding fiscal year (or such shorter
period in the case of the first such report) and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement for such year, or, if there has been a
default in the fulfillment of all such obligations, specifying each such default
known to such officers and the nature and status thereof including the steps
being taken by the Servicer to remedy such default.
(b) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and their receipt of such shall not
constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.20 Annual Independent Certified Public Accountants'
Reports.
(a) Not later than 90 days following the end of each fiscal year of
the Servicer commencing the fiscal year ending in 2002, the Servicer, at its
expense, shall cause a nationally recognized firm of independent certified
public accountants to furnish to the Trustee, the Depositor and each Rating
Agency, a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Servicer which includes an
assertion that the Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in either the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America or the Audit Program for Mortgages serviced by Freddie
Mac, with respect to the servicing of residential mortgage loans during the most
recently completed fiscal year and (ii) on the basis of an examination conducted
by such firm in accordance with standards established by the American Institute
of Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request, provided that such statement is delivered by the
Servicer to the Trustee.
(b) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and their receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(c) The Trustee shall, on behalf of the Trust Fund, prepare and file
with the Securities and Exchange Commission any and all reports, statements and
information respecting the Trust which the Depositor determines are required to
be filed with the Securities and Exchange Commission pursuant to Sections 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, each such report,
statement and information to be filed on or prior to the required filing date
for such report, statement or information. Upon the request of the Trustee, each
of the Servicer and the Depositor shall cooperate with the Trustee in the
preparation of any such report and shall provide to the Trustee in a timely
manner all such information or documentation as the Trustee may reasonably
request in connection with the performance of its duties and obligations under
this Section.
Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Servicer shall provide to the Trustee, Certificateholders that
are federally insured savings and loan associations, the Office of Thrift
Supervision, the FDIC and the supervisory agents and examiners of each of the
foregoing (which, in the case of supervisory agents and examiners, may be
required by applicable state and federal regulations) access to the
documentation regarding the Mortgage Loans, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer designated by it.
Section 3.22 Duties of Credit Risk Manager.
For and on behalf of the Depositor, the Credit Risk Manager shall
provide reports and recommendations as to loss mitigation activities concerning
Mortgage Loans that are past due, are in default, as to which there has been
commencement of foreclosure, as to which there has been forbearance in exercise
of remedies, as to which any obligor is the subject of bankruptcy, receivership,
or an arrangement of creditors, or which have become REO Properties. Such
reports and recommendations will be based upon information provided pursuant to
the Credit Risk Management Agreement. The Credit Risk Manager shall look solely
to the Servicer for all information and data (including loss and delinquency
information and data) and loan level information and data relating to the
servicing of the Mortgage Loans.
The Credit Risk Manager may be removed at any time by a vote of
Certificateholders holding Certificates evidencing at least 66 2/3% of the
aggregate Voting Rights of the Certificates. After any such termination, the
Credit Risk Manager shall have no further obligations hereunder, and shall no
longer be entitled to the Credit Risk Manager Fee.
Section 3.23 Obligations of the Servicer in Respect of
Compensating Interest.
Not later than the close of business on each Servicer Remittance
Date, the Servicer shall deliver to the Trustee for deposit in the Distribution
Account an amount ("Compensating Interest") equal to the lesser of (A) the
aggregate of the Prepayment Interest Shortfalls on the Mortgage Loans for the
related Distribution Date resulting from Principal Prepayments on the Mortgage
Loans during the related Prepayment Period and (B) its aggregate Servicing Fee
received in the related Collection Period. The Servicer shall apply Compensating
Interest to offset any Prepayment Interest Shortfalls on the Mortgage Loans. The
Servicer shall not have the right to reimbursement for any amounts remitted to
the Trustee in respect of Compensating Interest. Such amounts so remitted shall
be included in the Available Funds and distributed therewith on the next
Distribution Date. The Servicer shall not be obligated to pay Compensating
Interest with respect to Relief Act Interest Shortfalls.
Section 3.24 Obligations of the Servicer in Respect of Mortgage
Interest Rates and Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Interest Rates, Monthly Payments or Principal Balances that were made
by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and
any successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement.
Section 3.25 Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Servicer may direct any depository institution maintaining
the Collection Account and the Trustee may direct any depository institution
maintaining the Distribution Account (for purposes of this Section 3.25, each an
"Investment Account"), to invest the funds in such Investment Account in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trustee is the obligor thereon. All such Permitted Investments shall be held to
maturity, unless payable on demand. Any investment of funds in an Investment
Account shall be made in the name of the Trustee or the Servicer, as applicable
(in its capacity as such) or in the name of a nominee of the Trustee. The
Trustee shall be entitled to sole possession (except with respect to investment
direction of funds held in the Collection Account) over each such investment and
the income thereon, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Trustee shall at the direction of the Servicer:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the
last day such Permitted Investment may otherwise mature
hereunder in an amount equal to the lesser of (1) all
amounts then payable thereunder and (2) the amount
required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly
upon determination by a Responsible Officer of the
Trustee that such Permitted Investment would not
constitute a Permitted Investment in respect of funds
thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds in the
Collection Account shall be for the benefit of the Servicer. The Servicer shall
deposit in the Collection Account the amount of any loss incurred in respect of
any such Permitted Investment made with funds in such account immediately upon
realization of such loss. All income and gain realized from the investment of
funds in the Distribution Account shall be for the benefit of the Trustee. The
Trustee shall deposit in the Distribution Account the amount of any loss
incurred on Permitted Investments in the Distribution Account.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
The Trustee shall not in any way be held liable by reason of any
insufficiency in any Account held by the Trustee resulting from any investment
loss on any Permitted Investment included therein (except to the extent that the
Trustee is the obligor and has defaulted thereon).
Section 3.26 Liability of Servicer; Indemnification.
(a) Subject to clause (b) below and Section 6.03, the Servicer
(except the Trustee if it is required to succeed the Servicer hereunder)
indemnifies and holds the Trustee, the Depositor and the Trust Fund harmless
against any and all claims, losses, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Trustee, the Depositor and the Trust Fund may sustain in any way
related to the failure of the Servicer to perform its duties and service the
Mortgage Loans in compliance with the Servicing Standards. The Servicer shall
immediately notify the Trustee and the Depositor if a claim is made that may
result in such claims, losses, penalties, fines, forfeitures, legal fees or
related costs, judgments, or any other costs, fees and expenses, and the
Servicer shall assume (with the consent of the Trustee) the defense of any such
claim and pay all expenses in connection therewith, including reasonable counsel
fees, and promptly pay, discharge and satisfy any judgment or decree which may
be entered against the Servicer, the Trustee, the Depositor and/or the Trust
Fund in respect of such claim. The provisions of this Section 3.26 shall survive
the termination of this Agreement and the payment of the outstanding
Certificates.
(b) None of the Depositor, the Servicer, or any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Trust Fund or the Certificateholders for any action taken,
or for refraining from the taking of any action, in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor or the Servicer or any such Person against any
breach of warranties or representations made by such party herein, or against
any specific liability imposed on the Servicer for a breach of the Servicing
Standard, or against any liability which would otherwise be imposed by reason of
its respective willful misfeasance, bad faith, fraud or negligence in the
performance of its duties or by reasons of negligent disregard of its respective
obligations or duties hereunder.
The Depositor, the Servicer and any director, officer, employee or
agent of the Depositor or the Servicer, may rely in good faith on any document
of any kind which, prima facie, is properly executed and submitted by any
appropriate Person with respect to any matters arising hereunder. The Depositor,
the Servicer and any director, officer, employee or agent of the Depositor or
the Servicer shall be indemnified and held harmless by the Trust against any
loss, liability or expense incurred in connection with any legal action relating
to this Agreement or the Certificates, other than any loss, liability or expense
incurred in connection with any legal action incurred by reason of its
respective misfeasance, bad faith, fraud or negligence, a breach of a
representation or warranty made by such party hereunder or (in the case of the
Servicer) a breach of the Servicing Standard in the performance of its
respective duties or by reason of negligent disregard of its respective
obligations or duties hereunder. Neither the Depositor nor the Servicer shall be
under any obligation to appear in, prosecute or defend any legal action unless
such action is related to its respective duties under this Agreement and in its
opinion does not expose it to any expense or liability; provided, however, that
the Depositor or the Servicer may in their discretion undertake any action
related to their obligations hereunder which they may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder.
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties.
Beginning in 2003, the Servicer shall file the reports of
foreclosure and abandonment of any Mortgaged Property required by Section 6050J
of the Code with the Internal Revenue Service on or before the due date for any
such report. Not later than 90 days following the end of each calendar year,
beginning in 2003, the Servicer will deliver an Officer's Certificate to the
Trustee certifying its compliance with this Section 3.27. The reports from the
Servicer shall be in form and substance sufficient to meet the reporting
requirements imposed by such Section 6050J.
Section 3.28 Protection of Assets.
(a) Except for transactions and activities entered into in
connection with the securitization that is the subject of this Agreement, the
Trust is not authorized and has no power to:
(1) borrow money or issue debt;
(2) merge with another entity, reorganize, liquidate or sell
assets; or
(3) engage in any business or activities.
(b) Each party to this Agreement agrees that it will not file an
involuntary bankruptcy petition against the Trustee or the Trust Fund or
initiate any other form of insolvency proceeding until after the Certificates
have been paid.
Section 3.29 Limitation of Liability of the Credit Risk Manager.
Neither the Credit Risk Manager, nor any of the directors, officers,
employees or agents of the Credit Risk Manager, shall be under any liability to
the Depositor, the Servicer, the Trustee or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, in reliance upon information provided by the
Servicer under the Credit Risk Management Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Credit Risk Manager
or any such person against liability that would otherwise be imposed by reason
of willful malfeasance, bad faith or negligence in its performance of its duties
or by reason of reckless disregard for its obligations and duties under this
Agreement or the applicable Credit Risk Management Agreement. The Credit Risk
Manager and any director, officer, employee or agent of the Credit Risk Manager
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder, and may
rely in good faith upon the accuracy of information furnished by the Servicer
pursuant to the applicable Credit Risk Management Agreement in the performance
of its duties thereunder and hereunder.
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions.
On each Distribution Date, the Trustee shall withdraw from the
Distribution Account the Interest Remittance Amount and apply it in the
following order of priority (based upon the Mortgage Loan information provided
to it in the Remittance Report, upon which the Trustee may conclusively rely),
and the calculations required to be made by the Trustee, to the extent
available:
(i) Concurrently, to the Trustee, the Trustee Fee for such
Distribution Date, and to the Credit Risk Manager, the Credit Risk Manager
Fee for such Distribution Date;
(ii) concurrently, as follows:
(a) concurrently, from the Group 1 Interest Remittance Amount
to the Class A-1 Certificates and the Class A-IO Certificates, pro
rata, the Accrued Certificate Interest or the Group 1 Class A-IO
Accrued Certificate Interest, as applicable, for such Distribution
Date; and
(b) concurrently, from the Group 2 Interest Remittance Amount
to the Class A-2 Certificates and the Class A-IO Certificates, pro
rata, the Accrued Certificate Interest or the Group 2 Class A-IO
Accrued Certificate Interest, as applicable, for such Distribution
Date;
(iii) concurrently, as follows:
(a) concurrently, from the Group 1 Interest Remittance Amount
to the Class A-1 Certificates and the Class A-IO Certificates, pro
rata, the Interest Carry Forward Amount for the Class A-1
Certificates and the Group 1 Class A-IO Interest Carry Forward
Amount for such Distribution Date; and
(b) concurrently, from the Group 2 Interest Remittance Amount
to the Class A-2 Certificates and the Class A-IO Certificates, pro
rata, the Interest Carry Forward Amount for the Class A-2
Certificates and the Group 2 Class A-IO Interest Carry Forward
Amount for such Distribution Date;
(iv) concurrently, as follows:
(a) if the Group 1 Interest Remittance Amount is insufficient
to pay the Class A-1 Certificates' Accrued Certificate Interest or
the Class A-IO Certificates' Group 1 Class A-IO Accrued Certificate
Interest for such Distribution Date pursuant to Section 4.01(ii)(a)
above, concurrently, from the remaining Group 2 Interest Remittance
Amount, to the Class A-1 Certificates and the Class A-IO
Certificates, pro rata, to cover such shortfall for such
Distribution Date; and
(b) if the Group 2 Interest Remittance Amount is insufficient
to pay the Class A-2 Certificates' Accrued Certificate Interest or
the Class A-IO Certificates' Group 2 Class A-IO Accrued Certificate
Interest for such Distribution Date pursuant to Section 4.01(ii)(b)
above, concurrently, from the remaining Group 1 Interest Remittance
Amount, to the Class A-2 Certificates and the Class A-IO
Certificates, pro rata, to cover such shortfall for such
Distribution Date;
(v) concurrently, as follows:
(a) if the Group 1 Interest Remittance Amount is insufficient
to pay the Class A-1 Certificates' Interest Carry Forward Amount or
the Group 1 Class A-IO Interest Carry Forward Amount for such
Distribution Date pursuant to Section 4.01(iii)(a) above,
concurrently, from the remaining Group 2 Interest Remittance Amount,
to the Class A-1 Certificates and the Class A-IO Certificates, pro
rata, to cover such shortfall for such Distribution Date; and
(b) if the Group 2 Interest Remittance Amount is insufficient
to pay the Class A-2 Certificates' Interest Carry Forward Amount or
the Group 2 Class A-IO Interest Carry Forward Amount for such
Distribution Date pursuant to Section 4.01(iii)(b) above,
concurrently, from the remaining Group 1 Interest Remittance Amount,
to the Class A-2 Certificates and the Class A-IO Certificates, pro
rata, to cover such shortfall for such Distribution Date;
(vi) to the Class M-1 Certificates, the Accrued Certificate Interest
thereon for such Distribution Date;
(vii) to the Class M-2 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(viii) to the Class M-3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;
(ix) to the Class M-4 Certificates, the Accrued Certificate Interest
thereon for such Distribution Date; and
(x) to the Class B Certificates, the Accrued Certificate Interest
thereon for such Distribution Date; and
(xi) the amount, if any, of the Interest Remittance Amount remaining
after application with respect to the priorities set forth above will be
applied as described under Section 4.02(b) hereof.
Section 4.02 Distributions of Principal and Monthly Excess
Cashflow Amounts.
(a) On each Distribution Date, the Trustee shall make the following
distributions in the following order of priority (based upon the Mortgage Loan
information provided to it in the Remittance Report and the calculations
required to be made by the Trustee), to the extent of the Principal Distribution
Amount:
(i) before the Stepdown Date or with respect to which a Trigger
Event is in effect, sequentially, as follows:
first, concurrently, the Class A-1 Principal Distribution
Amount to the Class A-1 Certificates and the Class A-2 Principal
Distribution Amount to the Class A-2 Certificates, until the
Certificate Principal Balances thereof have been reduced to zero;
second, the Class A-2 Principal Distribution Amount remaining
after priority first of this Section 4.02(a)(i), to the Class A-1
Certificates, until the Certificate Principal Balance thereof has
been reduced to zero and the Class A-1 Principal Distribution Amount
remaining after priority first of this Section 4.02(a)(i), to the
Class A-2 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero;
third, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
fourth, to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
fifth, to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
sixth, to the Class M-4 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
seventh, to the Class B Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and
eighth, any remaining Principal Distribution Amount will be
distributed as part of the Monthly Excess Cashflow Amount as set
forth in Section 4.02(b).
(ii) on or after the Stepdown Date and as long as a Trigger Event is
not in effect:
first, concurrently, the Class A-1 Principal Distribution
Amount to the Class A-1 Certificates and the Class A-2 Principal
Distribution Amount to the Class A-2 Certificates, until the
Certificate Principal Balances thereof have been reduced to zero;
second, the Class A-2 Principal Distribution Amount remaining
after priority first of this Section 4.02(a)(ii) above, to the Class
A-1 Certificates, until the Certificate Principal Balance thereof
has been reduced to zero and the Class A-1 Principal Distribution
Amount remaining after priority first of this Section 4.02(a)(ii)
above, to the Class A-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
third, to the Class M-1 Certificates, up to the Class M-1
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
fourth, to the Class M-2 Certificates, up to the Class M-2
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
fifth, to the Class M-3 Certificates, up to the Class M-3
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
sixth, to the Class M-4 Certificates, up to the Class M-4
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
seventh, to the Class B Certificates, up to the Class B
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero; and
eighth, any remaining Principal Distribution Amount will be
distributed as part of the Monthly Excess Cashflow Amount as set
forth in Section 4.02(b).
(b) On each Distribution Date, any Monthly Excess Cashflow Amount
shall be distributed, to the extent available, in the following order of
priority on such Distribution Date:
(i) to pay any remaining Accrued Certificate Interest for such
Distribution Date, pro rata, for the Class A Certificates;
(ii) to pay any Interest Carry Forward Amounts for such Distribution
Date, pro rata, for the Class A Certificates;
(iii) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-1 Certificates;
(iv) to pay the remaining Interest Carry Forward Amount, if any, for
the Class M-1 Certificates;
(v) to pay the Class M-1 Realized Loss Amortization Amount for such
Distribution Date;
(vi) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-2 Certificates;
(vii) to pay the remaining Interest Carry Forward Amount, if any,
for the Class M-2 Certificates;
(viii) to pay the Class M-2 Realized Loss Amortization Amount for
such Distribution Date;
(ix) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-3 Certificates;
(x) to pay the remaining Interest Carry Forward Amount, if any, for
the Class M-3 Certificates;
(xi) to pay the Class M-3 Realized Loss Amortization Amount for such
Distribution Date;
(xii) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class M-4 Certificates;
(xiii) to pay the remaining Interest Carry Forward Amount, if any,
for the Class M-4 Certificates;
(xiv) to pay the Class M-4 Realized Loss Amortization Amount for
such Distribution Date;
(xv) to pay any remaining unpaid Accrued Certificate Interest for
such Distribution Date for the Class B Certificates;
(xvi) to pay the remaining Interest Carry Forward Amount, if any,
for the Class B Certificates;
(xvii) to pay the Class B Realized Loss Amortization Amount for such
Distribution Date;
(xviii) first, to the Class A Certificates, pro rata, and then
sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4 and Class
B Certificates, in that order, any Cap Carryover Amount for each such
Class; and
(xix) to the Class CE Certificates, the Class CE Distributable
Amount for such Distribution Date.
On each Distribution Date, there shall be distributed to the Holder
of the Class R Certificate, any remaining amount in the Distribution Account on
such date after the application pursuant to Sections 4.01, 4.02(a) and
4.02(b)(i)-(xix).
(c) On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges collected by the Servicer in connection with the Principal Prepayment in
full of any of the Mortgage Loans or any Servicer Prepayment Charge Payment
Amount and shall distribute such amounts to the Holders of the Class P
Certificates. Such amounts shall be treated as having been distributed to the
Holders of the Class P Certificates from the Grantor Trust.
(d) Any amounts distributed to the Offered P&I Certificates in
respect of interest pursuant to Sections 4.01(b)(xviii) which constitute Cap
Carryover Amounts shall first be deemed distributed by REMIC 4 as a distribution
in respect of the REMIC 4 Components and distributed thereby as a distribution
to the Class CE Certificates in respect of the REMIC 4 Components, and then
distributed to the Offered P&I Certificates from the Grantor Trust as payments
on notional principal contracts in the nature of cap contracts.
Section 4.03 Allocation of Losses.
Realized Losses shall be allocated first against the
Overcollateralization Amount until such amount has been reduced to zero. If,
after giving effect to the distribution of the Principal Distribution Amount on
any Distribution Date the aggregate Certificate Principal Balance of the Offered
Certificates exceeds the Pool Balance as of the end of the related Collection
Period, such excess will be allocated against the Class B, Class M-4, Class M-3,
Class M-2 and Class M-1 Certificates, in that order and until the respective
Certificate Principal Balances thereof are reduced to zero.
Section 4.04 Method of Distribution.
The Trustee shall make distributions in respect of a Distribution
Date to each Certificateholder of record on the related Record Date (other than
as provided in Section 10.01 respecting the final distribution), in the case of
Certificateholders of the Certificates, by wire transfer in immediately
available funds to the account of the Person entitled thereto if such Person
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of such Certificates, or by check mailed by first class mail to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, provided that the Trustee may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.
Section 4.05 Distributions on Book-Entry Certificates.
Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, the Depositor or the Servicer shall have
any responsibility therefor except as otherwise provided by applicable law.
Section 4.06 Statements.
