EXHIBIT 99.1
EXECUTION
SEQUOIA RESIDENTIAL FUNDING, INC.
Depositor
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Master Servicer and Securities Administrator
and
HSBC BANK USA
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2002
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS............................................................................................6
Section 1.01. Definitions....................................................................................6
Section 1.02. Calculations Respecting Mortgage Loans........................................................38
ARTICLE II DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES.......................................................38
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans..........................38
Section 2.02. Acceptance of Trust Fund by Trustee; Review of Documentation
for Trust Fund................................................................................41
Section 2.03. Representations and Warranties of the Depositor...............................................42
Section 2.04. Discovery of Breach; Repurchase or Substitution of Mortgage Loans.............................44
Section 2.05. Purchases of Converted Mortgage Loans.........................................................47
Section 2.06. Grant Clause..................................................................................47
ARTICLE III THE CERTIFICATES....................................................................................48
Section 3.01. The Certificates..............................................................................48
Section 3.02. Registration..................................................................................49
Section 3.03. Transfer and Exchange of Certificates.........................................................49
Section 3.04. Cancellation of Certificates..................................................................53
Section 3.05. Replacement of Certificates...................................................................53
Section 3.06. Persons Deemed Owners.........................................................................53
Section 3.07. Temporary Certificates........................................................................54
Section 3.08. Appointment of Paying Agent...................................................................54
Section 3.09. Book-Entry Certificates.......................................................................54
ARTICLE IV ADMINISTRATION OF THE TRUST FUND.....................................................................56
Section 4.01. Custodial Accounts; Distribution Account......................................................56
Section 4.03. Reports to Trustee and Certificateholders.....................................................57
ARTICLE V DISTRIBUTIONS TO HOLDERS OF CERTIFICATES..............................................................60
Section 5.01. Distributions Generally.......................................................................60
Section 5.02. Distributions from the Certificate Account....................................................61
Section 5.03. Allocation of Losses..........................................................................64
Section 5.04. Advances by Master Servicer...................................................................65
Section 5.05. Compensating Interest Payments................................................................65
Section 5.06. Basis Risk Reserve Fund.......................................................................65
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ARTICLE VI CONCERNING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR; EVENTS OF DEFAULT...........................................................................67
Section 6.01. Duties of Trustee and the Securities Administrator............................................67
Section 6.02. Certain Matters Affecting the Trustee and the Securities Administrator........................69
Section 6.03. Trustee and Securities Administrator Not Liable for Certificates..............................71
Section 6.04. Trustee and the Securities Administrator May Own Certificates.................................71
Section 6.05. Eligibility Requirements for Trustee..........................................................72
Section 6.06. Resignation and Removal of Trustee and the Securities Administrator...........................72
Section 6.07. Successor Trustee and Successor Securities Administrator......................................73
Section 6.08. Merger or Consolidation of Trustee or the Securities Administrator............................74
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian......................................74
Section 6.10. Authenticating Agents.........................................................................75
Section 6.11. Indemnification of Trustee, Securities Administrator and
Auction Administrator.........................................................................76
Section 6.12. Fees and Expenses of Securities Administrator, Trustee and
Auction Administrator.........................................................................77
Section 6.13. Collection of Monies..........................................................................77
Section 6.14. Events of Default; Trustee To Act; Appointment of Successor...................................77
Section 6.15. Additional Remedies of Trustee Upon Event of Default..........................................81
Section 6.16. Waiver of Defaults............................................................................81
Section 6.17. Notification to Holders.......................................................................82
Section 6.18. Directions by Certificateholders and Duties of Trustee During
Event of Default..............................................................................82
Section 6.19. Action Upon Certain Failures of the Master Servicer and Upon
Event of Default..............................................................................82
Section 6.20. Preparation of Tax Returns and Other Reports..................................................82