(a) On each Distribution Date, based, as applicable, on the Mortgage
Loan information contained in the Remittance Report, the Trustee shall prepare
and post on its website at www.usbank.com/abs and forward by mail to each Holder
of the Regular Certificates, a statement as to the distributions made on such
Distribution Date:
(i) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Certificates allocable to principal or
reduction of Notional Amount, separately identified and the amount of the
distribution made on such Distribution Date to the Holders of the Class P
Certificates allocable to Prepayment Charges and Servicer Prepayment
Charge Payment Amounts;
(ii) the amount of the distribution made on such Distribution Date
to the Holders of each Class of Certificates allocable to interest or
Class CE Distributable Amount, separately identified;
(iii) the Overcollateralization Amount, the Overcollateralization
Release Amount, the Overcollateralization Deficiency and the
Overcollateralization Target Amount as of such Distribution Date and the
Monthly Excess Interest Amount and Monthly Excess Cashflow Amount for such
Distribution Date;
(iv) the aggregate amount of servicing compensation received by the
Servicer during the related Collection Period;
(v) the aggregate amount of Advances for the related Collection
Period, cumulative unreimbursed Advances and Servicing Advances and
cumulative Nonrecoverable Advances;
(vi) the Pool Balance at the close of business at the end of the
related Collection Period;
(vii) the number, weighted average remaining term to maturity and
weighted average Mortgage Interest Rate of the Mortgage Loans as of the
related Due Date;
(viii) the number and aggregate unpaid principal balance of Mortgage
Loans (a) 30 to 59 days past due on a contractual basis, (b) 60 to 89 days
past due on a contractual basis, (c) 90 or more days past due on a
contractual basis, (d) as to which foreclosure proceedings have been
commenced and (e) in bankruptcy as of the close of business on the last
day of the calendar month preceding such Distribution Date;
(ix) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number of such Mortgage
Loan, the unpaid principal balance and the Principal Balance of such
Mortgage Loan as of the date it became an REO Property;
(x) the book value of any REO Property as of the close of business
on the last Business Day of the calendar month preceding the Distribution
Date, and, cumulatively, the total number and cumulative principal balance
of all REO Properties as of the close of business of the last day of the
preceding Collection Period;
(xi) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xii) the aggregate amount of Realized Losses incurred during the
related Collection Period and the cumulative amount of Realized Losses;
(xiii) the Certificate Principal Balance, or Notional Amount, as
applicable, of each Class of Certificates, after giving effect to the
distributions, and allocations of Realized Losses or Applied Realized Loss
Amounts, as applicable, made on such Distribution Date, separately
identifying any reduction thereof due to allocations of Realized Losses or
Applied Realized Loss Amounts;
(xiv) the Accrued Certificate Interest in respect of each Class of
Certificates for such Distribution Date, separately identifying the
portions thereof attributable to Cap Carryover Amounts, and the respective
portions thereof, if any, remaining unpaid following the distributions
made in respect of such Certificates on such Distribution Date;
(xv) the aggregate amount of any Prepayment Interest Shortfalls for
such Distribution Date, to the extent not covered by payments by the
Servicer pursuant to Section 3.23;
(xvi) the amount of the Trustee Fee paid;
(xvii) the Cap Carryover Amounts distributed on such Distribution
Date and the amounts remaining after giving effect to distributions
thereof on such Distribution Date;
(xviii) any Overcollateralization Deficiency after giving effect to
the distribution of principal on such Distribution Date;
(xix) whether a Trigger Event has occurred and is continuing, and
the cumulative Realized Losses, as a percentage of the original Pool
Balance;
(xx) the Available Funds;
(xxi) the rate at which interest accrues for each Class of
Certificates for such Distribution Date;
(xxii) the information contained in the Liquidation Report for such
Distribution Date;
(xxiii) the aggregate Principal Balance of Mortgage Loans purchased
by the Servicer or Seller during the related Collection Period and
indicating the Section of this Agreement requiring or allowing the
purchase of each such Mortgage Loan;
(xxiv) the aggregate Principal Balance of the Mortgage Loans
repurchased by the Servicer during the related Collection Period in
connection with Section 3.16;
(xxv) the amount of the Credit Risk Manager Fee paid; and
(xxvi) the Mortgage Loan identifying number of each Mortgage Loan
with a Prepayment Charge that was the subject of a Principal Prepayment in
full during the related Collection Period, the Prepayment Charge listed on
each related Mortgage Note and the Prepayment Charge collected or the
Servicer Prepayment Charge Payment Amount paid by the Servicer with
respect to each such Mortgage Loan.
The Trustee may fully rely upon and shall have no liability with
respect to information with respect to the Mortgage Loans provided by the
Servicer.
In the case of information furnished pursuant to subclauses (i),
(ii) and (xiii) above, the amounts shall be expressed in a separate section of
the report as a dollar amount for each Class for each $1,000 original dollar
amount as of the Cut-off Date.
(b) Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Certificateholder of a Regular Certificate, if requested
in writing by such Person, such information as is reasonably necessary to
provide to such Person a statement containing the information set forth in
subclauses (i), (ii), (xiv) and (xvii) above, aggregated for such calendar year
or applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the
Class R Certificateholder a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to Class R
Certificateholder by the Trustee pursuant to any requirements of the Code as
from time to time in force.
Section 4.07 Remittance Reports; Advances.
(a) On the second Business Day following each Determination Date,
the Servicer shall deliver to the Trustee by telecopy (or by such other means as
the Servicer and the Trustee may agree from time to time) a Remittance Report
with respect to the related Distribution Date. On the same date, the Servicer
shall electronically forward to the Trustee in such medium as may be agreed
between the Servicer and the Trustee the information set forth in such
Remittance Report with respect to the related Distribution Date and such
information reasonably available to the Servicer necessary in order for the
Trustee to perform the calculations necessary to make the distributions
contemplated by Section 4.01, 4.02 and 4.03 and to prepare the statements to
Certificateholders contemplated by Section 4.06. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by the Servicer.
(b) The amount of Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 4.07(d), the aggregate amount
of Monthly Payments (net of the related Servicing Fee), due during the related
Collection Period in respect of the Mortgage Loans, which Monthly Payments were
delinquent on a contractual basis as of the close of business on the related
Determination Date. The Servicer shall not be obligated to make any Advance with
respect to REO Properties.
On or before the close of business New York time on the Servicer
Remittance Date, the Servicer shall remit in immediately available funds to the
Trustee for deposit in the Distribution Account an amount equal to the aggregate
amount of Advances, if any, to be made in respect of the Mortgage Loans for the
related Distribution Date either (i) from its own funds or (ii) from the
Collection Account, to the extent of funds held therein for future distribution
(in which case it will cause to be made an appropriate entry in the records of
the Collection Account that amounts held for future distribution have been, as
permitted by this Section 4.07, used by the Servicer in discharge of any such
Advance) or (iii) in the form of any combination of (i) and (ii) aggregating the
total amount of Advances to be made by the Servicer with respect to the Mortgage
Loans. Any amounts held for future distribution and so used shall be
appropriately reflected in the Servicer's records and replaced by the Servicer
by deposit in the Collection Account on or before any future Servicer Remittance
Date to the extent that the Available Funds for the related Distribution Date
(determined without regard to Advances to be made on the Servicer Remittance
Date) shall be less than the total amount that would be distributed to the
Classes of Certificateholders pursuant to Section 4.01 and 4.02 on such
Distribution Date if such amounts held for future distributions had not been so
used to make Advances. The Trustee will provide notice to the Servicer by
telecopy by the close of business on any Servicer Remittance Date in the event
that the amount remitted by the Servicer to the Trustee on such date is less
than the Advances required to be made by the Servicer for the related
Distribution Date, as set forth in the related Remittance Report.
(c) The obligation of the Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
earlier of such time as the Trust acquires title to the related Mortgaged
Property or such Mortgage Loan is paid in full by the Mortgagor or disposed of
by the Trust, or until the recovery of all Liquidation Proceeds thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if such
Advance would, if made, constitute a Nonrecoverable Advance. The determination
by the Servicer that it has made a Nonrecoverable Advance or that any proposed
Advance, if made, would constitute a Nonrecoverable Advance, shall be evidenced
by an Officers' Certificate of the Servicer delivered to the Depositor and the
Trustee.
Section 4.08 REMIC Distributions.
(a) REMIC 4. On each Distribution Date, the timing and amounts of
principal and interest distributions and allocations of Applied Realized Loss
Amounts and Realized Loss Amortization Amounts on each Class of REMIC 4 Regular
Interests (other than the REMIC 4 Components) and the Class A-IO Certificates
shall be identical to the timing, amounts and allocations on the corresponding
Classes of Certificates (other than the Class CE, Class P and Class R
Certificates), except that the Pass-Through Rate of any P&I Regular Interest
shall not exceed the pass-through rate as set forth in the definition thereof,
and any amount paid in respect of a Class of Offered P&I Certificates as a Cap
Carryover Amount, whether with respect to the Distribution Date on which such
amount is paid or a prior Distribution Date, shall be treated as a distribution
by REMIC 4 in respect of the REMIC 4 Components, beneficially owned by the Class
CE Certificates, then as paid by the Class CE Certificates to the applicable
Class of Offered P&I Certificates as a payment from the Grantor Trust outside of
the REMICs. Interest (and in the case of the Class T4-4 Interest, principal)
shall be deemed distributed to each Class of REMIC 4 Components as follows: (i)
the Class T4-4, Class T4-11, Class T4-12 and Class T4-13 Interests shall be
entitled to all distributions on the Class T3-4, Class T3-11, Class T3-12 and
Class T3-13 Interests, respectively; and (ii) the Class T4-A1IO, Class T4-A2IO,
Class T4-M1IO, Class T4-M2-IO, Class T4-M3IO, Class T4-M4IO and Class T4-BIO
Interests shall be entitled to a specified portion of interest payments
consisting of the excess of interest distributable on each of the Class T3-A1,
Class T3-A2, Class T3-M1, Class T3-M2, Class T3-M3, Class T3-M4 and Class T3-B
Interests over interest distributable on the Class T4-A1, Class T4-A2, Class
T4-M1, Class T4-M2, Class T4-M3, Class T4-M4 and Class T4-B Interests,
respectively. Any shortfalls of interest, including any Realized Losses
allocated to reduce the Subsequent Overcollateralization Amount, shall be borne,
first, by the REMIC 4 Components, pro rata based on interest accrued, before
being allocated to the applicable P&I Regular Interests. Realized Losses
allocated to the Class T4-4 Interest shall equal Realized Losses allocated to
the Class T3-4 Interest pursuant to Section 4.08(b). The Class CE Certificates
shall be deemed to receive the aggregate of the amounts distributable in respect
of the REMIC 4 Components, notwithstanding that a portion of such amount is
applied to pay any Cap Carryover Amount. Amounts deemed distributed in respect
of the P&I Regular Interests shall be treated as held by the Grantor Trust for
distribution in accordance with Sections 4.01 and 4.02. Any portion of the
Available Funds remaining in REMIC 4 on a Distribution Date shall be distributed
to the Class R Certificate in respect of the Class R-4 Interest.
(b) REMIC 3. On each Distribution Date, the timing and amounts of
principal and interest distributions and allocations of Applied Realized Loss
Amounts and Realized Loss Amortization Amounts on the Classes of REMIC 3 Regular
Interests identified as Corresponding Classes shall be identical to the timing,
amounts and allocations in respect of Corresponding Classes of REMIC 4 Regular
Interests and the Class A-IO Certificates pursuant to Section 4.08(a). The Class
T3-4 Interest shall be entitled to all distributions on the Class T2-4 Interest.
Interest shortfalls will reduce interest payable, first, on the Class T3-4
Interest, to the same extent that interest shortfalls are allocable to the Class
T2-4 Interest; second, on the Class T3-11, Class T3-12 and Class T3-13
Interests, pro rata; third, on the Class T3-B, Class T3-M4, Class T3-M3, Class
T3-M2 and Class T3-M1 Interests, in that order; and fourth, on the Class T3-A1
and Class T3-A2 Interests, pro rata; provided, that the portion of the interest
payable on the Class T3-B, Class T3-M4, Class T3-M3, Class T3-M2, Class T3-M1,
Class T3-A1 and Class T3-A2 Interests attributable to the Class T4-BIO, Class
T4-M4IO, Class T4-M3IO, Class T4-M2IO, Class T4-M1IO, Class T4-A1IO and Class
T4-A2IO Interests shall bear interest shortfalls pro rata and prior to the
allocation of any remaining shortfalls to such Interests. Amounts of principal
and interest distributed in respect of, and Realized Losses allocated to, the
Class T3-4 Interest shall equal the allocations made to the Class T2-4 Interest,
reduced by any allocation of interest shortfalls to the Class T3-4 Interest
pursuant to the preceding sentence. Amounts in the Distribution Account deemed
distributed in respect of the REMIC 3 Regular Interests shall be treated as held
by REMIC 4 for distribution in accordance with Sections 4.08(a). Any portion of
Available Funds remaining in REMIC 3 on a Distribution Date shall be distributed
to the Class R Certificate in respect of the Class R-3 Interest.
(c) REMIC 2. On each Distribution Date, the timing and amounts of
principal distributions and allocations of Realized Losses on each Class of
REMIC 2 Regular Interests shall be identical to the timing, amounts and
allocations in respect of the corresponding Classes of REMIC 1 Regular Interests
pursuant to Section 4.08(d). For these purposes, the Class T2-1 and Class T2-11
Interests correspond to the Class T1-1 Interest, the Class T2-2 and Class T2-12
Interests correspond to the Class T1-2 Interest, the Class T2-3 and Class T2-13
Interests correspond to the Class T1-3 Interest, and the Class T2-4 Interest
corresponds to the Class T1-4 Interest. Interest will accrue on each of the
Class T2-1, Class T2-2 and Class T2-3 Interests at the REMIC 2 Pass-Through
Rate. Interest will accrue on each of the Class T2-11, Class T2-12 and Class
T2-13 Interests at the excess, if any, of the Adjusted Weighted Average Net
Mortgage Rate over the REMIC 2 Pass-Through Rate. Interest will accrue on the
Class T2-4 Interest at the Adjusted Weighted Average Net Mortgage Rate. Any
shortfalls of interest will be allocated, first, to the Class T2-4 Interest to
the extent that interest shortfalls are allocated to the Class T1-4 Interest;
second, pro rata, to the Class T2-11, Class T2-12 and Class T2-13 Interests; and
third, pro rata, to the Class T2-1, Class T2-2 and Class T2-3 Interests. Amounts
in the Distribution Account deemed distributed in respect of the REMIC 2 Regular
Interests shall be treated as held by REMIC 3 for distribution in accordance
with Section 4.08(b). Any portion of Available Funds remaining in REMIC 2 on a
Distribution Date shall be distributed to the Class R Certificate in respect of
the Class R-2 Interest.
(d) REMIC 1. On each Distribution Date, the REMIC 1 Regular
Interests shall receive distributions of interest and principal equal in the
aggregate to amounts distributable pursuant to Sections 4.01 and 4.02 (other
than to the Class R Certificate in respect of the Class R-4 Interest) from
amounts on deposit in the Distribution Account. Such amounts with respect to
interest shall accrue at the Adjusted Weighted Average Net Mortgage Rate on the
Class T1-1, Class T1-2, Class T1-3 and the Class T1-4 Regular Interests. Any
shortfalls of interest will be allocated, first, to the Class T1-4 Interest, to
the extent that interest shortfalls are allocated to the Class TB-4 Interest;
and, second, to the Class T1-1, Class T1-2 and Class T1-3 Interests, pro rata
based on interest accrued. Amounts in reduction of principal balance of the
REMIC 1 Regular Interests shall be allocated to the Class T1-1, Class T1-2 and
Class T1-3 Interests in the aggregate in an amount equal to the Principal
Remittance Amount less the lesser of the Overcollateralization Release Amount
and the Overcollateralization Amount. Such aggregate amount shall be allocated
so that the principal balance of the Class T1-1, Class T1-2 and Class T1-3
Interests equal the amounts specified in the definitions thereof in Article I.
Amounts in reduction of principal balance shall be allocated to the Class T1-4
Interest, to the extent such amounts are allocated to the Class TB-4 Interest.
Realized Losses shall be allocated first to the Class T1-4 Interest, to the
extent such Realized Losses are allocated to the Class TB-4 Interest, and then
pro rata to the Class T1-1, Class T1-2 and Class T1-3 Interests. Such amounts
with respect to principal and any Realized Losses with respect to principal
shall reduce the principal balances of the REMIC 1 Regular Interests so that, in
the aggregate, such balances correspond to the Pool Balance of the Mortgage
Loans as of the last day of the related Collection Period. Amounts in the
Distribution Account deemed distributed in respect of the REMIC 1 Regular
Interests shall be treated as held by REMIC 2 for distribution in accordance
with Section 4.08(c). Any amounts remaining in REMIC 1 on a Distribution Date
shall be distributed to the Class R Certificate in respect of the Class R-1
Interest.
(e) REMICs A and B.
(1) REMIC A. On each Distribution Date, the REMIC A
Regular Interests shall receive distributions of interest and
principal equal in the aggregate to amounts distributable
pursuant to Sections 4.01 and 4.02 (other than to the Class R
Certificate in respect of the Class R-4 Interest) from amounts
on deposit in the Distribution Account. Such amounts with
respect to interest shall accrue at the Weighted Average Net
Mortgage Rate on each REMIC A Regular Interest. Any shortfalls
of interest will be allocated, first, to the Class TA-4
Interest, second, to the Class TA-1 Interest, and third, to
Class TA-2 Interest. Amounts in reduction of principal balance
of the REMIC A Regular Interests shall be allocated first, to
the Class TA-4 Interest such that the principal balance of the
Class TA-4 Interest is equal to the Remaining
Overcollateralization Amount and then to the Class TA-1 and
TA-2 Interest as described in the following two sentences.
Amounts in reduction of principal balance of the REMIC A
Regular Interests shall be allocated to the Class TA-1 and
Class TA-2 Interests in the aggregate in an amount equal to
the Principal Remittance Amount less the lesser of the
Overcollateralization Release Amount and the
Overcollateralization Amount. Such aggregate amount shall be
allocated first to the Class TA-1 Interest, until such Class
is reduced to zero and second to the Class TA-2 Interest,
until such Class is reduced to zero. Realized Losses shall be
allocated first to the Class TA-4 Interest, until such Class
is reduced to zero, second to the Class TA-1 Interest, until
such Class is reduced to zero, and third to the Class TA-2
Interest, until such Class is reduced to zero. Such amounts
with respect to principal and any Realized Losses with respect
to principal shall reduce the principal balances of the REMIC
A Regular Interests so that, in the aggregate, such balances
correspond to the Pool Balance of the Mortgage Loans as of the
last day of the related Collection Period. Amounts in the
Distribution Account deemed distributed in respect of the
REMIC A Regular Interests shall be treated as held by REMIC B
for distribution in accordance with Section 4.08(e)(2). Any
amounts remaining in REMIC A on a Distribution Date shall be
distributed to the Class R Certificate in respect of the Class
R-A Interest.
(2) REMIC B. On each Distribution Date, the timing and
amounts of principal distributions and allocations of Realized
Losses on each Class of REMIC B Regular Interests shall be
identical to the timing, amounts and allocations in respect of
the corresponding Classes of REMIC A Regular Interests
pursuant to Section 4.08(e)(1). For these purposes, the Class
TB-1 Interest corresponds to the Class TA-1 Interest, the
Class TB-2 and Class TB-AIO Interests correspond to the Class
TA-2 Interest, and the Class TB-4 Interest corresponds to the
Class TA-4 Interest. Interest will accrue on each of the Class
TB-1 and Class TB-4 Interest at the Weighted Average Net
Mortgage Rate. Interest will accrue on the Class TB-2 Interest
at the excess, if any, of the Weighted Average Net Mortgage
Rate over the Class A-IO Pass-Through Rate. Interest will
accrue on the Class TB-AIO Interest at the Class A-IO
Pass-Through Rate. Any shortfalls of interest will be
allocated, first, to the Class TB-4 Interest to the extent
that interest shortfalls are allocated to the Class TA-4
Interest; second, to the Class TB-1 Interest to the extent
that interest shortfalls are allocated to the Class TA-1
Interest; and third, pro rata, to the Class TB-2 and Class
TB-AIO Interests to the extent that interest shortfalls are
allocated to the Class TA-2 Interest. Amounts in the
Distribution Account deemed distributed in respect of the
REMIC B Regular Interests shall be treated as held by REMIC 1
for distribution in accordance with Section 4.08(d). Any
portion of Available Funds remaining in REMIC B on a
Distribution Date shall be distributed to the Class R
Certificate in respect of the Class R-B Interest.
(f) [Reserved]
(g) Notwithstanding anything to the contrary contained herein, the
above distributions in this Section 4.08 (other than on the Certificates) are
deemed distributions, and distributions of funds from the Distribution Account
shall be made only in accordance with Sections 4.01 and 4.02 hereof.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.
Each of the Class A-1, Class A-2, Class A-IO, Class M-1, Class M-2,
Class M-3, Class M-4, Class B, Class CE, Class P and Class R Certificates shall
be substantially in the forms annexed hereto as exhibits, and shall, on original
issue, be executed by the Trustee and authenticated and delivered by the
Certificate Registrar to or upon the receipt of a Written Order to Authenticate
from the Depositor concurrently with the sale and assignment to the Trustee of
the Trust Fund. Each Class of the Offered Certificates shall be initially
evidenced by one or more Certificates representing a Percentage Interest with a
minimum dollar (or notional amount) denomination of $25,000 and integral
multiples of $1 in excess thereof. The Class CE and Class P Certificates are
issuable only in minimum Percentage Interests of 10%. The Class R Certificate is
issuable only as a single certificate.
The Certificates shall be executed on behalf of the Trust by manual
or facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Certificate Registrar substantially in the form
provided for herein, and such authentication upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Offered Certificates
(other than the Class B Certificates) shall be Book-Entry Certificates. The
Class B, Class CE, Class P and Class R Certificates shall not be Book-Entry
Certificates but shall be issued in fully registered certificate form.
Section 5.02 Registration of Transfer and Exchange of
Certificates.
(a) The Certificate Registrar shall cause to be kept at the
Corporate Trust Office of the Trustee a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Certificate Registrar
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee shall initially serve
as Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Trustee as
Certificate Registrar shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall
apply to the Certificate Registrar to the same extent as they apply to the
Trustee. Any Certificate Registrar appointed in accordance with this Section
5.02(a) may at any time resign by giving at least 30 days' advance written
notice of resignation to the Trustee, the Servicer and the Depositor, such
resignation to become effective upon appointment of a successor Certificate
Registrar.
Upon surrender for registration of transfer of any Certificate at
any office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of the Class R Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute and the Certificate Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be
exchanged for other Certificates in authorized denominations and the same
aggregate Percentage Interests, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute on behalf of the Trust and
the Certificate Registrar shall authenticate and deliver the Certificates which
the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or exchange
shall (if so required by the Trustee or the Certificate Registrar) be duly
endorsed by, or be accompanied by a written instrument of transfer satisfactory
to the Trustee and the Certificate Registrar duly executed by, the Holder
thereof or his attorney duly authorized in writing.
(b) Upon original issuance, the Book-Entry Certificates shall be
issued in the form of one or more typewritten certificates, to be delivered to
the Depository, the initial Depository, by, or on behalf of, the Depositor; or
to, and deposited with the Certificate Custodian, on behalf of the Depository,
if directed to do so pursuant to instructions from the Depository. Except as
provided in paragraph (c) below, the Book-Entry Certificates shall at all times
remain registered in the name of the Depository or its nominee and at all times:
(i) registration of such Certificates may not be transferred by the Trustee
except to another Depository; (ii) the Depository shall maintain book-entry
records with respect to the Certificate Owners and with respect to ownership and
transfers of such Certificates; (iii) ownership and transfers of registration of
such Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall for all purposes deal with the Depository as representative of
the Certificate Owners of the Certificates for purposes of exercising the rights
of Holders under this Agreement, and requests and directions for and votes of
such representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; (vi) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners; and (vii) the direct participants of the Depository shall have no rights
under this Agreement under or with respect to any of the Certificates held on
their behalf by the Depository, and the Depository may be treated by the Trustee
and its agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures. The parties hereto
are hereby authorized to execute a Letter of Representations with the Depository
or take such other action as may be necessary or desirable to register a
Book-Entry Certificate to the Depository. In the event of any conflict between
the terms of any such Letter of Representation and this Agreement, the terms of
this Agreement shall control.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Termination, the Certificate Owners of each Class of Book-Entry Certificates
representing Percentage Interests of such Classes aggregating not less than 51%
advises the Trustee and Depository through the Financial Intermediaries and the
Depository Participants in writing that the continuation of a book-entry system
through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Certificate Owners is no longer
in the best interests of the Certificate Owners. Upon surrender to the
Certificate Registrar of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall, at the Depositor's expense, in the case of (ii) above, or the
Seller's expense, in the case of (i) and (iii) above, execute on behalf of the
Trust and the Certificate Registrar shall authenticate the Definitive
Certificates. None of the Depositor or the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Servicer, any Paying
Agent and the Depositor shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
(d) Except with respect to a transfer of the Private Certificates
between or among the Depositor, the Seller, their affiliates or both, no
transfer, sale, pledge or other disposition of any Private Certificate shall be
made unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such transfer, (i) unless such transfer is made in reliance upon
Rule 144A (as evidenced by the investment letter delivered to the Certificate
Registrar, in substantially the form attached hereto as Exhibit J) under the
1933 Act, the Certificate Registrar and the Depositor shall require a written
Opinion of Counsel (which may be in-house counsel) acceptable to and in form and
substance reasonably satisfactory to the Certificate Registrar and the Depositor
that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the 1933 Act or is being made
pursuant to the 1933 Act, which Opinion of Counsel shall not be an expense of
the Certificate Registrar or the Depositor or (ii) the Certificate Registrar
shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit L) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit J) acceptable to and in form and substance reasonably satisfactory to
the Depositor and the Certificate Registrar certifying to the Depositor and the
Certificate Registrar the facts surrounding such transfer, which investment
letter shall not be an expense of the Certificate Registrar or the Depositor.
The Holder of a Private Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Certificate Registrar and the Depositor
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless
the Certificate Registrar shall have received either (i) a representation from
the transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Certificate Registrar and the Depositor, (such requirement
is satisfied only by the Certificate Registrar's receipt of a representation
letter from the transferee substantially in the form of Exhibit I hereto, as
appropriate), to the effect that such transferee is not an employee benefit plan
or arrangement subject to Section 406 of ERISA or a plan subject to Section 4975
of the Code, nor a person acting on behalf of any such plan or arrangement nor
using the assets of any such plan or arrangement to effect such transfer or (ii)
(except in the case of a Class R, Class CE or Class P Certificate) if the
purchaser is an insurance company, a representation that the purchaser is an
insurance company which is purchasing such Certificates with funds contained in
an "insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and that the
purchase and holding of such Certificates are covered under Sections I and III
of PTCE 95-60 or (iii) (except in the case of the Class R Certificate) in the
case of any such ERISA Restricted Certificate presented for registration in the
name of an employee benefit plan subject to ERISA or a plan or arrangement
subject to Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel satisfactory to the Certificate Registrar, to the effect that
the purchase or holding of such ERISA Restricted Certificate will not result in
the assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Depositor, the Servicer, the Trustee or the Certificate Registrar to any
obligation in addition to those expressly undertaken in this Agreement or to any
liability. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Certificate Registrar by
the acceptance by a Certificate Owner of the beneficial interest in any such
Class of ERISA-Restricted Certificates, unless the Certificate Registrar shall
have received from the transferee an alternative representation acceptable in
form and substance to the Depositor. Notwithstanding anything else to the
contrary herein, any purported transfer of an ERISA-Restricted Certificate to or
on behalf of an employee benefit plan subject to ERISA or to the Code without
the delivery to the Certificate Registrar of an Opinion of Counsel satisfactory
to the Certificate Registrar as described above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in the
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Depositor or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (v) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in the Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in the
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Certificate Registrar of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in the Class R
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in the Class R Certificate, the Certificate Registrar shall as a
condition to registration of the transfer, require delivery to it, in form
and substance satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit K hereto from the proposed
transferee to the effect that, among other things, such transferee is a
Permitted Transferee and that it is not acquiring its Ownership Interest in the
Class R Certificate that is the subject of the proposed transfer as a nominee,
trustee or agent for any Person who is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Class R Certificate.
(iv) Any attempted or purported transfer of any Ownership Interest
in the Class R Certificate in violation of the provisions of this Section
shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation of
the provisions of this Section, become the Holder of the Class R
Certificate, then the prior Holder of such Class R Certificate that is a
Permitted Transferee shall, upon discovery that the registration of
transfer of such Class R Certificate was not in fact permitted by this
Section, be restored to all rights as Holder thereof retroactive to the
date of registration of transfer of such Class R Certificate. The
Certificate Registrar shall be under no liability to any Person for any
registration of transfer of the Class R Certificate that is in fact not
permitted by this Section or for making any distributions due on such
Class R Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as
the Certificate Registrar received the documents specified in clause
(iii). The Trustee shall be entitled to recover from any Holder of the
Class R Certificate that was in fact not a Permitted Transferee at the
time such distributions were made all distributions made on such Class R
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such Class
R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in the Class R Certificate in violation of the
restrictions in this Section, then the Certificate Registrar shall have
the right but not the obligation, without notice to the Holder of the
Class R Certificate or any other Person having an Ownership Interest
therein, to notify the Depositor to arrange for the sale of the Class R
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Depositor or its affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of the Class R Certificate
that is a Permitted Transferee, except that in the event that the Trustee
determines that the Holder of the Class R Certificate may be liable for
any amount due under this Section or any other provisions of this
Agreement, the Trustee may withhold a corresponding amount from such
remittance as security for such claim. The terms and conditions of any
sale under this clause (v) shall be determined in the sole discretion of
the Trustee and it shall not be liable to any Person having an Ownership
Interest in the Class R Certificate as a result of its exercise of such
discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in the Class R Certificate in violation of the
restrictions in this Section, then the Trustee will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations. The Trustee shall be entitled to
reasonable compensation for providing such information from the person to
whom it is provided.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Certificate Registrar, in form and substance satisfactory to the Certificate
Registrar, (i) written notification from each Rating Agency that the removal of
the restrictions on Transfer set forth in this Section will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC hereunder to
fail to qualify as a REMIC.
(e) No service charge shall be made for any registration of transfer
or exchange of Certificates of any Class, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, and the Certificate Registrar shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section, shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 5.04 Persons Deemed Owners.
The Servicer, the Depositor, the Trustee, the Certificate Registrar,
any Paying Agent and any agent of the Servicer, the Depositor, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and 4.02 and for all other purposes whatsoever, and none of the Servicer, the
Trust, the Trustee nor any agent of any of them shall be affected by notice to
the contrary.
Section 5.05 Appointment of Paying Agent.
The Paying Agent shall make distributions to Certificateholders from
the Distribution Account pursuant to Section 4.01 and 4.02 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws of
the United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor and the Rating Agencies. The
Trustee as Paying Agent shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall
apply to the Paying Agent to the same extent as they apply to the Trustee. Any
Paying Agent appointed in accordance with this Section 5.05 may at any time
resign by giving at least 30 days' advance written notice of resignation to the
Trustee, the Servicer and the Depositor, such resignation to become effective
upon appointment of a successor Paying Agent.
ARTICLE VI
THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Servicer and the Depositor.
The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Servicer herein. The Depositor shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by the
Depositor.
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or the Depositor.
Any entity into which the Servicer or the Depositor may be merged or
consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Servicer or the Depositor shall be a party, or any
corporation succeeding to the business of the Servicer or the Depositor, shall
be the successor of the Servicer or the Depositor, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor servicer shall satisfy
all the requirements of Section 7.02 with respect to the qualifications of a
successor servicer.
Section 6.03 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Trust or
the Certificateholders for any action taken or for refraining from the taking of
any action by the Servicer in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or negligence in the
performance of duties of the Servicer or by reason of its reckless disregard of
its obligations and duties of the Servicer hereunder; provided, further, that
this provision shall not be construed to entitle the Servicer to indemnity in
the event that amounts advanced by the Servicer to retire any senior lien exceed
Liquidation Proceeds (in excess of related liquidation expenses) realized with
respect to the related Mortgage Loan. The Servicer and any director or officer
or employee or agent of the Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Servicer and any director or officer or
employee or agent of the Servicer shall be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of its
reckless disregard of obligations and duties hereunder. The Servicer may
undertake any such action which it may deem necessary or desirable in respect of
this Agreement, and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the reasonable
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Trust and the Servicer shall be
entitled to pay such expenses from the proceeds of the Trust or to be reimbursed
therefor pursuant to Section 3.05 upon presentation to the Trustee of
documentation of such expenses, costs and liabilities. The Servicer's right to
indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Servicer pursuant to Section 6.04 or 7.01 with
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination). This paragraph shall apply to the Servicer solely
in its capacity as Servicer hereunder and in no other capacities.
Section 6.04 Servicer Not to Resign.
Subject to the provisions of Section 7.01 and Section 6.02, the
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of its obligations or duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it
or its subsidiaries or Affiliates, the other activities of the Servicer so
causing such a conflict being of a type and nature carried on by the Servicer or
its subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of the following conditions: (a) the Servicer has proposed a
successor servicer to the Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Trustee; and (b) each Rating Agency
shall have delivered a letter to the Trustee prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Servicer hereunder will not result in the reduction or withdrawal of
the then current rating of the Regular Certificates or the ratings that are in
effect; provided, however, that no such resignation by the Servicer shall become
effective until such successor servicer or, in the case of (i) above, the
Trustee shall have assumed the Servicer's responsibilities and obligations
hereunder or the Trustee shall have designated a successor servicer in
accordance with Section 7.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections 7.01
and 7.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee.
Section 6.05 Delegation of Duties.
(a) In the ordinary course of business, the Servicer at any time may
delegate any of its duties hereunder to any Person, including any of its
Affiliates, who agrees to conduct such duties in accordance with standards
comparable to those set forth in Section 3.01. Such delegation shall not relieve
the Servicer of its liabilities and responsibilities with respect to such duties
and shall not constitute a resignation within the meaning of Section 6.04. The
Servicer shall provide the Trustee and the Rating Agencies with 60 days prior
written notice prior to the delegation of any of its duties to any Person other
than any of the Servicer's Affiliates or their respective successors and
assigns.
(b) The Servicer is hereby authorized to enter into a financing or
other facility (any such arrangement, an "Advance Facility") under which (1) the
Servicer assigns or pledges to another Person (together with such Person's
successors and assigns, an "Advancing Person") the Servicer's rights under this
Agreement to be reimbursed for any Advances or Servicing Advances and/or (2) an
Advancing Person agrees to fund some or all Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Depositor, the Trustee, the Certificateholders or any other party is
required before the Servicer may enter into an Advance Facility, although the
Servicer shall provide each party to this Agreement with at least 30 days'
advance written notice. Notwithstanding the existence of any Advance Facility
under which an Advancing Person agrees to fund Advances and/or Servicing
Advances on the Servicer's behalf, the Servicer shall remain obligated pursuant
to this Agreement to make Advances and Servicing Advances pursuant to and as
required by this Agreement. If the Servicer enters into an Advance Facility, and
for so long as an Advancing Person remains entitled to receive reimbursement for
any Advances and/or Servicing Advances, as applicable, pursuant to this
Agreement, then the Servicer shall not be permitted to reimburse itself for
Advances and/or Servicing Advances, but instead the Servicer shall be required
to remit amounts collected that would otherwise be retained by the Servicer to
reimburse it for previously unreimbursed Advances ("Advance Reimbursement
Amounts") and/or previously unreimbursed Servicing Advances ("Servicing Advance
Reimbursement Amounts" and together with Advance Reimbursement Amounts,
"Reimbursement Amounts") (in each case to the extent such type of Reimbursement
Amount is included in the Advance Facility) in accordance with the documentation
establishing the Advance Facility to such Advancing Person or to a trustee,
agent or custodian (an "Advance Facility Trustee") designated by such Advancing
Person. Notwithstanding anything to the contrary herein, in no event shall
Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be
included in the "Available Funds" or distributed to Certificateholders.
Reimbursement Amounts shall consist solely of amounts in respect of
Advances and/or Servicing Advances made with respect to the Mortgage Loans for
which the Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming the Servicer had made the related Advance(s) and/or
Servicing Advance(s). Notwithstanding the foregoing, no Person shall be entitled
to reimbursement from funds held in the Collection Account for future
distribution to Certificateholders pursuant to this Agreement. None of the
Depositor or the Trustee shall have any duty or liability with respect to the
calculation or payment of any Reimbursement Amount, nor shall the Depositor or
the Trustee have any responsibility to track or monitor the administration of
the Advance Facility or the payment of Reimbursement Amounts to the related
Advancing Person or Advance Facility Trustee. The Servicer shall maintain and
provide to any successor servicer and (upon request) the Trustee a detailed
accounting on a loan by loan basis as to amounts advanced by, pledged or
assigned to, and reimbursed to any Advancing Person. The successor servicer
shall be entitled to rely on any such information provided by the predecessor
Servicer, and the successor servicer shall not be liable for any errors in such
information.
An Advancing Person who receives an assignment or pledge of the
rights to be reimbursed for Advances and/or Servicing Advances, and/or whose
obligations hereunder are limited to the funding of Advances and/or Servicing
Advances shall not be required to meet the criteria for qualification of a
subservicer set forth in this Agreement.
The documentation establishing any Advance Facility shall require
that Reimbursement Amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed Advances or Servicing Advances (as the
case may be) made with respect to that Mortgage Loan on a "first in, first out"
(FIFO) basis. Such documentation shall also require the Servicer to provide to
the related Advancing Person or Advance Facility Trustee loan by loan
information with respect to each Reimbursement Amount distributed to such
Advancing Person or Advance Facility Trustee on each Distribution Date, to
enable the Advancing Person or Advance Facility Trustee to make the FIFO
allocation of each Reimbursement Amount with respect to each Mortgage Loan. The
Servicer shall remain entitled to be reimbursed by the Advancing Person or
Advance Facility Trustee for all Advances and Servicing Advances funded by the
Servicer to the extent the related rights to be reimbursed therefor have not
been assigned or pledged to an Advancing Person.
The Servicer shall indemnify the Depositor, the Trustee, any
successor servicer and the Trust Fund resulting from any claim by the related
Advancing Person, except to the extent that such claim, loss, liability or
damage resulted from or arose out of negligence, recklessness or willful
misconduct on the part of the Depositor, the Trustee or any successor servicer.
Any amendment to this Section 6.05(b) 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 6.05(b), including
amendments to add provisions relating to a successor servicer, may be entered
into by the Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 11.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. Prior to
entering into an Advance Facility, the Servicer shall notify the lender under
such facility in writing that: (a) the Advances and/or Servicing Advances
financed by and/or pledged to the lender are obligations owed to the Servicer on
a non-recourse basis 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 Trustee and the Trust are not
otherwise obligated or liable to repay any Advances and/or Servicing Advances
financed by the lender; (b) the Servicer will be responsible for remitting to
the lender the applicable amounts collected by it as reimbursement for Advances
and/or Servicing Advances funded by the lender, subject to the restrictions and
priorities created in this Agreement; and (c) the Trustee shall not have any
responsibility to track or monitor the administration of the financing
arrangement between the Servicer and the lender.
ARTICLE VII
DEFAULT
Section 7.01 Servicer Events of Termination.
(a) If any one of the following events ("Servicer Events of
Termination") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Advance; or (B) any
other failure by the Servicer to deposit in the Collection Account or
Distribution Account any deposit required to be made under the terms of
this Agreement, which failure continues unremedied for a period of one
Business Day; or
(ii) The failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 days, or the
failure by the Servicer duly to observe or perform, in any material
respect, any other covenants, obligations or agreements of the Servicer as
set forth in this Agreement, which failure continues unremedied for a
period of 30 days, after the date (A) on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or by any Holder of a Regular Certificate
evidencing at least 25% of the Voting Rights or (B) actual knowledge of
such failure by a Servicing Officer of the Servicer; or
(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 days; or
(iv) The Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator or receiver or liquidator or similar
person in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property; or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver, liquidator or
similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 60 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations; or
(v) The aggregate amount of Realized Losses on the Mortgage Loans
incurred since the Cut-off Date through the last day of the related
Collection Period divided by the Cut-off Date Aggregate Principal Balance
exceeds the applicable percentages set forth below with respect to such
Distribution Date:
DISTRIBUTION DATE PERCENTAGE OF MORTGAGE
OCCURRING IN LOANS
----------------------------- ----------------------
August 2002 through July 2004 2.50%
August 2004 through July 2005 4.00%
August 2005 through July 2006 5.25%
August 2006 and thereafter 6.70%
(b) Then, and in each and every such case, so long as a Servicer
Event of Termination shall not have been remedied within the applicable grace
period, (x) with respect solely to clause (i)(A) above, if such Advance is not
made by 2:00 P.M., New York time, on the Business Day immediately following the
Servicer Remittance Date, the Trustee may terminate all of the rights and
obligations of the Servicer under this Agreement and the Trustee, or a successor
servicer appointed in accordance with Section 7.02, shall immediately make such
Advance and assume, pursuant to Section 7.02, the duties of a successor servicer
and (y) in the case of (i)(B), (ii), (iii), (iv) and (v) above, the Trustee
shall, at the direction of the Holders of each Class of Regular Certificates
evidencing Percentage Interests aggregating not less than 51%, by notice then
given in writing to the Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency and the Depositor. On or after the receipt by the
Servicer (and by the Trustee if such notice is given by the Holders) of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Certificates or the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee pursuant to and under this Section or
successor servicer appointed in connection with Section 7.02; and, without
limitation, the Trustee or successor servicer is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of each
Mortgage Loan and Related Documents or otherwise. The Servicer agrees to
cooperate with the Trustee (or the applicable successor servicer) in effecting
the termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the delivery to the Trustee (or the applicable
successor servicer) of all documents and records requested by it to enable it to
assume the Servicer's functions under this Agreement within ten Business Days
subsequent to such notice, the transfer within one Business Day subsequent to
such notice to the Trustee (or the applicable successor servicer) for the
administration by it of all cash amounts that shall at the time be held by the
Servicer and to be deposited by it in the Collection Account, the Distribution
Account or any Escrow Account or that have been deposited by the Servicer in
such accounts or thereafter received by the Servicer with respect to the
Mortgage Loans or any REO Property received by the Servicer. All reasonable
out-of-pocket costs and expenses (including attorneys' fees) incurred in
connection with transferring the servicing to the successor servicer and
amending this Agreement to reflect such succession as Servicer pursuant to this
Section shall be paid by the predecessor Servicer (or if the predecessor
Servicer is the Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Notwithstanding any termination of the activities of a Servicer
hereunder, the Servicer shall be entitled to receive payment of all accrued and
unpaid Servicing Fees and reimbursement for all outstanding Advances and
Servicing Advances properly made prior to the date of termination.
Section 7.02 Trustee to Act; Appointment of Successor.
(a) Within 90 days of the time the Servicer (and the Trustee, if
notice is sent by the Holders) receives a notice of termination pursuant to
Section 7.01 or 6.04, the Trustee (or such other successor servicer as is
approved in accordance with this Agreement) shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof arising on and after its succession.
As compensation therefor, the Trustee (or such other successor servicer) shall
be entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
above, (i) if the Trustee is unwilling to act as successor servicer or (ii) if
the Trustee is legally unable so to act, the Trustee shall appoint or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution, bank or other mortgage loan or home equity loan servicer
having a net worth of not less than $50,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder; provided, that the appointment of any
such successor servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Certificates or the ratings that are
in effect by the Rating Agencies as evidenced by a letter to such effect from
the Rating Agencies. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.18 (or such other compensation as the Trustee and such successor shall
agree, not to exceed the Servicing Fee). The successor servicer shall be
entitled to withdraw from the Collection Account all costs and expenses
associated with the transfer of the servicing to the successor servicer. The
appointment of a successor servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer to pay any deductible under an insurance policy pursuant
to Section 3.12 or to indemnify the parties indicated in Section 3.26 pursuant
to the terms thereof, nor shall any successor servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer of any
of its representations or warranties contained herein or in any related document
or agreement. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor, including the Trustee, to the Servicer as
servicer shall during the term of its service as servicer continue to service
and administer the Mortgage Loans for the benefit of Certificateholders, and
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
Fidelity Bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
Section 7.03 Waiver of Defaults.
The Majority Certificateholders may, on behalf of all
Certificateholders, waive any events permitting removal of the Servicer as
servicer pursuant to this Article VII, provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution on
a Certificate without the consent of the Holder of such Certificate. Upon any
waiver of a past default, such default shall cease to exist and any Servicer
Event of Termination arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Trustee to
the Rating Agencies.