Section 6.21. Auction Administration Agreement; Swap Agreement..............................................83
ARTICLE VII PURCHASE OF MORTGAGE LOANS AND
TERMINATION OF THE TRUST FUND..............................................................................84
Section 7.01. Purchase of Mortgage Loans; Termination of Trust Fund Upon Purchase
or Liquidation of All Mortgage Loans..........................................................84
Section 7.02. Procedure Upon Termination of Trust Fund......................................................85
Section 7.03. Additional Trust Fund Termination Requirements................................................86
ARTICLE VIII RIGHTS OF CERTIFICATEHOLDERS.......................................................................87
Section 8.01. Limitation on Rights of Holders...............................................................87
Section 8.02. Access to List of Holders.....................................................................88
Section 8.03. Acts of Holders of Certificates...............................................................89
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ARTICLE IX ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS BY THE MASTER SERVICER...............................................................................90
Section 9.01. Duties of the Master Servicer; Enforcement of Servicer's
and Master Servicer's Obligations.............................................................90
Section 9.02. Assumption of Master Servicing by Trustee; Assumption of
Auction Administration Agreement and Swap Agreement...........................................91
Section 9.03. Representations and Warranties of the Master Servicer.........................................92
Section 9.04. Compensation to the Master Servicer...........................................................94
Section 9.05. Merger or Consolidation.......................................................................94
Section 9.06. Resignation of Master Servicer................................................................95
Section 9.07. Assignment or Delegation of Duties by the Master Servicer.....................................95
Section 9.08. Limitation on Liability of the Master Servicer and Others.....................................95
Section 9.09. Indemnification; Third-Party Claims...........................................................96
ARTICLE X REMIC ADMINISTRATION..................................................................................96
Section 10.01. REMIC Administration..........................................................................96
Section 10.02. Prohibited Transactions and Activities........................................................99
Section 10.03. Indemnification with Respect to Prohibited Transactions or
Loss of REMIC Status..........................................................................99
Section 10.04. REO Property..................................................................................99
ARTICLE XI MISCELLANEOUS PROVISIONS............................................................................100
Section 11.01. Binding Nature of Agreement; Assignment......................................................100
Section 11.02. Entire Agreement.............................................................................100
Section 11.03. Amendment....................................................................................101
Section 11.04. Voting Rights................................................................................102
Section 11.05. Provision of Information.....................................................................102
Section 11.06. Governing Law................................................................................103
Section 11.07. Notices......................................................................................103
Section 11.08. Severability of Provisions...................................................................103
Section 11.09. Indulgences; No Waivers......................................................................103
Section 11.10. Headings Not To Affect Interpretation........................................................103
Section 11.11. Benefits of Agreement........................................................................104
Section 11.12. Special Notices to the Rating Agencies.......................................................104
Section 11.13. Conflicts....................................................................................105
Section 11.14. Counterparts.................................................................................105
Section 11.15. No Petitions.................................................................................106
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ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit C Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit D Form of Custody Agreement
Exhibit E List of Servicing Agreements
Exhibit F List of Underlying Purchase Agreements
Exhibit G List of Limited Purpose Surety Bonds
Exhibit H Form of Rule 144A Transfer Bonds
Exhibit I Form of Purchaser's Letter for Institutional Accredited Investors
Exhibit J Form of ERISA Transfer Affidavit
Exhibit K Form of Letter of Representations with the Depository Trust Company
Schedule A Mortgage Loan Schedule
Schedule B-1 Mortgage Loan Representations and Warranties of the Initial Seller
Schedule B-2 Mortgage Loan Representations and Warranties of the Seller
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This POOLING AND SERVICING AGREEMENT, dated as of July 1, 2002 (the
"Agreement"), by and among SEQUOIA RESIDENTIAL FUNDING, INC., a Delaware
corporation, as depositor (the "Depositor"), HSBC Bank USA, a New York banking
corporation, as trustee (the "Trustee"), and WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, in its dual capacities as master servicer (the "Master
Servicer") and securities administrator (the "Securities Administrator") and
acknowledged by REDWOOD TRUST, INC., a Maryland corporation, as the initial
seller (the "Initial Seller") and RWT HOLDINGS, INC., a Delaware corporation, as
seller (the "Seller"), for purposes of Section 2.04.