Section 7.04 Notification to Certificateholders.
(a) On any termination or appointment of a successor the Servicer
pursuant to this Article VII or Section 6.04, the Trustee shall give prompt
written notice thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register and each Rating Agency.
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Servicer Event of Termination for five Business Days after a Responsible Officer
of the Trustee becomes aware of the occurrence of such an event, the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Servicer Event of Termination shall have been waived or
cured. Such notice shall be given to the Rating Agencies promptly after any such
occurrence.
Section 7.05 Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination of
the Servicer hereunder, any liabilities of the Servicer which accrued prior to
such termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of
Termination of which a Responsible Officer of the Trustee shall have actual
knowledge and after the curing of all Servicer Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination has
occurred (which has not been cured) of which a Responsible Officer has actual
knowledge, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Seller or the Depositor hereunder. If any such
instrument is found not to conform in any material respect to the requirements
of this Agreement, the Trustee shall notify the Certificateholders of such
instrument in the event that the Trustee, after so requesting, does not receive
a satisfactorily corrected instrument.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) prior to the occurrence of a Servicer Event of Termination of
which a Responsible Officer of the Trustee shall have actual knowledge,
and after the curing of all such Servicer Events of Termination which may
have occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Majority Certificateholders relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising or omitting to exercise any trust
or power conferred upon the Trustee under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred to
in clauses (i) and (ii) of Section 7.01 or any Servicer Event of
Termination unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer or the Majority
Certificateholders. In the absence of such receipt of such notice, the
Trustee may conclusively assume that there is no Servicer Event of
Termination.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
The Trustee shall not have any duty (A) to see any recording,
filing, or depositing of this Agreement or any agreement referred to herein or
any financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any thereof, (B)
to see to any insurance or (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Fund
other than from funds available in the Distribution Account.
Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(iii) the Trustee shall not be under any obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby; the
right of the Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of any such act;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of a Servicer Event of Termination and
after the curing of all Servicer Events of Termination which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or documents, unless requested in writing to do so by
the Majority Certificateholder; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to such proceeding. The reasonable expense of
every such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be reimbursed by the Servicer upon demand. Nothing in this
clause (v) shall derogate from the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Mortgagors;
(vi) the Trustee shall not be accountable, have any liability or
make any representation as to any acts or omissions hereunder of the
Servicer until such time as the Trustee may be required to act as Servicer
pursuant to Section 7.02;
(vii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or
custodian appointed by it with due care; and
(viii) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act.
Section 8.03 Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other than
the authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document. The Trustee shall not be accountable for the
use or application by the Servicer, or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall not at
any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Servicer pursuant to Section 7.02); the validity of the assignment of any
Mortgage Loan to the Trustee or of any intervening assignment; the completeness
of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
7.02); the compliance by the Depositor or the Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Servicer or any
loss resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust property that it may hold in its individual capacity;
the acts or omissions of any of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02), or any Mortgagor;
any action of the Servicer (other than if the Trustee shall assume the duties of
the Servicer pursuant to Section 7.02), taken in the name of the Trustee; the
failure of the Servicer to act or perform any duties required of it as agent of
the Trustee hereunder; or any action by the Trustee taken at the instruction of
the Servicer (other than if the Trustee shall assume the duties of the Servicer
pursuant to Section 7.02); provided, however, that the foregoing shall not
relieve the Trustee of its obligation to perform its duties under this
Agreement. The Trustee shall not have any responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee and may transact any banking and trust business with the
Servicer, the Depositor or their Affiliates.
Section 8.05 Trustee Fees and Expenses.
The Trustee shall be entitled to the Trustee Fee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by the Trustee in the exercise and
performance of any of the powers and duties hereunder. The Trustee shall
withdraw from the Distribution Account on each Distribution Date and pay to
itself the Trustee Fee. The Trust shall reimburse the Trustee for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith or which is the
responsibility of Certificateholders or the Trustee hereunder. In addition, the
Trustee and its officers, directors, employees and agents shall be indemnified
by the Trust from, and held harmless against, any and all losses, liabilities,
damages, claims or expenses incurred in connection with any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence of
the Trustee in the performance of its duties hereunder or by reason of the
Trustee's reckless disregard of obligations and duties hereunder. This Section
shall survive termination of this Agreement or the resignation or removal of any
Trustee hereunder.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be an entity duly organized
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of BBB by Fitch and S&P and a long term debt rating of at least A1
or better by Moody's and subject to supervision or examination by federal or
state authority. If such entity publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 8.06, the combined
capital and surplus of such entity shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
The principal office of the Trustee (other than the initial Trustee) shall be in
a state with respect to which an Opinion of Counsel has been delivered to such
Trustee at the time such Trustee is appointed Trustee to the effect that the
Trust will not be a taxable entity under the laws of such state. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section 8.06, the Trustee shall resign immediately in the manner and with
the effect specified in Section 8.07.
Section 8.07 Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Servicer
and each Rating Agency. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of their property shall be appointed, or any public
officer shall take charge or control of the Trustee or of their property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee. If the Depositor or the Servicer removes the
Trustee under the authority of the immediately preceding sentence, the Depositor
shall promptly appoint a successor Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor Trustee.
The Majority Certificateholders may at any time remove the Trustee
by written instrument or instruments delivered to the Servicer, the Depositor
and the Trustee; the Depositor shall thereupon use its best efforts to appoint a
successor Trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08.
Section 8.08 Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, the Rating Agencies, the
Servicer and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective, and such successor Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee. The Depositor, the Servicer and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.08, the successor Trustee shall mail notice of the appointment of
a successor Trustee hereunder to all Holders of Certificates at their addresses
as shown in the Certificate Register and to each Rating Agency.
Section 8.09 Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the business of the Trustee, shall be the successor of the
hereunder, provided such entity shall be eligible under the provisions of
Section 8.06 and 8.08, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or any Mortgaged Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Servicer. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case a Servicer Event of Termination shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor Trustee under Section 8.06, and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required under
Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee, acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of a Servicer Event of Termination,
the Trustee acting alone may accept the resignation or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor, the Rating Agencies and the Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 8.11 Limitation of Liability.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by this Agreement. Each of the undertakings
and agreements made on the part of the Trustee in the Certificates is made and
intended not as a personal undertaking or agreement by the Trustee but is made
and intended for the purpose of binding only the Trust.
Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered.
(b) The Trustee shall afford the Depositor, the Servicer and each
Certificateholder upon reasonable notice during normal business hours, access to
all records maintained by the Trustee in respect of its duties hereunder and
access to officers of the Trustee responsible for performing such duties. The
Trustee shall cooperate fully with the Servicer, the Depositor and such
Certificateholder and shall make available to the Servicer, the Depositor and
such Certificateholder for review and copying at the expense of the party
requesting such copies, such books, documents or records as may be requested
with respect to the Trustee's duties hereunder. The Depositor, the Servicer and
the Certificateholders shall not have any responsibility or liability for any
action or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 8.13 Suits for Enforcement.
In case a Servicer Event of Termination or other default by the
Servicer hereunder shall occur and be continuing, the Trustee may proceed to
protect and enforce its rights and the rights of the Certificateholders under
this Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, and subject to the foregoing, shall deem most
effectual to protect and enforce any of the rights of the Trustee and the
Certificateholders.
Section 8.14 Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee post a bond or other surety with any
court, agency or body whatsoever.
Section 8.15 Waiver of Inventory, Accounting and Appraisal
Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
ARTICLE IX
REMIC AND GRANTOR TRUST ADMINISTRATION
Section 9.01 REMIC Administration.
(a) The Trustee shall make or cause to be made REMIC elections for
each of REMIC A, REMIC B, REMIC 1, REMIC 2, REMIC 3 and REMIC 4 as set forth in
the Preliminary Statement on Forms 1066 or other appropriate federal tax or
information return for the taxable year ending on the last day of the calendar
year in which the Certificates are issued. The regular interests and residual
interest in each REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of
each REMIC within the meaning of section 860G(a)(9) of the Code.
(c) The Trustee shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to such REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Trustee in fulfilling its duties hereunder. The Trustee shall
be entitled to reimbursement of expenses to the extent provided in clause (i)
above from the Collection Account.
(d) The Trustee shall prepare or cause to be prepared, sign and file
or cause to be filed, each REMIC's federal and state tax and information returns
as such REMIC's direct representative. The expenses of preparing and filing such
returns shall be borne by the Trustee.
(e) The Holder of the Class R Certificate shall be the "tax matters
person" as defined in the REMIC Provisions (the "Tax Matters Person") with
respect to the REMICs, and the Trustee is irrevocably designated as and shall
act as attorney-in-fact and agent for such Tax Matters Person for each REMIC.
The Trustee, as agent for the Tax Matters Person, shall perform, on behalf of
each REMIC, all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, if required by the Code, the REMIC
Provisions, or other such guidance, the Trustee, as agent for the Tax Matters
Person, shall provide (i) to the Treasury or other governmental authority such
information as is necessary for the application of any tax relating to the
transfer of the Class R Certificate to any disqualified person or organization
and (ii) to the Certificateholders such information or reports as are required
by the Code or REMIC Provisions.
(f) The Trustee, the Servicer, and the Holders of Certificates shall
take any action or cause any REMIC to take any action necessary to create or
maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. None of
the Trustee, the Servicer or the Holder of the Class R Certificate shall take
any action or cause any REMIC to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of such REMIC as a
REMIC or (ii) result in the imposition of a tax upon such REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Servicer have received an Opinion of Counsel (at the expense of the
party seeking to take such action) to the effect that the contemplated action
will not endanger such status or result in the imposition of such a tax. In
addition, prior to taking any action with respect to any REMIC or the assets
therein, or causing such REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of the Class R
Certificate will consult with the Trustee and the Servicer, or their respective
designees, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to such REMIC, and no such Person
shall take any such action or cause such REMIC to take any such action as to
which the Trustee or the Servicer has advised it in writing that an Adverse
REMIC Event could occur.
(g) The Holder of the Class R Certificate shall pay when due any and
all taxes imposed on any REMIC by federal or state governmental authorities, but
only from amounts, if any, distributable thereon. To the extent that such REMIC
taxes are not paid by the Class R Certificateholder, the Trustee shall pay any
remaining REMIC taxes out of future amounts otherwise distributable to the
Holder of the Class R Certificate or, if no such amounts are available, out of
other amounts held in the Collection Account, and shall reduce amounts otherwise
payable to Holders of the REMIC Regular Interests or the Certificates, as the
case may be.
(h) The Trustee, shall, for federal income tax purposes, maintain or
cause to be maintained books and records with respect to each REMIC on a
calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any
REMIC, except as expressly provided in this Agreement with respect to Eligible
Substitute Mortgage Loans.
(j) Neither the Trustee nor the Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.
(k) On or before April 15 of each calendar year beginning in 2003,
the Trustee shall deliver to each Rating Agency an Officer's Certificate stating
the Trustee's compliance with the provisions of this Section 9.01.
(l) The Trustee shall treat the rights of the Offered P&I
Certificates to receive Cap Carryover Amounts as a right in interest rate cap
contracts written by the Class CE Certificateholders in favor of the Holders of
the Offered Certificates, and the Trustee shall account for such as property
held separate and apart from the regular interests it holds in each of the
REMICs created hereunder. This provision is intended to satisfy the requirements
of Treasury Regulations Section 1.860G-2(i) for the treatment of property rights
coupled with regular interests to be separately respected and shall be
interpreted consistent with such regulation. On each Distribution Date, to the
extent the Offered Certificates receive interest in excess of the Class A-1
REMIC Pass-Through Rate, Class A-2 REMIC Pass-Through Rate, Class M-1 REMIC
Pass-Through Rate, Class M-2 REMIC Pass-Through Rate, Class M-3 REMIC
Pass-Through Rate, Class M-4 REMIC Pass-Through Rate and Class B REMIC
Pass-Through Rate, as applicable, such interest will be treated as distributed
on the REMIC 4 Components, pro rata, beneficially owned by the Class CE
Certificates and then paid to the respective Class of Offered P&I Certificates
pursuant to the related interest rate cap agreement.
Section 9.02 Prohibited Transactions and Activities.
None of the Depositor, the Servicer or the Trustee shall sell,
dispose of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of any REMIC pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to any REMIC after
the Closing Date, unless it has received an Opinion of Counsel (at the expense
of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of such REMIC as a REMIC or of the interests therein other
than the Class R Certificate as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause such REMIC to be
subject to a tax on prohibited transactions or prohibited contributions pursuant
to the REMIC Provisions.
Section 9.03 Indemnification with Respect to Certain Taxes and
Loss of REMIC Status.
In the event that any REMIC formed hereunder fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the Holder of the
Class R Certificate against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the
Servicer shall not be liable for any such Losses attributable to the action or
inaction of the Trustee, the Depositor or the Holder of the Class R Certificate,
as applicable, nor for any such Losses resulting from misinformation provided by
the Holder of the Class R Certificate on which the Servicer has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the Holder of the Class R Certificate now or hereafter existing at law or in
equity. Notwithstanding the foregoing, however, in no event shall the Servicer
have any liability (1) for any action or omission that is taken in accordance
with and in compliance with the express terms of, or which is expressly
permitted by the terms of, this Agreement, (2) for any Losses other than arising
out of a negligent performance by the Servicer of its duties and obligations set
forth herein, and (3) for any special or consequential damages to
Certificateholders (in addition to payment of principal and interest on the
Certificates).
Section 9.04 REO Property.
(a) Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding any other provision of this
Agreement, the Servicer, acting on behalf of the Trust hereunder, shall not
rent, lease, or otherwise earn income on behalf of any REMIC with respect to any
REO Property which might cause such REO Property to fail to qualify as
"foreclosure" property within the meaning of section 860G(a)(8) of the Code or
result in the receipt by any REMIC of any "income from non-permitted assets"
within the meaning of section 860F(a)(2) of the Code or any "net income from
foreclosure property" which is subject to tax under the REMIC Provisions unless
the Servicer has advised, or has caused the applicable Servicer to advise, the
Trustee in writing to the effect that, under the REMIC Provisions, such action
would not adversely affect the status of any REMIC as a REMIC and any income
generated for such REMIC by the REO Property would not result in the imposition
of a tax upon such REMIC.
(b) The Servicer shall make reasonable efforts to sell any REO
Property for its fair market value. In any event, however, the Servicer shall
dispose of any REO Property before the close of the third calendar year
beginning after the year of its acquisition by the Trust Fund unless the
Servicer has received a grant of extension from the Internal Revenue Service to
the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, any REMIC may hold REO Property for
a longer period without adversely affecting its REMIC status or causing the
imposition of a Federal or state tax upon any REMIC. If the Servicer has
received such an extension, then the Servicer shall continue to attempt to sell
the REO Property for its fair market value as determined in good faith by the
Servicer for such longer period as such extension permits (the "Extended
Period"). If the Servicer has not received such an extension and the Servicer is
unable to sell the REO Property within 33 months after its acquisition by the
Trust Fund or if the Servicer has received such an extension, and the Servicer
is unable to sell the REO Property within the period ending three months before
the close of the Extended Period, the Servicer shall, before the end of the
applicable period, (i) purchase such REO Property at a price equal to the REO
Property's fair market value as determined in good faith by the Servicer or (ii)
auction the REO Property to the highest bidder (which may be the Servicer) in an
auction reasonably designed to produce a fair price prior to the expiration of
the applicable period.
Section 9.05 Grantor Trust Administration.
The parties intend that the portions of the Trust Fund consisting of
the REMIC 4 Regular Interests (other than the REMIC 4 Components), the right of
the Class P Certificates to receive Prepayment Charges and Servicer Prepayment
Charge Payment Amounts, the right of the Offered P&I Certificates to receive Cap
Carryover Amounts and the obligation of the Class CE Certificates to pay such
Cap Carryover Amounts, shall be treated as a "grantor trust" under the Code, and
the provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall furnish or cause to be
furnished (i) to the Holders of the Offered P&I Certificates and (ii) to the
Holder of the Class CE Certificates and shall file or cause to be filed with the
Internal Revenue Service together with Form 1041 or such other form as may be
applicable, their allocable shares of income and expenses with respect to the
property held by the Grantor Trust, at the time or times and in the manner
required by the Code.
ARTICLE X
TERMINATION
Section 10.01 Termination.
(a) The respective obligations and responsibilities of the Servicer,
the Depositor, the Trustee and the Certificate Registrar created hereby (other
than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balance of each Class of Certificates has been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, and (iii) the optional purchase by the Majority Class CE
Certificateholders or the Servicer of the Mortgage Loans as described below.
Notwithstanding the foregoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, living on the date hereof.
The Majority Class CE Certificateholders may, at their option,
terminate the Trust Fund and retire the Offered Certificates on the next
succeeding Distribution Date upon which the aggregate current Pool Balance is
less than 10% of the aggregate Pool Balance of the Mortgage Loans as of the
Cut-off Date by purchasing all of the outstanding (i) Mortgage Loans in the
Trust Fund at a price equal to the sum of the outstanding Principal Balance of
the Mortgage Loans and except to the extent previously advanced by the Servicer,
accrued and unpaid interest thereon at the weighted average of the Mortgage
Interest Rates through the end of the Collection Period preceding the final
Distribution Date plus unreimbursed Servicing Advances, Advances and any unpaid
Servicing Fees allocable to such Mortgage Loans and (ii) REO Properties in the
Trust Fund at a price equal to their fair market value as determined in good
faith by the Servicer (the "Termination Price"). If such option is not exercised
by the Majority Class CE Certificateholders on the first applicable Distribution
Date, the Servicer may exercise such option, but only upon providing at least
sixty days prior written notice to the Majority Class CE Certificateholders and
the Seller of the Servicer's intention to terminate the Trust Fund and the
applicable Distribution Date for such termination. Upon receipt of such notice,
the Majority Class CE Certificateholders may exercise their option to terminate
the Trust Fund on or before the Distribution Date selected by the Servicer in
accordance with the procedures set forth in this Section 10.01.
In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deliver to the Trustee for deposit in the
Distribution Account all amounts then on deposit in the Collection Account (less
amounts permitted to be withdrawn by the Servicer pursuant to Section 3.07),
which deposit shall be deemed to have occurred immediately following such
purchase.
Any such purchase shall be accomplished by delivery to the Trustee
for deposit into the Distribution Account as part of Available Funds on the
Determination Date before such Distribution Date of the Termination Price.
(b) Notice of any termination, specifying the Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee upon the Trustee receiving notice of such date from the Majority
Class CE Certificateholders or the Servicer, as applicable, by letter to the
Certificateholders mailed not earlier than the 15th day of the month preceding
the month of such final distribution and not later than the 15th day of the
month of such final distribution specifying (1) the Distribution Date upon which
final distribution of the Certificates will be made upon presentation and
surrender of such Certificates at the office or agency of the Trustee therein
designated, (2) the amount of any such final distribution and (3) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Sections 4.01 and 4.02 for
such Distribution Date.
(d) In the event that all Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders, and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders, to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholder shall be entitled to all unclaimed funds and other assets
which remain subject hereto (except with respect to the Class B, Class CE and
Class P Certificates) and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds, and all other
Certificateholders shall look to the Class R Certificateholder for payment.
Section 10.02 Additional Termination Requirements.
(a) In the event that the Majority Class CE Certificateholders or
Servicer exercises its purchase option as provided in Section 10.01, the Trust
shall be terminated in accordance with the following additional requirements,
unless the Trustee shall have been furnished with an Opinion of Counsel to the
effect that the failure of the Trust to comply with the requirements of this
Section will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust as defined in Section 860F of the Code or (ii) cause
any REMIC constituting part of the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding:
(i) The Trustee shall designate a date within 90 days prior to the
final Distribution Date as the date of adoption of plans of complete
liquidation of each of REMIC A, REMIC B, REMIC 1, REMIC 2, REMIC 3 and
REMIC 4 and shall specify such date in the final federal income tax return
of each REMIC;
(ii) After the date of adoption of such plans of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Majority Class CE
Certificateholders or the Servicer, as applicable, for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited in the following order of priority (A) (i) to the
Holders of each of the Class A-1 and Class A-2 Certificates, pro rata and
(ii) to the Class M-1, Class M-2, Class M-3, Class M-4 and Class B
Certificates, the related Certificate Principal Balance, as applicable,
plus one month's interest thereon at the applicable Pass-Through Rate, (B)
to the Class CE Certificates, the amount of any remaining Monthly Excess
Cash Flow Amounts not previously distributed thereon, (C) to the remaining
REMIC Regular Interests the amounts allocable thereto pursuant to Section
4.08 and (D) to the Class R Certificateholder, all cash on hand in respect
of the REMICs after such payment (other than cash retained to meet claims)
and the Trust shall terminate at such time.
(b) By their acceptance of Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) designate such
date of adoption of plans of complete liquidation and (ii) to take such other
action in connection therewith as may be reasonably required to carry out such
plans of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment.
This Agreement may be amended from time to time by the Depositor,
the Servicer and the Trustee; and without the consent of the Certificateholders,
(i) to cure any ambiguity or mistake, (ii) to correct, modify or supplement any
provision herein which may be inconsistent with any other provision herein or
the Prospectus Supplement, (iii) to make any other provisions with respect to
matters or questions arising under this Agreement, which shall not be
inconsistent with the provisions of this Agreement; or (iv) to comply with any
requirements imposed by the Code; provided, however, that any such action listed
in clause (iii) above shall not adversely affect in any respect the interests of
any Certificateholder, as evidenced by (i) notice in writing to the Depositor,
the Servicer and the Trustee from the Rating Agencies that such action will not
result in the reduction or withdrawal of the rating of any outstanding Class of
Certificates with respect to which it is a Rating Agency, or (ii) an Opinion of
Counsel delivered to the Servicer and the Trustee.
In addition, this Agreement may be amended from time to time by the
Depositor, the Servicer and the Trustee, with the consent of the Majority
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates which are
required to be made on any Certificate without the consent of the Holder of such
Certificate, (y) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a 66% Percentage Interest in such Class, or (z) reduce
the percentage of Voting Rights required by clause (y) above without the consent
of the Holders of all Certificates of such Class then outstanding. Upon approval
of an amendment, a copy of such amendment shall be sent to the Rating Agencies.
Prior to the execution of any amendment to this Agreement, the Trustee shall be
entitled to receive and rely upon an Opinion of Counsel (at the expense of the
Person seeking such amendment) stating that the execution of such amendment is
authorized or permitted by this Agreement. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a tax on any REMIC constituting part of the Trust
Fund pursuant to the REMIC Provisions or cause any REMIC constituting part of
the Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding and that the amendment is being made in accordance with the terms
hereof.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Servicer (but in no event at the expense of the Trustee),
otherwise at the expense of the Trust, a copy of such amendment and the Opinion
of Counsel referred to in the immediately preceding paragraph to the Servicer
and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment; instead it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Section 11.02 Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Trust, but only upon direction of
Certificateholders, accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
Section 11.03 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i)
operate to terminate this Agreement or the Trust, (ii) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust, or (iii) otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as herein provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 days after
its receipt of such notice, request and offer of indemnity, shall have neglected
or refused to institute any such action, suit or proceeding. It is understood
and intended, and expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04 Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. With respect to any
claim arising out of this Agreement, each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further irrevocably waives the right to object,
with respect to such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.
Section 11.05 Notices.
All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by first class mail, postage prepaid, or by express delivery service, to (a) in
the case of the Trustee, U.S. Bank National Association, 180 East Fifth Street,
St. Paul, Minnesota 55101, Attention: Structured Finance, ABFC 2002-NC1, or such
other address as may hereafter be furnished to the Depositor and the Servicer in
writing by the Trustee, (b) in the case of the Depositor, Asset Backed Funding
Corporation, 100 North Tryon Street, 11th Floor, Charlotte, North Carolina 28255
Attention: ABFC Asset-Backed Certificates, Series 2002-NC1, or such other
address as may be furnished to the Servicer and the Trustee in writing by the
Depositor, and (c) in the case of the Servicer, Ocwen Federal Bank FSB, 1675
Palm Beach Lakes Blvd., Suite 10A, West Palm Beach, Florida 33401, Attention:
Secretary, or such other address as may be furnished to the Depositor and the
Trustee in writing by the Servicer. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register.
Notice of any Servicer Event of Termination shall be given by telecopy and by
certified mail. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have duly been given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder shall also be mailed to the appropriate
party in the manner set forth above.
Section 11.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07 Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
Section 11.08 Notice to the Rating Agencies.
(a) Each of the Trustee and the Servicer shall be obligated to use
its best reasonable efforts promptly to provide notice to the Rating Agencies
with respect to each of the following of which a Responsible Officer of the
Trustee or the Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Event of Termination that has
not been cured or waived;
(iii) the resignation or termination of the Servicer or the Trustee;
(iv) the final payment to Holders of the Certificates of any Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor servicer pursuant to
Section 7.02 hereof, any event that would result in the inability of the
Trustee to make Advances.
(vii) In addition, the Servicer shall promptly furnish to each
Rating Agency copies of the following:
(A) each annual statement as to compliance described in
Section 3.19 hereof;
(B) each annual independent public accountants' servicing
report described in Section 3.20 hereof; and
(C) each notice delivered pursuant to Section 7.01(a) hereof
which relates to the fact that the Servicer has not made an Advance.
Any such notice pursuant to this Section 11.08 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to: Fitch
Ratings, One State Street Plaza, New York, New York 10004, Attention: Managing
Director, Residential Mortgage-Backed Securities; Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10007, Attention: Attention: Managing
Director, Residential Mortgage-Backed Securities; and Standard & Poor's, a
division of The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York
10041, Attention: Mortgage Surveillance Group.
Section 11.09 Further Assurances.
Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders nor the Trustee shall have any obligation to consent
to any amendment or modification of this Agreement unless they have been
provided reasonable security or indemnity against their out-of-pocket expenses
(including reasonable attorneys' fees) to be incurred in connection therewith.
Section 11.10 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.11 Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and such action shall become effective when
such instrument or instruments are delivered to the Trustee and the Servicer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Certificateholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section 11.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificate.
Section 11.12 Waiver of Jury Trial.
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
(TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES THAT
ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
Section 11.13 Limitation on Damages.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE
PARTIES AGREE THAT NO PARTY SHALL BE LIABLE HEREUNDER FOR ANY PUNITIVE DAMAGES
WHATSOEVER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT
LIABILITY), OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE, PROVIDED, HOWEVER, THAT
SUCH LIMITATION SHALL NOT BE APPLICABLE WITH RESPECT TO THIRD PARTY CLAIMS MADE
AGAINST A PARTY.
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized, all as of the day and year first above written.
ASSET BACKED FUNDING CORPORATION,
as Depositor
By:____________________________________
Name: Michael P. Schoffelen
Title: Senior Vice President
OCWEN FEDERAL BANK FSB, as Servicer
By:____________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION, not in
its individual capacity but solely as
Trustee for the ABFC 2002-NC1 Trust,
ABFC Asset-Backed Certificates, Series
2002-NC1
By:____________________________________
Name:
Title:
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
On the 30th day of July, 2002 before me, a notary public in and for
said State, personally appeared Michael P. Schoffelen, known to me to be a
Senior Vice President of Asset Backed Funding Corporation, a Delaware
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
STATE OF MINNESOTA )
) ss.:
COUNTY OF HENNEPIN )
On the 30th day of July, 2002 before me, a notary public in and for
said State, personally appeared _____________________, known to me to be a
______________________ of U.S. Bank National Association, a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said association, and acknowledged to me
that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
STATE OF FLORIDA )
) ss.:
COUNTY OF )
On the 30th day of July, 2002 before me, a notary public in and for
said State, personally appeared _____________________, known to me to be a
______________________ of Ocwen Federal Bank FSB, a federally chartered savings
bank, that executed the within instrument, and also known to me to be the person
who executed it on behalf of said bank, and acknowledged to me that such bank
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
Notary Public
EXHIBIT A-1
[FORM OF THE CLASS A-1 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") AND CERTAIN OTHER PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS A-1
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class A-1 Original Class Certificate Principal
Balance of the Class A-1 Certificates
Pass-Through Rate: Floating as of the Closing Date:
$290,280,000.00
Date of Pooling and Servicing
Agreement and Cut-off Date: Initial Certificate Principal
July 1, 2002 Balance: $[ ]
First Distribution Date: Servicer: Ocwen Federal Bank FSB
August 26, 2002
Trustee: U.S. Bank National
No. Association
CUSIP: 04542B AW 2 Closing Date: July 30, 2002
ISIN: US04542BAW28
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class A-1 Certificates) in that certain beneficial ownership interest
evidenced by all the Class A-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
A-1 Certificates on such Distribution Date pursuant to the Agreement; provided,
however, that if any Class A-1 Certificate becomes a Definitive Certificate, the
Record Date for such Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class A-1
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class A-1 Pass-Through Rate for each Distribution Date will be
the lesser of (i) One-Month LIBOR as of the related LIBOR Determination Date,
plus the Class A-1 Certificate Margin and (ii) the Maximum Rate Cap. Interest
will accrue on the Class A-1 Certificates during each Interest Accrual Period at
a rate equal to the lesser of (i) the Class A-1 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class A-1 Certificates.
The Class A-1 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer and the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-2
[FORM OF THE CLASS A-2 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") AND CERTAIN OTHER PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS A-2
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class A-2 Original Class Certificate Principal
Balance of the Class A-2 Certificates
Pass-Through Rate: Floating as of the Closing Date:
$95,892,000.00
Date of Pooling and Servicing
Agreement and Cut-off Date: Initial Certificate Principal
July 1, 2002 Balance: $[ ]
First Distribution Date: Servicer: Ocwen Federal Bank FSB
August 26, 2002
Trustee: U.S. Bank National
No. Association
CUSIP: 04542B AX 0 Closing Date: July 30, 2002
ISIN: US04542BAX01
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class A-2 Certificates) in that certain beneficial ownership interest
evidenced by all the Class A-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
A-2 Certificates on such Distribution Date pursuant to the Agreement; provided,
however, that if any Class A-2 Certificate becomes a Definitive Certificate, the
Record Date for such Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class A-2
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class A-2 Pass-Through Rate for each Distribution Date will be
the lesser of (i) One-Month LIBOR as of the related LIBOR Determination Date,
plus the Class A-2 Certificate Margin and (ii) the Maximum Rate Cap. Interest
will accrue on the Class A-2 Certificates during each Interest Accrual Period at
a rate equal to the lesser of (i) the Class A-2 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class A-2 Certificates.
The Class A-2 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer and the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT A-IO
[FORM OF CLASS A-IO CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") AND CERTAIN OTHER PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS A-IO
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class A-IO Original Notional Amount as of the
Closing Date: $48,272,000.00
Pass-Through Rate: Step Coupon
Initial Notional Amount: $[ ]
Date of Pooling and Servicing
Agreement and Cut-off Date: Servicer: Ocwen Federal Bank FSB
July 1, 2002
Trustee: U.S. Bank National
First Distribution Date: Association
August 26, 2002
Closing Date: July 30, 2002
No.
CUSIP: 04542B AY 83
ISIN: US04542BAY83
THE NOTIONAL AMOUNT OF THIS CERTIFICATE WILL BE REDUCED IN THE MANNER
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT. ACCORDINGLY, THE
OUTSTANDING NOTIONAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE INITIAL NOTIONAL AMOUNT REPRESENTED HEREBY.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Notional Amount of this
Certificate by the Original Notional Amount) in that certain beneficial
ownership interest evidenced by all the Class A-IO Certificates in the Trust
Fund created pursuant to a Pooling and Servicing Agreement, dated as specified
above (the "Agreement"), among Asset Backed Funding Corporation (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date, in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class A-IO Certificates on such Distribution Date pursuant to
the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class A-IO
Certificates the aggregate Initial Notional Amount of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.
The Class A-IO Pass-Through Rate on each Distribution Date will be
(i) through and including the Distribution Date in May 2003, 6.50% per annum,
(ii) from and including the Distribution Date in June 2003 through and including
the Distribution Date in March 2004, 4.50% per annum, (iii) from and including
the Distribution Date in April 2004 through and including the Distribution Date
in January 2005, 2.50% per annum, and (iv) after the Distribution Date in
January 2005, 0%.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class A-IO Certificates.
The Class A-IO Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT B
[FORM OF CLASS B CERTIFICATE]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
M-1, CLASS M-2, CLASS M-3 AND CLASS M-4 CERTIFICATES AS DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES NOT REQUIRE SUCH
REGISTRATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN, THIS CERTIFICATE MAY NOT BE PURCHASED BY OR
TRANSFERRED TO ANY PERSON THAT HAS NOT DELIVERED A REPRESENTATION LETTER
STATING EITHER (A) THAT THE TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL
PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE
OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) SUBJECT TO
CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING AGREEMENT, THAT
THE SOURCE OF FUNDS USED TO PURCHASE THIS CERTIFICATE IS AN "INSURANCE
COMPANY GENERAL ACCOUNT." THE POOLING AND SERVICING AGREEMENT PROVIDES
THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN VIOLATION OF THESE TRANSFER
RESTRICTIONS WILL BE NULL AND VOID AND WILL VEST NO RIGHTS IN ANY
PURPORTED TRANSFEREE.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") AND CERTAIN OTHER PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS B
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class B Original Class Certificate Principal
Balance of the Class B Certificates
Pass-Through Rate: Fixed as of the Closing Date: $3,620,000.00
Date of Pooling and Servicing Initial Certificate Principal
Agreement and Cut-off Date: Balance: $[ ]
July 1, 2002
Servicer: Ocwen Federal Bank FSB
First Distribution Date:
August 26, 2002 Trustee: U.S. Bank National
Association
No.
Closing Date: July 30, 2002
CUSIP: 04542B BD 3
ISIN: US04542BBD38
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ______________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class B Certificates) in that certain beneficial ownership interest
evidenced by all the Class B Certificates in the Trust Fund created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Asset Backed Funding Corporation (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer and
the Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date, in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class B Certificates on such Distribution Date pursuant to the
Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class B
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class B Pass-Through Rate for each Distribution Date will be
7.000% per annum. Interest will accrue on the Class B Certificates during each
Interest Accrual Period at a rate equal to the lesser of (i) the Class B
Pass-Through Rate and (ii) the Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class B Certificates.
The Class B Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class A,
Class M-1, Class M-2, Class M-3 and Class M-4 Certificates as described in the
Pooling and Servicing Agreement referred to herein.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Certificate Registrar the facts surrounding the transfer, or
(ii) that the Depositor and the Certificate Registrar shall require an Opinion
of Counsel satisfactory to them that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not be an expense
of the Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar or the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and any Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT C-1
[FORM OF CLASS R CERTIFICATE]
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE
"RESIDUAL INTEREST" IN SIX SEPARATE "REAL ESTATE MORTGAGE INVESTMENT
CONDUITS," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THIS CLASS R CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, SECTION 4975 OF THE CODE OR ANY
MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW
WILL BE REGISTERED.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY
BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN AFFIDAVIT TO THE
CERTIFICATE REGISTRAR THAT SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN
SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1
OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY
SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING
CLAUSES (A), (B) OR (C) BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED
ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (2) NO
PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX,
AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING
TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE
REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER
DISPOSITION OF THIS CLASS R CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED
TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH
HOLDER OF THE CLASS R CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL
BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION IS
PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS CLASS R
CERTIFICATE.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS R
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class R Servicer: Ocwen Federal Bank FSB
Date of Pooling and Servicing Trustee: U.S. Bank National
Agreement and Cut-off Date: Association
July 1, 2002
Closing Date: July 30, 2002
First Distribution Date:
August 26, 2002
No.
Percentage Interest: 100%
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _______________________ is the registered owner
of 100% Percentage Interest in that certain beneficial ownership interest
evidenced by the Class R Certificate in the Trust Fund created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Asset Backed Funding Corporation (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Servicer and
the Trustee, a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date, in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in the amount required to be distributed to the
Holder of Class R Certificate on such Distribution Date pursuant to the
Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class R
Certificate, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing the Percentage
Interest specified on the face hereof.
The Class R Certificate is limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Certificate Registrar the facts surrounding the transfer, or
(ii) that the Depositor and the Certificate Registrar shall require an Opinion
of Counsel satisfactory to them that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not be an expense
of the Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar or the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and any Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of this Certificate or any interest therein may be made
to employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA, Section 4975 of the Code or any materially similar
provisions of applicable federal, state or local law (collectively, "Plans") or
any person who is directly or indirectly purchasing the Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed for all purposes to have consented to the provisions of Section 5.02 of
the Agreement and to any amendment of the Agreement deemed necessary by counsel
of the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the Trust
to cease to qualify as six separate REMICs or cause the imposition of a tax upon
the Trust.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is the Class R Certificate referred to in the within-mentioned
Agreement.
Dated:
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT C-2
[FORM OF CLASS M-1 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") AND CERTAIN OTHER PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS M-1
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class M-1 Original Class Certificate Principal
Balance of the Class M-1 Certificates
Pass-Through Rate: Floating as of the Closing Date:
$32,584,000.00
Date of Pooling and Servicing
Agreement and Cut-off Date: Initial Certificate Principal
July 1, 2002 Balance: $[ ]
First Distribution Date: Servicer: Ocwen Federal Bank FSB
August 26, 2002
Trustee: U.S. Bank National
No. Association
CUSIP: 04542B AZ 5 Closing Date: July 30, 2002
ISIN: US04542BAZ58
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _________________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-1 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-1 Certificates on such Distribution Date pursuant to the Agreement; provided,
however, that if any Class M-1 Certificate becomes a Definitive Certificate, the
Record Date for such Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class M-1
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-1 Pass-Through Rate for each Distribution Date will be
the lesser of (i) One-Month LIBOR as of the related LIBOR Determination Date,
plus the Class M-1 Certificate Margin and (ii) the Maximum Rate Cap. Interest
will accrue on the Class M-1 Certificates during each Interest Accrual Period at
a rate equal to the lesser of (i) the Class M-1 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-1 Certificates.
The Class M-1 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class A
Certificates as described in the Pooling and Servicing Agreement referred to
herein.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT C-3
[FORM OF CLASS M-2 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
CLASS M-1 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") AND CERTAIN OTHER PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS M-2
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class M-2 Original Class Certificate Principal
Balance of the Class M-2 Certificates
Pass-Through Rate: Floating as of the Closing Date:
$28,963,000.00
Date of Pooling and Servicing
Agreement and Cut-off Date: Initial Certificate Principal
July 1, 2002 Balance: $[ ]
First Distribution Date: Servicer: Ocwen Federal Bank FSB
August 26, 2002
Trustee: U.S. Bank National
No. Association
CUSIP: 04542B BA 9 Closing Date: July 30, 2002
ISIN: US04542BBA98
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _________________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-2 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-2 Certificates on such Distribution Date pursuant to the Agreement; provided,
however, that if any Class M-2 Certificate becomes a Definitive Certificate, the
Record Date for such Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class M-2
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-2 Pass-Through Rate for each Distribution Date will be
the lesser of (i) One-Month LIBOR as of the related LIBOR Determination Date,
plus the Class M-2 Certificate Margin and (ii) the Maximum Rate Cap. Interest
will accrue on the Class M-2 Certificates during each Interest Accrual Period at
a rate equal to the lesser of (i) the Class M-2 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-2 Certificates.
The Class M-2 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class A
Certificates and Class M-1 Certificates as described in the Pooling and
Servicing Agreement referred to herein.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT C-4
[FORM OF CLASS M-3 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
M-1 AND CLASS M-2 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") AND CERTAIN OTHER PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS M-3
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class M-3 Original Class Certificate Principal
Balance of the Class M-3 Certificates
Pass-Through Rate: Floating as of the Closing Date:
$19,308,000.00
Date of Pooling and Servicing
Agreement and Cut-off Date: July 1, Initial Certificate Principal
2002 Balance: $[ ]
First Distribution Date: August 26, Servicer: Ocwen Federal Bank FSB
2002
Trustee: U.S. Bank National
No. Association
CUSIP: 04542B BB 7 Closing Date: July 30, 2002
ISIN: US04542BBB71
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _________________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-3 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-3 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-3 Certificates on such Distribution Date pursuant to the Agreement; provided,
however, that if any Class M-3 Certificate becomes a Definitive Certificate, the
Record Date for such Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class M-3
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-3 Pass-Through Rate for each Distribution Date will be
the lesser of (i) One-Month LIBOR as of the related LIBOR Determination Date,
plus the Class M-3 Certificate Margin and (ii) the Maximum Rate Cap. Interest
will accrue on the Class M-3 Certificates during each Interest Accrual Period at
a rate equal to the lesser of (i) the Class M-3 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-3 Certificates.
The Class M-3 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class A
Certificates, Class M-1 Certificate and Class M-2 Certificates as described in
the Pooling and Servicing Agreement referred to herein.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-3 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT C-5
[FORM OF CLASS M-4 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
M-1, CLASS M-2 AND CLASS M-3 CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") AND CERTAIN OTHER PROPERTY.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS M-4
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class M-4 Original Class Certificate Principal
Balance of the Class M-4 Certificates
Pass-Through Rate: Floating as of the Closing Date: $8,448,000.00
Date of Pooling and Servicing Initial Certificate Principal
Agreement and Cut-off Date: Balance: $[ ]
July 1, 2002
Servicer: Ocwen Federal Bank FSB
First Distribution Date:
August 26, 2002 Trustee: U.S. Bank National
Association
No.
Closing Date: July 30, 2002
CUSIP: 04542B BC 5
ISIN: US04542BBC54
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _________________ is the registered owner of a
Percentage Interest (obtained by dividing the Initial Certificate Principal
Balance of this Certificate by the Original Class Certificate Principal Balance
of the Class M-4 Certificates) in that certain beneficial ownership interest
evidenced by all the Class M-4 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Asset Backed Funding Corporation (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Business Day immediately preceding such
Distribution Date (the "Record Date"), from funds in the Distribution Account in
an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of Class
M-4 Certificates on such Distribution Date pursuant to the Agreement; provided,
however, that if any Class M-4 Certificate becomes a Definitive Certificate, the
Record Date for such Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class M-4
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
The Class M-4 Pass-Through Rate for each Distribution Date will be
the lesser of (i) One-Month LIBOR as of the related LIBOR Determination Date,
plus the Class M-4 Certificate Margin and (ii) the Maximum Rate Cap. Interest
will accrue on the Class M-4 Certificates during each Interest Accrual Period at
a rate equal to the lesser of (i) the Class M-4 Pass-Through Rate and (ii) the
Pool Cap for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing a Percentage Interest
in the Class M-4 Certificates.
The Class M-4 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
This certificate is subordinated in right of payment to the Class A
Certificates, Class M-1 Certificate, Class M-2 Certificates and Class M-3
Certificates as described in the Pooling and Servicing Agreement referred to
herein.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M-4 Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT C-6
[FORM OF CLASS CE CERTIFICATES]
FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A DIRECT
OR INDIRECT BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE").
THIS CLASS CE CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS CE CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS CE CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, SECTION 4975 OF THE CODE OR ANY
MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW
WILL BE REGISTERED.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS CE
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class CE Servicer: Ocwen Federal Bank FSB
Date of Pooling and Servicing Trustee: U.S. Bank National
Agreement and Cut-off Date: Association
July 1, 2002
Closing Date: July 30, 2002
First Distribution Date:
August 26, 2002
No.
Percentage Interest: 100%
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that __________________________________ is the
registered owner of a Percentage Interest set forth above in that certain
beneficial ownership interest evidenced by all the Class CE Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Asset Backed Funding Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer and the Certificate Administrator, a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs or the Closing
Date in the case of the first Distribution Date (the "Record Date"), from funds
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class CE Certificates on such Distribution Date pursuant to
the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class CE
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
the Percentage Interest specified on the face hereof.
The Class CE Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Certificate Administrator
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by, the Holder hereof
or such Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Certificate Registrar the facts surrounding the transfer, or
(ii) that the Depositor and the Certificate Registrar shall require an Opinion
of Counsel satisfactory to them that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not be an expense
of the Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar or the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA, Section 4975 of the Code or any materially similar
provisions of applicable federal, state or local law (collectively, "Plans") or
any person who is directly or indirectly purchasing the Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Administrator may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assume no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.
Dated:
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT C-7
[FORM OF CLASS P CERTIFICATE]
THIS CLASS P CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, SECTION 4975 OF THE CODE OR ANY
MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW
WILL BE REGISTERED.
ABFC ASSET-BACKED CERTIFICATES
SERIES 2002-NC1, CLASS P
evidencing a beneficial ownership interest in a Trust Fund consisting primarily
of a pool of conventional fixed-rate and adjustable-rate one- to four-family
first lien mortgage loans formed and sold by
ASSET BACKED FUNDING CORPORATION
Series 2002-NC1, Class P Servicer: Ocwen Federal Bank FSB
Date of Pooling and Servicing Trustee: U.S. Bank National
Agreement and Cut-off Date: Association
July 1, 2002
Closing Date: July 30, 2002
First Distribution Date:
August 26, 2002
No.
Percentage Interest: 100%
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED FUNDING CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that __________________________________ is the
registered owner of a Percentage Interest set forth above in that certain
beneficial ownership interest evidenced by all the Class P Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Asset Backed Funding Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs (the "Record
Date"), from Prepayment Charges and Servicer Prepayment Charge Payment Amounts
in the Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class P Certificates on such Distribution Date pursuant to the
Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Certificate Registrar
in writing at least five Business Days prior to the Record Date immediately
prior to such Distribution Date and is the registered owner of Class P
Certificates, or by check mailed by first class mail to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as ABFC Asset-Backed Certificates of the Series specified on the face
hereof (herein called the "Certificates") and representing the Percentage
Interest specified on the face hereof.
The Class P Certificates are limited in right of payment to
Prepayment Charges received on the Mortgage Loans and Servicer Prepayment Charge
Payment Amounts, all as more specifically set forth herein and in the Agreement.
As provided in the Agreement, withdrawals from the Collection Account and the
Distribution Account may be made from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement of
advances made, or certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to the Voting Rights
identified in the agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the 1933 Act and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. In the event that a transfer is to be made without registration
or qualification, the Certificate Registrar shall require, in order to assure
compliance with such laws, either (i) that the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee each
execute a representation letter in the form described by the Agreement
certifying to the Certificate Registrar the facts surrounding the transfer, or
(ii) that the Depositor and the Certificate Registrar shall require an Opinion
of Counsel satisfactory to them that such transfer may be made without such
registration or qualification, which Opinion of Counsel shall not be an expense
of the Depositor, the Trustee or the Certificate Registrar, in their respective
capacities as such. None of the Depositor, the Certificate Registrar or the
Trustee is obligated to register or qualify the Class of Certificates specified
on the face hereof under the 1933 Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any such Certificateholder
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Registrar and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA, Section 4975 of the Code or any materially similar
provisions of applicable federal, state or local law (collectively, "Plans") or
any person who is directly or indirectly purchasing the Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee, the Certificate Registrar or any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
Dated:
U.S. BANK NATIONAL ASSOCIATION, as
Certificate Registrar
By: ____________________________________
Authorized Signatory
Date of authentication:
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
---------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts
JT TEN - as joint tenants with right to Minors Act
of survivorship and not as ___________________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) _____________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.
EXHIBIT D-1
GROUP 1 MORTGAGE LOAN SCHEDULE
(Intentionally Omitted)
EXHIBIT D-2
GROUP 2 MORTGAGE LOAN SCHEDULE
(Intentionally Omitted)
EXHIBIT E
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
To: U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Capital Markets Fiduciary Services,
Asset Backed Funding Corporation Series 2002-NC1
Re: Pooling and Servicing Agreement dated as of July 1, 2002 among Asset
Backed Funding Corporation, as depositor, Ocwen Federal Bank FSB, as
servicer, and U.S. Bank National Association, as trustee
--------------------------------------------------------------------
All capitalized terms used herein shall have the means ascribed to
them in the Pooling and Servicing Agreement (the "Agreement") referenced above.
In connection with the administration of the Mortgage Loans held by
you as Trustee pursuant to the Agreement, we request the release, and hereby
acknowledge receipt, of the Trustee's Mortgage File for the Mortgage Loan
described below, for the reason indicated.
Mortgage Loan Number:
- ---------------------
Mortgagor Name, Address & Zip Code:
- -----------------------------------
Reason for Requesting Documents (check one):
- --------------------------------------------
_____ 1. Mortgage Paid in Full
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation (Repurchases, etc.)
_____ 5. Nonliquidation Reason: ______________________
By: __________________________
(authorized signer)
Issuer: ______________________
Address: _____________________
______________________________
Date: ________________________
Custodian
- ---------
U.S. Bank National Association
Please acknowledge the execution of the above request by your
signature and date below:
____________________________________ __________________
Signature Date
Documents returned to Custodian:
____________________________________ __________________
Custodian Date
EXHIBIT F-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION
Date
Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, North Carolina 28255
Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd.
Suite 10A
West Palm Beach, Florida 33401
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of July 1, 2002 among Asset Backed Funding
Corporation, as depositor, Ocwen Federal Bank FSB, as servicer, and
U.S. Bank National Association, as trustee, with respect to ABFC
Asset-Backed Certificates, Series 2002-NC1.
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Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that it has received
the documents listed in Section 2.01 of the Pooling and Servicing Agreement for
each Mortgage File pertaining to each Mortgage Loan listed on Exhibits D-1 and
D-2 to the Pooling and Servicing Agreement, subject to any exceptions noted on
Schedule I hereto and, based on an examination of such documents, the
information set forth in the Mortgage Loan Schedules that corresponds to items
(1), (2), (3), (6), (7), (8), (10) and (22) of the Mortgage Loan Schedules
accurately reflects the information in the Mortgage File.
Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Pooling and
Servicing Agreement. This Certificate is subject in all respects to the terms of
Section 2.02 of the Pooling and Servicing Agreement and the Pooling and
Servicing Agreement sections cross-referenced therein.
U.S. BANK NATIONAL ASSOCIATION
as Trustee
By: ____________________________________
Name:
Title:
EXHIBIT F-2
FORM OF TRUSTEE'S FINAL CERTIFICATION
[Date]
Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, North Carolina 28255
Ocwen Federal Bank FSB
1675 Palm Beach Lakes Blvd.
Suite 10A
West Palm Beach, Florida 33401
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of July 1, 2002 among Asset Backed Funding
Corporation, as depositor, Ocwen Federal Bank FSB, as servicer, and
U.S. Bank National Association, as trustee, with respect to ABFC
Asset-Backed Certificates, Series 2002-NC1
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that as to each
Mortgage Loan listed in the Mortgage Loan Schedules attached as Exhibits D-1 and
D-2 to the Pooling and Servicing Agreement (other than any Mortgage Loan paid in
full or listed on Schedule I hereto), it has received the applicable documents
listed in Section 2.01 of the Pooling and Servicing Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedules, other than any Mortgage Loan listed
on Schedule I hereto, it has reviewed the applicable documents listed in Section
2.01 of the Pooling and Servicing Agreement 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 Schedules is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement. This
Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ____________________________________
Name:
Title:
EXHIBIT F-3
FORM OF RECEIPT OF MORTGAGE NOTE
Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, North Carolina 28255
Re: ABFC Asset-Backed Certificates, Series 2002-NC1
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Ladies and Gentlemen:
Pursuant to Section 2.01 of the Pooling and Servicing Agreement,
dated as of July 1, 2002, among Asset Backed Funding Corporation, as depositor,
Ocwen Federal Bank FSB, as servicer, and U.S. Bank National Association, as
trustee, we hereby acknowledge the receipt of the original Mortgage Note, or,
with respect to any lost Mortgage Note, an original Lost Note Affidavit,
together with a copy of the related Mortgage Note (a copy of which is attached
hereto as Exhibit 1) with any exceptions thereto listed on Exhibit 2.
U.S. BANK NATIONAL ASSOCIATION
as Trustee
By: ____________________________________
Name:
Title:
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EXHIBIT G
MORTGAGE LOAN PURCHASE AGREEMENT
ASSET BACKED FUNDING CORPORATION
as Purchaser
and
BANC OF AMERICA MORTGAGE CAPITAL CORPORATION
as Seller
MORTGAGE LOAN PURCHASE AGREEMENT
Fixed Rate and Adjustable Rate Mortgage Loans
ABFC Asset-Backed Certificates, Series 2002-NC1
Dated as of July 1, 2002
================================================================================
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions.......................................................
ARTICLE II
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01 Sale of Mortgage Loans............................................
Section 2.02 Obligations of Seller Upon Sale...................................
Section 2.03 Payment of Purchase Price for the Mortgage Loans..................
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01 Seller Representations and Warranties Relating to the
Mortgage Loans...................................................
Section 3.02 Seller Representations and Warranties.............................
ARTICLE IV
SELLER'S COVENANTS
Section 4.01 Covenants of the Seller...........................................
ARTICLE V
[Reserved]
ARTICLE VI
TERMINATION
Section 6.01 Termination.......................................................
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01 Amendment.........................................................
Section 7.02 Governing Law.....................................................
Section 7.03 Notices...........................................................
Section 7.04 Severability of Provisions........................................
Section 7.05 Counterparts......................................................
Section 7.06 Further Agreements................................................
Section 7.07 Intention of the Parties..........................................
Section 7.08 Successors and Assigns; Assignment of this Agreement..............
Section 7.09 Survival..........................................................
Schedule I - Mortgage Loan Schedule
MORTGAGE LOAN PURCHASE AGREEMENT, dated as of July 1, 2002 (the
"Agreement"), between BANC OF AMERICA MORTGAGE CAPITAL CORPORATION ("Banc of
America" or the "Seller") and ASSET BACKED FUNDING CORPORATION (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller is the owner of either the notes or other
evidence of indebtedness (the "Mortgage Notes") or other evidence of ownership
so indicated on Schedule I hereto, and the other documents or instruments
constituting the Mortgage File (collectively, the "Mortgage Loans"); and
WHEREAS, the Seller, as of the date hereof, owns the mortgages (the
"Mortgages") on the properties (the "Mortgaged Properties") securing such
Mortgage Loans, including rights (a) to any property acquired by foreclosure or
deed in lieu of foreclosure or otherwise, and (b) to the proceeds of any
insurance policies covering the Mortgage Loans or the Mortgaged Properties or
the obligors on the Mortgage Loans; and
WHEREAS, the parties hereto desire that the Seller sell the Mortgage
Loans to the Purchaser and the Purchaser purchase the Mortgage Loans from the
Seller pursuant to the terms of this Agreement; and
WHEREAS, pursuant to the terms of a Pooling and Servicing Agreement,
dated as of July 1, 2002 (the "Pooling and Servicing Agreement"), among the
Purchaser, as depositor, Ocwen Federal Bank FSB, as servicer ("Ocwen" or the
"Servicer"), and U.S. Bank National Association, as trustee (the "Trustee"), the
Purchaser will convey the Mortgage Loans to the Trustee, on behalf of the ABFC
2002-NC1 Trust, the trust created pursuant to the Pooling and Servicing
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. All capitalized terms used but not defined
herein and below shall have the meanings assigned thereto in the Pooling and
Servicing Agreement.
"Appraised Value": With respect to any Mortgaged Property, the
lesser of (i) the value thereof as determined by an appraisal made for the
originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who then met the minimum requirements of Fannie Mae or Freddie
Mac, and (ii) the purchase price paid for the related Mortgaged Property by the
Mortgagor with the proceeds of the Mortgage Loan; provided, however, that in the
case of a Refinanced Mortgage Loan, such value of the Mortgaged Property is
based solely upon the value determined by an appraisal made for the originator
of such Refinanced Mortgage Loan at the time of origination of such Refinanced
Mortgage Loan by an appraiser who then met the minimum requirements of Fannie
Mae or Freddie Mac.
"Assignment and Conveyance": The assignment and conveyance of the
Mortgage Loans to be purchased on the applicable Closing Date, as defined in the
Mortgage Loan Sale Agreement in the form attached as Exhibit 7 thereto.
"Balloon Mortgage Loan": A fixed rate mortgage loan with a minimum
terms of 15 years which provides for a balloon payment.
"Escrow Payments": With respect to any Mortgage Loan, the amounts
constituting taxes and/or fire, flood and hazard insurance premiums required to
be escrowed pursuant to the terms of a voluntary escrow agreement between the
Servicer and the Mortgagor.
"FIRREA": The Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended and in effect from time to time.
"HUD": The United States Department of Housing and Urban Development
or any successor thereto.
"Mortgage Loan Sale Agreement": Mortgage Loan Sale Agreement dated
April 22, 2002, by and between Banc of America Mortgage Capital Corporation, a
North Carolina corporation, as purchaser, and NC Capital Corporation, a
California corporation, as seller.
"Mortgagee": The mortgagee or beneficiary named in the Mortgage and
the successors and assigns of such mortgagee or beneficiary.
"Prepayment Charge": The fee, if any, provided for in the related
Mortgage Note, to be paid by the Mortgagor for the privilege to prepay the
principal obligation of the related Mortgage Loan prior to the Mortgage Loan's
maturity date.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were not used to purchase the related Mortgaged Property.
"Underwriting Guidelines": The Seller's Underwriting Guidelines as
updated through the date hereof, a copy of which is attached as Exhibit 4 to the
Mortgage Loan Sale Agreement.
ARTICLE II
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01 Sale of Mortgage Loans. The Seller does hereby agree to
and does hereby sell, assign, set over, and otherwise convey to the Purchaser,
without recourse, on the Closing Date (i) all of its right, title and interest
in and to each Mortgage Loan and the related Cut-off Date Principal Balance
thereof, including any Related Documents, (ii) all payments on or collections in
respect of the Mortgage Loans due after the Cut-off Date; (iii) property which
secured such Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure; (iv) its interest in any insurance policies in respect of
the Mortgage Loans; (v) the rights of the Seller under the Mortgage Loan Sale
Agreement and (vi) all proceeds of any of the foregoing.
Section 2.02 Obligations of Seller Upon Sale. (a) In connection with
any transfer pursuant to Section 2.01 hereof, the Seller further agrees, at its
own expense, on or prior to the Closing Date, (x) to indicate in its books and
records that the Mortgage Loans have been sold to the Purchaser pursuant to this
Agreement and (y) to deliver to the Purchaser and the Trustee a computer file
containing a true and complete list of all the Mortgage Loans specifying, among
other things, for each Mortgage Loan, as of the Cut-off Date, its account number
and Cut-off Date Principal Balance. Such file (the "Mortgage Loan Schedule")
which is included as Exhibits D-1 and D-2 to the Pooling and Servicing
Agreement, shall also be marked as Schedule I to this Agreement and is hereby
incorporated into and made a part of this Agreement.
In connection with such transfer and assignment of the Mortgage
Loans, the Seller shall, on behalf of the Purchaser, deliver to and deposit with
the Trustee the following documents or instruments (with respect to each
Mortgage Loan, a "Mortgage File") with respect to each Mortgage Loan so
transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank or (B)
in the following form: "Pay to the order of U.S. Bank National
Association, as Trustee under the Pooling and Servicing Agreement, dated
as of July 1, 2002, among Asset Backed Funding Corporation, Ocwen Federal
Bank FSB and U.S. Bank National Association, ABFC Asset-Backed
Certificates, Series 2002-NC1, without recourse," or with respect to any
lost Mortgage Note, an original lost note affidavit stating that the
original mortgage note was lost, misplaced or destroyed, together with a
copy of the related mortgage note;
(ii) the original Mortgage with evidence of recording thereon, and
the original recorded power of attorney, if the Mortgage was executed
pursuant to a power of attorney, with evidence of recording thereon or, if
such Mortgage or power of attorney has been submitted for recording but
has not been returned from the applicable public recording office, has
been lost or is not otherwise available, a copy of such Mortgage or power
of attorney, as the case may be, certified to be a true and complete copy
of the original submitted for recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned either (A) in
blank or (B) to "U.S. Bank National Association, as Trustee under the
Pooling and Servicing Agreement, dated as of July 1, 2002, among Asset
Backed Funding Corporation, Ocwen Federal Bank FSB and U.S. Bank National
Association., ABFC Asset-Backed Certificates, Series 2002-NC1, without
recourse";
(iv) an original copy of any intervening assignment of Mortgage
showing a complete chain of assignments;
(v) the original or a certified copy of the lender's title insurance
policy; and
(vi) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any.
If any of the documents referred to in Section 2.02(ii), (iii) or
(iv) above has as of the Closing Date been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Seller to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Trustee no later than the
Closing Date, of a copy of each such document certified by the Seller in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Seller, delivery to the
Trustee, promptly upon receipt thereof of either the original or a copy of such
document certified by the applicable public recording office to be a true and
complete copy of the original. If the original lender's title insurance policy
was not delivered pursuant to Section 2.02(v) above, the Seller shall deliver or
cause to be delivered to the Trustee, a written commitment or interim binder or
preliminary report of title issued by the title insurance or escrow company,
with the original to be delivered to the Trustee, promptly upon receipt thereof.
The Seller shall deliver or cause to be delivered to the Trustee promptly upon
receipt thereof any other original documents constituting a part of a Mortgage
File received with respect to any Mortgage Loan, including, but not limited to,
any original documents evidencing an assumption or modification of any Mortgage
Loan.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Seller
shall have 120 days to cure such defect or deliver such missing document to the
Trustee or 150 days following the Closing Date, in the case of missing Mortgages
or Assignments (or within 90 days of the earlier of Seller's discovery or
receipt of notification if such defect would cause the Mortgage Loan not to be a
"qualified mortgage" for REMIC purposes or that the Mortgage Loan is defective
in a manner that would cause it to be a "defective obligation" within the
meaning of Treasury regulations relating to REMICs.). If the Seller does not
cure such defect or deliver such missing document within such time period, the
Seller shall either repurchase or substitute for such Mortgage Loan in
accordance with Section 2.03 of the Pooling and Servicing Agreement.
The Purchaser hereby acknowledges its acceptance of all right, title
and interest to the Mortgage Loans and other property, now existing and
hereafter created, conveyed to it pursuant to Section 2.01.
The parties hereto intend that the transaction set forth herein be a
sale by the Seller to the Purchaser of all the Seller's right, title and
interest in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, the Seller
hereby grants to the Purchaser a security interest in all of the Seller's right,
title and interest in, to and under the Mortgage Loans and other property
described above, whether now existing or hereafter created, to secure all of the
Seller's obligations hereunder; and this Agreement shall constitute a security
agreement under applicable law. The Seller and the Purchaser shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, 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 the Pooling and Servicing Agreement.
The Seller shall cause the Assignments of Mortgage which were
delivered in blank to be completed and shall cause all Assignments referred to
in 2.02(iii) hereof and, to the extent necessary, in Section 2.02(iv) hereof to
be delivered for recording in the states of Maryland and Florida with 30 days of
the Closing Date. The Seller shall furnish the Trustee with a copy of each
Assignment of Mortgage submitted for recording. In the event that any such
Assignment is lost or returned unrecorded because of a defect therein, the
Seller shall promptly have a substitute Assignment prepared or have such defect
cured, as the case may be, and thereafter cause each such Assignment to be duly
recorded. In the event that any Mortgage Note is endorsed in blank as of the
Closing Date, promptly following the Closing Date the Seller shall cause to be
completed such endorsements "Pay to the order of U.S. Bank National Association,
as Trustee under the Pooling and Servicing Agreement, dated as of July 1, 2002,
among Asset Backed Funding Corporation, Ocwen Federal Bank FSB and U.S. Bank
National Association, ABFC Asset-Backed Certificates, Series 2002-NC1, without
recourse."
Section 2.03 Payment of Purchase Price for the Mortgage Loans. In
consideration of the sale of the Mortgage Loans from the Seller to the Purchaser
on the Closing Date, the Purchaser agrees (i) to pay to the Seller on the
Closing Date by transfer of immediately available funds, as directed by the
Seller, an amount equal to $482,079,923.14 and (ii) deliver to or at the
direction of the Seller on the Closing Date, the Class CE, Class P and Residual
Certificates, in respect of the Mortgage Loans (collectively, the "Purchase
Price"). The Seller shall pay, and be billed directly for, all reasonable
expenses incurred by the Purchaser in connection with the issuance of the
Certificates, including, without limitation, printing fees incurred in
connection with the prospectus relating to the Certificates, blue sky
registration fees and expenses, fees and reasonable expenses of Purchaser's
counsel, fees of the rating agencies requested to rate the Certificates,
accountant's fees and expenses and the fees and expenses of the Trustee and
other out-of-pocket costs, if any.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01 Seller Representations and Warranties Relating to the
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser, with
respect to the Mortgage Loans, or each Mortgage Loan, as the case may be, that
as of the Closing Date or as of such date specifically provided herein:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule, a copy of which is attached to the applicable Assignment
and Conveyance as Exhibit A thereto is true and correct in all material
respects.
(b) No Outstanding Charges. There are no delinquent taxes, ground
rents, governmental assessments, insurance premiums, leasehold payments,
including assessments payable in future installments or other outstanding
charges affecting the lien priority of the related Mortgaged Property. Except
for (A) payments in the nature of escrow payments and (B) interest accruing from
the date of the Mortgage Note or date of disbursement of the Mortgage proceeds,
whichever is greater to the day which precedes by one month the Due Date of the
first installment of principal and interest, including, without limitation,
taxes and insurance payments, the Seller has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount required under
the Mortgage Loan.
(c) Original Terms Unmodified. The terms of the Mortgage Note and
the Mortgage have not been impaired, waived, altered or modified in any respect,
except by written instruments, recorded in the applicable public recording
office if necessary to maintain the lien priority of the Mortgage, and which
have been delivered to the Seller; the substance of any such waiver, alteration
or modification has been approved by the title insurer, to the extent required
by the related policy, and is reflected on the Mortgage Loan Schedule. No
instrument of waiver, alteration or modification has been executed, and no
Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent required by
the policy, and which assumption agreement has been delivered to the Seller.
(d) No Defenses. The Mortgage Note and the Mortgage are not subject
to any right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including the defense
of usury and no such right of rescission, set-off, counterclaim or defense has
been asserted with respect thereto.
(e) Delivery of Mortgage Documents. With respect to each Mortgage
Loan, the Seller has transferred to the Purchaser or its designee a complete
Mortgage File and the Seller has delivered to the Purchaser or its designee all
original title policies and original recorded documents related to the Mortgage
Loans within the time period set forth in Section 6.02.
(f) Hazard Insurance. All buildings upon the Mortgaged Property are
insured by an insurer generally acceptable to prudent mortgage lending
institutions against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the Mortgaged Property is located,
pursuant to insurance policies. All such insurance policies contain a standard
mortgagee clause naming the originator of the Mortgage Loan, its successors and
assigns as mortgagee and all premiums thereon have been paid. If the Mortgaged
Property is in an area identified on a flood hazard map or flood insurance rate
map issued by the federal 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 is in effect which policy conforms to the requirements
of Fannie Mae or Freddie Mac. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor. All such insurance policies are in full force and
effect. Where required by state law or regulation, the Mortgagor has been given
an opportunity to choose the carrier of the required hazard insurance, provided
the policy is not a "master" or "blanket" hazard insurance policy covering the
common facilities of a planned unit development. The hazard insurance policy is
the valid and binding obligation of the insurer, is in full force and effect,
and will be in full force and effect and inure to the benefit of the Purchaser
upon the consummation of the transactions contemplated by this Agreement. The
Seller has not engaged in, and has no knowledge of the Mortgagor's or any
subservicer's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either, including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other person or entity, and no such unlawful items have been
received, retained or realized by the Seller.
(g) Compliance with Applicable Laws; Mortgagor Acknowledgment. Any
and all requirements of any federal, state or local law including, without
limitation, usury, truth-in-lending, real estate settlement procedures, consumer
credit protection, consumer credit reporting, home mortgage disclosure, equal
credit opportunity, fair housing, predatory lending, unfair and deceptive trade
practices, or other ant-discriminatory or fair lending laws, and privacy laws
applicable to the origination and servicing of Mortgage Loan have been complied
with. The Mortgagor has received all disclosure materials required by applicable
law with respect to the making of mortgage loans of the same type as the
Mortgage Loan and rescission materials required by applicable law if the
Mortgage Loan is a Refinanced Mortgage Loan.
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
satisfaction, cancellation, subordination, rescission or release. The Seller has
not waived the performance by the Mortgagor of any action, if the Mortgagor's
failure to perform such action would cause the Mortgage Loan to be in default,
nor has the Seller waived any default resulting from any action or inaction by
the Mortgagor.
(i) Valid First Lien. The Mortgage is a valid, existing and
enforceable first lien on the Mortgaged Property, including all improvements on
the Mortgaged Property subject only to (i) the lien of current real property
taxes and assessments not yet due and payable, (ii) covenants, conditions and
restrictions, rights of way, easements and other matters of public record as of
the date of recording being acceptable to mortgage lending institutions
generally and specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and which do not adversely
affect the Appraised Value of the Mortgaged Property, and (iii) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property. Any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
existing and enforceable first lien and first priority security interest on the
property described therein and the Seller has the full right to sell and assign
the same to the Purchaser.
(j) Validity of Mortgage Documents. The Mortgage Note and the
related Mortgage are genuine and each is the legal, valid and binding obligation
of the maker thereof, enforceable in accordance with its terms except as
enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors and (ii) general principles of equity,
whether enforcement is sought in a proceeding in equity or at law.
(k) Legal Capacity. All parties to the Mortgage Note and the
Mortgage had legal capacity to enter into the Mortgage Loan and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties.
(l) Full Disbursement of Proceeds. The proceeds of the Mortgage Loan
have been fully disbursed to or for the account of the Mortgagor and there is no
obligation for the Mortgagee to advance additional funds thereunder and any and
all requirements as to completion of any on-site or off-site improvements and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage
Note or Mortgage or any other agreement.
(m) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1)
(A) in compliance with any and all applicable "doing business" and licensing
requirements of the laws of the state wherein the Mortgaged Property is located,
and (B) organized under the laws of such state(s), or (2) qualified to do
business in such state(s), or (3) federal savings and loan associations or
national banks having principal offices in such state(s), or (4) not required to
qualify to do business in such state(s).
(n) Title Insurance. The Mortgage Loan is covered by an American
Land Title Association lender's title insurance policy (which, if the Mortgage
Loan is an Adjustable-Rate Mortgage Loan, includes an adjustable rate mortgage
endorsement substantially in the form of ALTA Form 6.0 or 6.1), acceptable to
Fannie Mae or Freddie Mac, issued by a title insurer acceptable to Fannie Mae or
Freddie Mac and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring (subject to the exceptions contained in clauses
(i)(i) and (ii) above) the Seller, its successors and assigns as to the first
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan. Where required by state law or regulation, the Mortgagor has been given
the opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy affirmatively insures ingress
and egress, and against encroachments by or upon the Mortgaged Property or any
interest therein. The Seller is the sole insured of such lender's title
insurance policy, and such lender's title insurance policy is in full force and
effect and will be in full force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and neither the Seller nor the prior holder of
the related Mortgage has done, by act or omission, anything which would impair
the coverage of such lender's title insurance policy, including without
limitation, receiving, retaining or realizing by any attorney, firm or other
person or entity, any unlawful fee, commission, kickback or other unlawful
compensation or value of any kind, and no such unlawful items have been
received, retained or realized by the Seller.
(o) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and the Seller has not waived any default, breach, violation or
event of acceleration.
(p) No Mechanics' Liens. There are no mechanics' or similar liens or
claims filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage.
(q) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the related
Mortgaged Property lay wholly within the boundaries and building restriction
lines of the Mortgaged Property, and no improvements on adjoining properties
encroach upon the Mortgaged Property.
(r) Origination; Conformance with Underwriting Guidelines. The
Mortgage Loan was originated by Seller or a mortgagee approved by the Secretary
of HUD pursuant to Sections 203 or 211 of the National Housing Act. The Mortgage
Note and Mortgage are on forms acceptable to Fannie Mae or Freddie Mac. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines.
(s) Payment Terms. Principal payments on the Mortgage Loan commenced
no more than sixty (60) days after the proceeds of the Mortgage Loan were
disbursed. As to each Adjustable-Rate Mortgage Loan, on each applicable
Adjustment Date, the Mortgage Interest Rate will be adjusted to equal the sum of
the Index plus the applicable Gross Margin, rounded up or down to the nearest
multiple of 0.125%; provided, however, that, on the initial Adjustment Date, the
Mortgage Interest Rate will not increase or decrease by more than the Initial
Reset Cap and on any subsequent Adjustment Date, the Mortgage Interest Rate will
not increase or decrease by more than the Periodic Cap and, in no event, will
the Mortgage Interest Rate exceed the Lifetime Rate Cap. Except with respect to
Balloon Mortgage Loans, the Mortgage Note requires monthly payments which are
sufficient to fully amortize the original principal balance over the original
term thereof (which shall not exceed 30 years) and to pay interest at the
related Mortgage Interest Rate. Interest on each Mortgage Loan is payable in
arrears on the first day of the month. Interest is calculated on the Mortgage
Note on the basis of twelve 30-day months and a 360-day year. None of the
Mortgage Loans are simple interest Mortgage Loans. No Mortgage Note permits
negative amortization.
(t) Mortgaged Property Undamaged. There is no proceeding pending or,
to the Seller's knowledge, threatened for the total or partial condemnation or
eminent domain proceedings of the Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire, earthquake
or earth movement, windstorm, flood, tornado or other damage, so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage Loan
or the use for which the premises were intended. The Mortgage Loan is not
subject to or the subject of, any pending litigation.
(u) Customary Provisions. The Mortgage and related Mortgage Note
contain customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided thereby, including,
(i) in the case of a Mortgage designated as a deed of trust, by trustee's sale,
and (ii) otherwise by judicial foreclosure. The Mortgaged Property has not been
subject to any bankruptcy proceeding or foreclosure proceeding and the Mortgagor
has not filed for protection under applicable bankruptcy laws. There is no
homestead or other exemption or right available to the Mortgagor or any other
person which would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940.
(v) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage on
the Mortgaged Property and the security interest of any applicable security
agreement or chattel mortgage referred to in (i) above.
(w) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property, in a form acceptable to Fannie Mae or Freddie Mac
and such appraisal complies with the requirements of FIRREA, and was made and
signed, prior to the approval of the Mortgage Loan application, by a qualified
appraiser, duly appointed by the originator of the Mortgage Loan, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, whose compensation is not affected by the approval or
disapproval of the Mortgage Loan and who met the minimum qualifications of
Fannie Mae or Freddie Mac. The appraisal has been made within one hundred and
eighty (180) days of the origination of the Mortgage Loan, and completed in
compliance with the Uniform Standards of Professional Appraisal Practice, and
all applicable federal and state laws and regulations. If the appraisal was made
more than one hundred and twenty (120) days before the origination of the
Mortgage Loan, the Seller has received and delivered to the Purchaser a
recertification of the appraisal.
(x) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor.
(y) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent interest
feature, nor does it contain provisions pursuant to which Monthly Payments are
paid or partially paid with funds deposited in any separate account established
by the Seller, the Mortgagor or anyone on behalf of the Mortgagor, or paid by
any source other than the Mortgagor, or any other similar provisions which may
constitute a "buydown" provision which is currently in effect.
(z) Occupancy of the Mortgaged Property. The Mortgaged Property is
lawfully occupied under applicable law, all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities and no improvement located on or part
of the Mortgaged Property is in violation of any zoning law or regulation.
(aa) Transfer of Mortgage Loans. The Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction(s) in which the Mortgaged Property is located.
(bb) Payments Current. No payment required under the Mortgage Loan
is or has been thirty (30) or more days delinquent since the related origination
date.
(cc) Collection Practices; Escrow Deposits; Adjustable Rate Mortgage
Loan Adjustments. The origination, collection and servicing practices used by
the Seller with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been serviced by the Seller in
accordance with the terms of the Mortgage Note and Mortgage and in compliance
with the requirements of all federal, state and local laws, and in compliance
with all other requirements of Fannie Mae and Freddie Mac, as applicable, and in
accordance with those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as the Mortgage Loans
in the jurisdiction where the related Mortgaged Property is located, with a view
towards the maximization of timely recovery of principal and interest for each
Mortgage Loan and to the best interests of the owner thereof. With respect to
escrow deposits and escrow payments, if any, all such payments are in the
possession of, or under the control of, the Seller and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All escrow payments have been collected in
full compliance with state and federal law. No escrow deposits or escrow
payments or other charges or payments due the Seller have been capitalized under
the Mortgage or the Mortgage Note. With respect to each Adjustable-Rate Mortgage
Loan, all Mortgage Interest Rate adjustments have been made in strict compliance
with state and federal law and the terms of the related Mortgage Note. Any
interest required to be paid pursuant to state and local law has been properly
paid and credited.
(dd) Ownership. Immediately prior to the payment of the Purchase
Price, the Seller was the sole owner and holder of the Mortgage Loan.
Immediately prior to the payment of the Purchase Price, the Mortgage Loan was
not assigned or pledged by the Seller and the Seller had good and marketable
title thereto, and the Seller had full right to transfer and sell the Mortgage
Loan to the Purchaser free and clear of any encumbrance, participation interest,
lien, equity, pledge, claim or security interest and had full right and
authority subject to no interest or participation in, or agreement with any
other party to sell or otherwise transfer the Mortgage Loan.
(ee) Consolidation of Future Advances. Any future advances made
prior to the related Cut-off Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other title evidence
acceptable to Fannie Mae and Freddie Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan.
(ff) Due on Sale. Each Mortgage Loan contains an enforceable
provision for the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the Mortgagee thereunder.
(gg) Location and Type of Mortgaged Property. The Mortgaged Property
is located in the state(s) identified in the Mortgage Loan Schedule and consists
of a parcel of real property with a detached single family residence erected
thereon, or a two- to four-family dwelling, or an individual condominium unit,
or an individual unit in a planned unit development; provided, however, that any
condominium project or planned unit development generally conforms with the
Underwriting Guidelines regarding such dwellings, and no residence or dwelling
is a mobile home or a manufactured dwelling. No portion of the Mortgaged
Property is used for commercial purposes.
(hh) Selection Process; Acceptable Investment. The Seller used no
adverse selection procedures in selecting the Mortgage Loan from among the
outstanding first lien residential mortgage loans owned by it which were
available for inclusion in the sale to the Purchaser. Except for the criteria
for eligible Mortgagors set forth in the Underwriting Guidelines, the Seller
knows of nothing involving any Mortgage File, Mortgaged Property or Mortgagor's
credit standing that could reasonably be expected (1) to cause private
institutional investors to regard the Mortgage Loan as an unacceptable
investment, (2) to cause the Mortgage Loan to become delinquent, or (3) to
affect adversely the value or marketability of the Mortgage Loan.
(ii) No Untrue Information; No Fraud. The documents, instruments and
agreements submitted for loan underwriting were not falsified and contain no
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the information and statements therein
not misleading. No fraud was committed by the Seller in connection with the
origination or servicing of the Mortgage Loan and no fraud with respect to a
Mortgage Loan has taken place on the part of any Person involved in the
origination of the Mortgage Loan.
(jj) Environmental Matters. The Mortgaged Property is free from any
and all toxic or hazardous substances and there exists no violation of any
local, state or federal environmental law, rule or regulation. There is no
pending action or proceeding directly involving any Mortgaged Property of which
the Seller is aware in which compliance with any environmental law, rule or
regulation is an issue; and to the best of the Seller's knowledge, nothing
further remains to be done to satisfy in full all requirements of each such law,
rule or regulation consisting a prerequisite to use and enjoyment of said
property.
(kk) No Construction Loans. No Mortgage Loan was made in connection
with (i) facilitating the trade-in or exchange of a Mortgaged Property or (ii)
the construction or rehabilitation of a Mortgaged Property, unless the Mortgage
Loan is a construction-to-permanent mortgage loan listed on the Mortgage Loan
Schedule which has been fully disbursed, all construction work is complete and a
completion certificate or certificate of occupancy (or a local equivalent) has
been issued.
(ll) Regarding the Mortgagor. The Mortgagor is one or more natural
persons and/or trustees for an Illinois land trust or a trustee under a "living
trust" and such "living trust" is in compliance with Fannie Mae guidelines for
such trusts.
(mm) Mortgagor Acknowledgment. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all disclosure materials
required by applicable law with respect to the making of adjustable rate
mortgage loans. The Seller shall maintain such statement in the Mortgage File.
(nn) Predatory Lending Regulations; High Cost Loans. None of the
Mortgage Loans are classified as (a) "high cost" loans under the Home Ownership
and Equity Protection Act of 1994 or (b) "high cost," "threshold" or "predatory"
loans under any other applicable state, federal or local law.
(oo) Texas Home Equity Loans. With respect to any Loan which is a
Texas Home Equity Loan, any and all requirements of Section 50, Article XVI of
the Texas Constitution applicable to Texas Home Equity Loans which were in
effect at the time of the origination of the Mortgage Loan have been complied
with. Specifically, without limiting the generality of the foregoing:
(i) all fees paid by the owner of the Mortgaged Property or such
owner's spouse, to any person, that were necessary to originate, evaluate,
maintain, record, insure or service the Mortgage Loan are reflected in the
closing statement for such Mortgage Loan;
(ii) the Mortgage Loan was closed only at the office of the mortgage
lender, an attorney at law, or a title company;
(iii) the Mortgagee has not been found by a federal regulatory
agency to have engaged in the practice of refusing to make loans because
the applicants for the loans reside or the property proposed to secure the
loans is located in a certain area;
(iv) the owner of the Mortgaged Property was not required to apply
the proceeds of the Mortgage Loan to repay another debt except debt
secured by the Mortgaged Property or debt to a lender other than the
Mortgagee;
(v) the owner of the Mortgaged Property did not sign any documents
or instruments relating to the Mortgage Loan in which blanks were left to
be filled in; and
(vi) if discussions between the Mortgagee and the Borrower were
conducted primarily in a language other than English, the Mortgagee
provided to the owner of the Mortgaged Property, prior to closing, a copy
of the notice required by Section 50(g), Article XVI of the Texas
Constitution translated into the written language in which the discussions
were conducted.
All notices, acknowledgments and disclosure statements required by Section 50,
Article XVI of the Texas Constitution applicable to Texas Home Equity Loans are
contained in the Mortgage File for each such Mortgage Loan.
(pp) Flood Certification Contract and Insurance. The Seller has
obtained a life of loan, transferable flood certification contract for each
Mortgage Loan. The Seller has caused or will cause to be performed any and all
acts required to preserve the rights and remedies of the Purchaser in such
contract and any insurance policies applicable to the Mortgage Loans including,
without limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of coinsured, joint loss payee
mortgagee rights in favor of the Purchaser.
(qq) Recordation. Each original Mortgage was recorded and, except
for those Mortgage Loans subject to the MERS identification system, all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) have been recorded in the appropriate jurisdictions wherein such
recordation is necessary to perfect the lien thereof as against creditors of the
Seller, or is in the process of being recorded.
(rr) FICO Scores. Each Mortgage Loan has a non-zero FICO score. No
Mortgage Loan has a Mortgagor with a FICO Score of less than 487.
(ss) Simple Interest Mortgage Loans. None of the Mortgage Loans are
simple interest Mortgage Loans.
(tt) Single Premium Credit Life Insurance. None of the proceeds of
the Mortgage Loan were used to finance single-premium credit life insurance
policies.
(uu) Prepayment Fee. With respect to each Mortgage Loan that has a
Prepayment Fee feature, each such Prepayment Fee is enforceable and will be
enforced by the Seller for the benefit of the Purchaser, and each Prepayment Fee
is permitted pursuant to federal, state and local law. Each such Prepayment Fee
is in an amount equal to the maximum amount permitted under applicable law.
(vv) Leaseholds. With respect to each Mortgage Loan secured by a
leasehold estate, (1) the lessor under the lease holds a fee simple interest in
the land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent and
the acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (3) the terms of such lease do
not (a) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (b) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence, (c)
prohibit the holder of the Mortgage from being insured (or receiving proceeds of
insurance) under the hazard insurance policy or policies relating to the
Mortgaged Property or (d) permit any increase in rent other than pre-established
increases as set forth in the lease; (4) the original term of such lease is not
less than 15 years; (5) the term of such lease does not terminate earlier than
five years after the maturity date of the Mortgage Note; and (6) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates in
transferring ownership in residential properties is a widely accepted practice.
(ww) Origination. No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken place on
the part of any person including without limitation the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or, in the application of any insurance in
relation to such Mortgage Loan; no predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan.
With respect to the representations and warranties set forth in this
Section 3.01 that are made to the best of the Seller's knowledge or as to which
the Seller has no knowledge, if it is discovered by the Depositor, the Servicer
or the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan, Prepayment Charge or the interest therein of the
Purchaser or the Purchaser's assignee, transferee or designee then,
notwithstanding the Seller's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
Upon discovery by the Seller, the Servicer, the Purchaser or any
assignee, transferee or designee of the Purchaser of a breach of any of the
representations and warranties contained in this Article III that materially and
adversely affects the value of any Mortgage Loan or the interest therein of the
Purchaser or the Purchaser's assignee, transferee or designee, the party
discovering the breach shall give prompt written notice to the others. Within 90
days of the earlier of its discovery or its receipt of notice of any such breach
of a representation or warranty, the Seller shall promptly cure such breach in
all material respects, or in the event such breach cannot be cured, the Seller
shall repurchase the affected Mortgage Loan or cause the removal of such
Mortgage Loan from the Trust Fund and substitute for it one or more Eligible
Substitute Mortgage Loans, in either case, in accordance with Section 2.03 of
the Pooling and Servicing Agreement.
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Seller
shall have 120 days to cure such defect (or within 90 days of the earlier of the
Seller's discovery or receipt of notification if such defect would cause the
Mortgage Loan not to be a "qualified mortgage" for REMIC purposes), or in the
event such defect cannot be cured, the Seller shall repurchase the affected
Mortgage Loan or cause the removal of such Mortgage Loan from the Trust Fund and
substitute for it one or more Eligible Substitute Mortgage Loans, in either
case, within such time periods and in accordance with Section 2.03 of the
Pooling and Servicing Agreement.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive delivery of the respective Mortgage
Files to the Trustee on behalf of the Purchaser and shall inure to the benefit
of the Certificateholders notwithstanding any restrictive or qualified
endorsement or assignment.
It is understood and agreed that the obligations of the Seller set
forth in this Section 3.01 to cure, repurchase or substitute for a defective
Mortgage Loan constitute the sole remedies of the Purchaser respecting a missing
or defective document or a breach of the representations or warranties contained
in this Section 3.01.
Section 3.02 Seller Representations and Warranties. The Seller
hereby represents and warrants to the Purchaser that as of the Closing Date or
as of such date specifically provided herein:
(a) The Seller is duly organized, validly existing and in good
standing as a corporation under the laws of the State of North Carolina and has
the power and authority to own its assets and to transact the business in which
it is currently engaged. The Seller is duly qualified to do business and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such qualification
and in which the failure to so qualify would have a material adverse effect on
(i) its business, properties, assets or condition (financial or other), (ii) the
performance of its obligations under this Agreement, (iii) the value or
marketability of the Mortgage Loans, or (iv) its ability to foreclose on the
related Mortgaged Properties.
(b) The Seller has the power and authority to make, execute, deliver
and perform this Agreement and to consummate all of the transactions
contemplated hereunder and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the Seller's legal, valid and binding
obligations enforceable in accordance with its terms, except as enforcement of
such terms may be limited by (i) bankruptcy, insolvency, reorganization,
receivership, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies, (ii) general
equity principals (regardless of whether such enforcement is considered in a
proceeding in equity or at law) or (iii) public policy considerations underlying
the securities laws, to the extent that such policy considerations limit the
enforceability of the provisions of this Agreement which purport to provide
indemnification from securities laws liabilities.
(c) The Seller holds all necessary licenses, certificates and
permits from all governmental authorities necessary for conducting its business
as it is presently conducted, except for such licenses, certificates and permits
the absence of which, individually or in the aggregate, would not have a
material adverse effect on the ability of the Seller to conduct its business as
it is presently conducted. It is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, licenses, approvals or authorizations, or
registrations or declarations as shall have been obtained or filed, as the case
may be, prior to the Closing Date.
(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein (i) will not conflict with
or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Seller pursuant to any material contract, indenture, mortgage, loan agreement,
note, lease or other instrument, agreement or document to which the Seller is a
party or by which it may be bound or to which any of the property or assets of
the Seller is subject, (ii) will not result in any violation of the provisions
of the charter or by-laws of the Seller, or any law, administrative regulation
or administrative or court decree applicable to the Seller and (iii) will not
require any filing or registration with or notice to or consent, approval,
authorization or order of any court or governmental authority or agency.
(e) The transactions contemplated by this Agreement are in the
ordinary course of the Seller's business.
(f) The Seller is not insolvent, nor will the Seller be made
insolvent by the transfer of the Mortgage Loans, nor is the Seller aware of any
pending insolvency.
(g) The Seller is not in violation of, and the execution and
delivery of this Agreement by it and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to any
order or decree of any court, or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation would
materially and adversely affect the Seller's condition (financial or otherwise)
or operations or any of the Seller's properties, or materially and adversely
affect the performance of any of its duties hereunder.
(h) There are no actions or proceedings against, or investigations
of, the Seller pending or, to its knowledge, threatened, before any court,
administrative agency or other tribunal (i) that, if determined adversely, would
prohibit the Seller from entering into this Agreement, (ii) seeking to prevent
the consummation of any of the transactions contemplated by this Agreement or
(iii) that, if determined adversely, would prohibit or materially and adversely
affect the Seller's performance of any of its respective obligations under, or
the validity or enforceability of, this Agreement.
(i) The Seller is not transferring the Mortgage Loans to the
Purchaser hereunder with any intent to hinder, delay or defraud any of its
creditors.
(j) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claims.
(k) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
ARTICLE IV
SELLER'S COVENANTS
Section 4.01 Covenants of the Seller. The Seller hereby covenants
that except for the transfer hereunder, the Seller will not sell, pledge, assign
or transfer to any other Person, or grant, create, incur, assume or suffer to
exist any lien on any Mortgage Loan, or any interest therein; the Seller will
notify the Trustee, as assignee of the Purchaser, of the existence of any lien
on any Mortgage Loan immediately upon discovery thereof, and the Seller will
defend the right, title and interest of the Trust, as assignee of the Purchaser,
in, to and under the Mortgage Loans, against all claims of third parties
claiming through or under the Seller; provided, however, that nothing in this
Section 4.01 shall prevent or be deemed to prohibit the Seller from suffering to
exist upon any of the Mortgage Loans any liens for municipal or other local
taxes and other governmental charges if such taxes or governmental charges shall
not at the time be due and payable or if the Seller shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
ARTICLE V
TERMINATION
Section 5.01 Termination. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate
upon the termination of the Trust as provided in Article X of the Pooling and
Servicing Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Amendment. This Agreement may be amended from time to
time by the Seller and the Purchaser by written agreement signed by the Seller
and the Purchaser.
Section 6.02 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 6.03 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, postage prepaid, addressed
as follows:
if to the Seller:
Banc of America Mortgage Capital Corporation
Banc of America Mortgage Capital Corporation Corporate Center
NC1-007-11-07
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: General Counsel
or such other address as may hereafter be furnished to the Purchaser in writing
by the Seller.
if to the Purchaser:
Asset Backed Funding Corporation.
100 North Tyron Street
11th Floor
Charlotte, North Carolina 28255
Attention: Michael P. Schoffelen
or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.
Section 6.04 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, 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.
Section 6.05 Counterparts. This Agreement may be executed in one or
more counterparts by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original and such
counterparts, together, shall constitute one and the same agreement.
Section 6.06 Further Agreements. The Purchaser and the Seller each
agree to execute and deliver to the other such additional documents, instruments
or agreements as may be necessary or reasonable and appropriate to effectuate
the purposes of this Agreement or in connection with the issuance of any Series
of Certificates representing interests in the Mortgage Loans.
Without limiting the generality of the foregoing, as a further
inducement for the Purchaser to purchase the Mortgage Loans from the Seller, the
Seller will cooperate with the Purchaser in connection with the sale of any of
the securities representing interests in the Mortgage Loans. In that connection,
the Seller will provide to the Purchaser any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request and will provide to the
Purchaser such additional representations and warranties, covenants, opinions of
counsel, letters from auditors, and certificates of public officials or officers
of the Seller as are reasonably required in connection with such transactions
and the offering of investment grade securities rated by the Rating Agencies.
Section 6.07 Intention of the Parties. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling, the
Mortgage Loans rather than the pledging of the Mortgage Loans by the Seller to
secure a loan by the Purchaser to the Seller. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes and all
other purposes as a sale by the Seller and a purchase by the Purchaser of the
Mortgage Loans. The Purchaser will have the right to review the Mortgage Loans
and the related Mortgage Files to determine the characteristics of the Mortgage
Loans which will affect the Federal income tax consequences of owning the
Mortgage Loans and the Seller will cooperate with all reasonable requests made
by the Purchaser in the course of such review.
Section 6.08 Successors and Assigns; Assignment of this Agreement.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Seller, the Purchaser and the Trustee. The obligations of the Seller under this
Agreement cannot be assigned or delegated to a third party without the consent
of the Purchaser and which consent shall be at the Purchaser's sole discretion,
except that the Purchaser acknowledges and agrees that the Seller may assign its
obligations hereunder to any Person into which the Seller is merged or any
corporation resulting from any merger, conversion or consolidation to which the
Seller is a party or any Person succeeding to the business of the Seller. The
parties hereto acknowledge that the Purchaser is acquiring the Mortgage Loans
for the purpose of contributing them to a trust that will issue a series of
certificates representing undivided interests in such Mortgage Loans. As an
inducement to the Purchaser to purchase the Mortgage Loans, the Seller
acknowledges and consents to the assignment by the Purchaser to the Trustee of
all of the Purchaser's rights against the Seller pursuant to this Agreement
insofar as such rights relate to Mortgage Loans transferred to the Trustee and
to the enforcement or exercise of any right or remedy against the Seller
pursuant to this Agreement by the Trustee. Such enforcement of a right or remedy
by the Trustee shall have the same force and effect as if the right or remedy
had been enforced or exercised by the Purchaser directly.
Section 6.09 Survival. The representations and warranties set forth
in Sections 3.01 and 3.02 hereof shall survive the purchase of the Mortgage
Loans hereunder.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed to this Mortgage Loan Purchase Agreement by their respective
officers thereunto duly authorized as of the day and year first above written.
ASSET BACKED FUNDING CORPORATION,
as Purchaser
By: ____________________________________
Name: Michael P. Schoffelen
Title: Senior Vice President
BANC OF AMERICA MORTGAGE CAPITAL
CORPORATION
as Seller
By: ____________________________________
Name: Mary E. Rapoport
Title: Vice President
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
On the 30th day of July, 2002 before me, a Notary Public in and for
said State, personally appeared Michael P. Schoffelen, known to me to be a
Senior Vice President of Asset Backed Funding Corporation, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________________
Notary Public
STATE OF NORTH CAROLINA)
) ss.:
COUNTY OF MECKLENBURG)
On the 30th day of July, 2002 before me, a Notary Public in and for
said State, personally appeared Mary E. Rapoport, known to me to be a Vice
President of Banc of America Mortgage Capital Corporation, the company that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________________
Notary Public
SCHEDULE I
MORTGAGE LOAN SCHEDULE
----------------------
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
Personally appeared before me the undersigned authority to
administer oaths, ______________________ who first being duly sworn deposes and
says: Deponent is ______________________ of ______________________________,
successor by merger to _________________________________________ ("Seller") and
who has personal knowledge of the facts set out in this affidavit.
On ___________________, _________________________ did execute and
deliver a promissory note in the principal amount of $__________.
That said note has been misplaced or lost through causes unknown and
is presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.
Seller executes this Affidavit for the purpose of inducing U.S. Bank
National Association, as trustee on behalf of ABFC Asset-Backed Certificates,
Series 2002-NC1, to accept the transfer of the above described loan from Seller.
Seller agrees to indemnify and hold harmless U.S. Bank National
Association and Asset Backed Funding Corporation for any losses incurred by such
parties resulting from the above described promissory note has been lost or
misplaced.
By: ____________________________________
________________________________________
STATE OF )
) SS:
COUNTY OF )
On this ____ day of _______ 20__, before me, a Notary Public, in and
for said County and State, appeared ________________________, who acknowledged
the extension of the foregoing and who, having been duly sworn, states that any
representations therein contained are true.
Witness my hand and Notarial Seal this ____ day of _______ 20__.
______________________________
______________________________
My commission expires ________.
EXHIBIT I
FORM OF ERISA REPRESENTATION
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Capital Markets Fiduciary Services,
Asset Backed Funding Corporation Series 2002-NC1
Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, North Carolina 28255
Re: ABFC Asset-Backed Certificates, Series 2002-NC1
-----------------------------------------------
Ladies and Gentlemen:
1. [The undersigned is the ______________________ of (the
"Transferee") a [corporation duly organized] and existing under the laws of
__________, on behalf of which he makes this affidavit.] [The undersigned,
___________________, is the transferee (the "Transferee").]
2. The Transferee hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Asset Backed Funding
Corporation, as depositor (the "Depositor"), Ocwen Federal Bank FSB, as
servicer, and U.S. Bank National Association, as trustee (the "Trustee"), no
transfer of the ERISA-Restricted Certificates shall be permitted to be made to
any person unless the Depositor and the Certificate Registrar (as defined in the
Agreement) have received a certificate from such transferee in the form hereof.
3. The Transferee either (x) (i) is not an employee benefit plan
subject to Section 406 or Section 407 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code") or any materially similar provisions of
applicable federal, state or local law ("Similar Law"), the Trustee of any such
plan or a person acting on behalf of any such plan nor a person using the assets
of any such plan or (ii) (except in the case of the Class R, Class CE and Class
P Certificates) is an insurance company which is purchasing such Certificates
with funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60") and that the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60 or (y) (except in the case of the Class R
Certificate) shall deliver to the Certificate Registrar and the Depositor an
opinion of counsel (a "Benefit Plan Opinion") satisfactory to the Certificate
Registrar, and upon which the Certificate Registrar and the Depositor shall be
entitled to rely, to the effect that the purchase or holding of such Certificate
by the Transferee will not result in the assets of the Trust Fund being deemed
to be plan assets and subject to the prohibited transaction provisions of ERISA
or the Code (or similar provisions of Similar Law) and will not subject the
Trustee or the Depositor to any obligation in addition to those undertaken by
such entities in the Pooling and Servicing Agreement, which opinion of counsel
shall not be an expense of the Trustee or the Depositor.
Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreement.
IN WITNESS WHEREOF, the Transferee has executed this certificate.
________________________________________
[Transferee]
By: ____________________________________
Name:
Title:
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, NC 28255
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Capital Markets Fiduciary Services,
Asset Backed Funding Corporation Series 2002-NC1
Ladies and Gentlemen:
In connection with our acquisition of the ABFC Asset-Backed
Certificates, Series 2002-NC1 (the "Certificates"), we certify that (a) we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we are an "accredited investor,"
as defined in Regulation D under the Act, and have such knowledge and experience
in financial and business matters that we are capable of evaluating the merits
and risks of investments in the Certificates, (c) we have had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (d)
we are acquiring the Certificates for investment for our own account and not
with a view to any distribution of such Certificates (but without prejudice to
our right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (g) below), (e) we agree that the Certificates must be
held indefinitely by us and we acknowledge that we are able to bear the economic
risk of investment in the Certificates, (f) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action which would result in a violation of Section 5 of the
Act, (g) we will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide an
opinion of counsel satisfactory to the addressees of this Certificate that such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement and (h)
we acknowledge that the Certificates will bear a legend setting forth the
applicable restrictions on transfer.
Very truly yours,
[NAME OF TRANSFEREE]
By: ____________________________________
Authorized Officer
FORM OF RULE 144A INVESTMENT LETTER
[DATE]
Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, NC 28255
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Capital Markets Fiduciary Services,
Asset Backed Funding Corporation Series 2002-NC1
Re: ABFC Asset-Backed Certificates, Series 2002-NC1
Ladies and Gentlemen:
In connection with our acquisition of the ABFC Asset-Backed
Certificates, Series 2002-NC1 (the "Certificates"), we certify that (a) we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we have had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (c)
we have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (d) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. We are aware that the sale to us is being
made in reliance on Rule 144A. We are acquiring the Certificates for our own
account or for resale pursuant to Rule 144A and further, understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By: ____________________________________
Authorized Officer
ANNEX 1 TO EXHIBIT J
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________(1) in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts
or similar business trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision over
any such institutions or is a foreign savings and loan association
or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State, territory
or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisors
Act of 1940.
- ----------
(1) Buyer must own and/or invest on a discretionary basis at least $__________
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $__________ in securities.
iii. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
iv. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
v. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
vi. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
________________________________________
Print Name of Buyer
By: ____________________________________
Name:
Title:
Date: __________________________________
ANNEX 2 TO EXHIBIT J
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $____________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
________________________________________
Print Name of Buyer or Adviser
By: ____________________________________
Name:
Title:
IF AN ADVISER:
________________________________________
Print Name of Buyer
Date: __________________________________
EXHIBIT K
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT
ABFC ASSET-BACKED CERTIFICATES, SERIES 2002-NC1
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is [an officer of] ____________________, the
proposed Transferee of an Ownership Interest in the Class R Certificates (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Certificates, among Asset Backed
Funding Corporation, as depositor, Ocwen Federal Bank FSB, as servicer, and U.S.
Bank National Association, as trustee (the "Trustee"). Capitalized terms used,
but not defined herein shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this affidavit
on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificates either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 5.02(d) of
the Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth in this Exhibit K to the Agreement (a "Transferor Certificate")
to the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate.
8. The Transferee's taxpayer identification number is
____________________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. That the Transferee will not cause income from the Class R
Certificate to be attributable to a foreign permanent establishment or fixed
base, within the meaning of an applicable income tax treaty, of the Transferee
or any other person.
12. That, if the Transferee is purchasing the Class R Certificate in
a transfer intended to meet the safe harbor provisions of Treasury Regulations
Sections 1.860E-1(c), the Transferee has executed and attached Attachment A
hereto.
13. The Transferee is not an employee benefit plan that is subject
to ERISA or a plan that is subject to Section 4975 of the Code or a plan or
arrangement subject to any materially similar provisions of applicable federal,
state or local law, , nor are we acting on behalf of such a plan.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of __________________, 20__.
[NAME OF TRANSFEREE]
By: _____________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named ____________ , known
or proved to me to be the same person who executed the foregoing instrument and
to be the ____________________ of the Transferee, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this ____ day of ________ , 20__.
________________________________________
NOTARY PUBLIC
My Commission expires the ____ day of
________________, 20__.
ATTACHMENT A
to
AFFIDAVIT PURSUANT TO SECTION 860E(e)(4) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, AND FOR NON-ERISA INVESTORS
Check the appropriate box:
[_] The consideration paid to the Transferee to acquire the Class R Certificate
equals or exceeds the excess of (a) the present value of the anticipated tax
liabilities over (b) the present value of the anticipated savings associated
with holding such Certificate, in each case calculated in accordance with U.S.
Treasury Regulations Sections 1.860E-1(c)(7) and (8), computing present values
using a discount rate equal to the short-term Federal rate prescribed by Section
1274(d) of the Code and the compounding period used by the Transferee.
OR
[_] The transfer of the Class R Certificate complies with U.S. Treasury
Regulations Sections 1.860E-1(c)(5) and (6) and, accordingly:
(i) the Transferee is an "eligible corporation," as defined in U.S.
Treasury Regulations Section 1.860E-1(c)(6)(i), as to which income from
Class R Certificate will only be taxed in the United States;
(ii) at the time of the transfer, and at the close of the
Transferee's two fiscal years preceding the year of the transfer, the
Transferee had gross assets for financial reporting purposes (excluding
any obligation of a person related to the Transferee within the meaning of
U.S. Treasury Regulations Section 1.860E-1(c)(6)(ii)) in excess of $100
million and net assets in excess of $10 million;
(iii) the Transferee will transfer the Class R Certificate only to
another "eligible corporation," as defined in U.S. Treasury Regulations
Section 1.860E-1(c)(6)(i), in a transaction that satisfies the
requirements of Sections 1.860E-1(c)(4)(i), (ii) and (iii) and Section
1.860E-1(c)(5) of the U.S. Treasury Regulations;
(iv) the Transferee has determined the consideration paid to it to
acquire the Class R Certificate based on reasonable market assumptions
(including, but not limited to, borrowing and investment rates, prepayment
and loss assumptions, expense and reinvestment assumptions, tax rates and
other factors specific to the Transferee) that it has determined in good
faith; and
(v) in the event of any transfer of the Class R Certificate by the
Transferee, the Transferee will require its transferee to complete a
representation in the form of this Attachment A as a condition of the
transferee's purchase of the Class R Certificate.
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
[DATE]
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Capital Markets Fiduciary Services,
Asset Backed Funding Corporation Series 2002-NC1
Asset Backed Funding Corporation
100 North Tryon Street
11th Floor
Charlotte, North Carolina 28255
Re: ABFC Asset-Backed Certificates, Series 2002-NC1
Ladies and Gentlemen:
In connection with our disposition of the ABFC Asset-Backed
Certificates, Series 2002-NC1 (the "Certificates"), we certify that (a) we
understand that the Certificates have not been registered under the Securities
Act of 1933, as amended (the "Act"), and are being disposed by us in a
transaction that is exempt from the registration requirements of the Act, (b) we
have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of the Class R Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of the Class R Certificate is to impede the assessment or collection
of tax.
Very truly yours,
[_____________________]
By: ____________________________________
EXHIBIT M
MONTHLY INFORMATION DELIVERED BY SERVICER
1. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the number and Principal Balances of all Mortgage
Loans which were the subject of Principal Prepayments during the related
Collection Period.
2. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the amount of all curtailments which were received
during the related Collection Period.
3. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the aggregate amount of the principal portion of
all Monthly Payments received during the related Collection Period.
4. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the amount of interest received on the Mortgage
Loans during the related Collection Period.
5. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the aggregate amount of the Advances made and
recovered with respect to such Distribution Date.
6. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the aggregate amount of the Servicing Advances
made and recovered with respect to such Distribution Date.
7. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the delinquency and foreclosure information and
the amount of Mortgage Loan Losses during the related Collection Period.
8. The information contained in the Liquidation Report for the related
Collection Period.
9. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the weighted average maturity, the weighted
average Mortgage Interest Rate and the weighted average Net Mortgage
Interest Rate as of the last day of the Collection Period preceding of the
related Accrual Period.
10. The Servicing Fees paid and Servicing Fees accrued during the related
Collection Period.
11. The Trustee Fees paid and Trustee Fees accrued during the related
Collection Period.
12. The Credit Risk Manager Fees paid and Credit Risk Manager Fees accrued
during the related Collection Period.
13. The amount of all payments or reimbursements to the Servicer paid or to be
paid since the prior Distribution Date (or in the case of the first
Distribution Date, since the Closing Date).
14. The Pool Balance, the aggregate Principal Balance of the Group 1 Mortgage
Loan and the aggregate Principal Balance of the Group 2 Mortgage Loans.
15. With respect to the Mortgage Pool, the Group 1 Mortgage Loans and the
Group 2 Mortgage Loans, the number of Mortgage Loans outstanding at the
beginning and at the end of the related Collection Period.
16. The aggregate interest accrued on the Mortgage Loans, the Group 1 Mortgage
Loans and the Group 2 Mortgage Loans, at their respective Mortgage
Interest Rates for the related Collection Period.
17. The amount deposited in the Collection Account which may not be withdrawn
therefrom pursuant to an Order of a United States Bankruptcy Court of
competent jurisdiction imposing a stay pursuant to Section 362 of U.S.
Bankruptcy Code.
18. The aggregate Realized Losses in the Mortgage Pool, in the Group 1
Mortgage Loans and in the Group 2 Mortgage Loans since the Cut-off Date as
of the end of the related Collection Period.
19. The amount of Prepayment Charges received, the amount of Servicer
Prepayment Charge Payment Amounts paid, and the reason for any Prepayment
Charges waived without a corresponding Servicer Prepayment Charge Payment
Amount, all for the related Collection Period.
Schedule I