PRELIMINARY STATEMENT
The Seller has acquired the Mortgage Loans from the Initial Seller. The
Depositor has acquired the Mortgage Loans from the Seller and at the Closing
Date is the owner of the Mortgage Loans and the other property being conveyed by
the Depositor to the Trustee hereunder for inclusion in the Trust Fund. On the
Closing Date, the Depositor will acquire the Certificates from the Trustee as
consideration for its transfer to the Trust Fund of the Mortgage Loans and the
other property constituting the Trust Fund. The Depositor has duly authorized
the execution and delivery of this Agreement to provide for the conveyance to
the Trustee of the Mortgage Loans and the other property constituting the Trust
Fund. All covenants and agreements made by the Initial Seller and the Seller in
the Mortgage Loan Purchase Agreements and in this Agreement and by the
Depositor, the Master Servicer, the Securities Administrator and the Trustee
herein with respect to the Mortgage Loans and the other property constituting
the Trust Fund are for the benefit of the Holders from time to time of the
Certificates. The Depositor, the Trustee, the Master Servicer and the Securities
Administrator are entering into this Agreement, and the Trustee is accepting the
Trust Fund created hereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.
As provided herein, the Trustee shall elect that the Trust Fund (exclusive
of the additional collateral, assets held in the Basis Risk Reserve Fund, the
Swap Agreement and the assets held in any account created thereunder and under
the Auction Administration Agreement (to the extent that such agreement or
accounts are deemed to be part of the Trust Fund)) be treated for federal income
tax purposes as comprising two real estate mortgage investment conduits (each a
"REMIC" or, in the alternative, the "Lower Tier REMIC" and the "Upper Tier
REMIC," respectively). Each Certificate, other than the Class A-R Certificate
and the Class LTR Certificate, shall represent ownership of a regular interest
in the Upper Tier REMIC. In addition, each of the Class 1A-1 and Class 1A-2
Certificates represents rights under the Auction Administration Agreement and
each of the LIBOR Certificates represents the right to receive payments in
respect of Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls from the Basis
Risk Reserve Fund as provided in Section 5.06. The Basis Risk Reserve Fund is
beneficially owned by the owners of the Interest Only Certificates. The Class
LTR Certificate represents the sole class of residual interest in the Lower Tier
REMIC. The Class A-R Certificate represents the sole class of residual interest
in the Upper Tier REMIC.
The Upper Tier REMIC shall hold as its assets the several classes of
uncertificated Lower Tier Interests in the Lower Tier REMIC and each such Lower
Tier Interest, other than the interest represented by the Class LTR Certificate,
is hereby designated as a regular interest in the Lower Tier REMIC for purposes
of the REMIC Provisions. The Lower Tier REMIC shall hold
as its assets the property of the Trust Fund other than the Lower Tier Interests
in the subsidiary REMIC and the Basis Risk Reserve Fund. The "Startup Day" for
each REMIC created hereby for purposes of the REMIC Provisions is the Closing
Date. In addition, for purposes of the REMIC Provisions, the latest possible
maturity date for each regular interest in each REMIC created hereby is the
month following month in which the Mortgage Loan having the latest maturity date
matures.
THE LOWER TIER REMIC INTERESTS
The following table sets forth (or describes) the class designation,
interest rate, initial principal amount, and corresponding class of certificates
for each class of Lower Tier Interests.
Interest Corresponding Class
Class Designation Principal Amount Rate of Certificates
- ----------------- ---------------- -------- -------------------------
LT1A-1 $ 50,000,100.00 (1) Class 1-A1, Class X-1 (6)
LT1A-2 $ 61,468,000.00 (1) Class 1-A2, Class X-1 (7)
LT2A-A $188,387,859.60 (2) Class 2-A, Class X-2A (8)
LT2A-B $274,709,140.40 (2) Class 2-A, Class X-2B (9)
LT3A $ 49,973,000.00 (3) Class 3-A
LTB1 $ 9,069,000.00 (4) Class B-1, Class X-B (10)
LTB2 $ 5,505,000.00 (4) Class B-2
LTB3 $ 3,886,000.00 (4) Class B-3
LTB4 $ 1,618,000.00 (4) Class B-4
LTB5 $ 970,000.00 (4) Class B-5
LTB6 $ 2,306,324.82 (4) Class B-6
LTR Certificate (5) (5) N/A
(1) The interest rate for each of these Lower Tier Interests for any
Distribution Date (and the related Accrual Period) is a per annum rate
equal to the Pool 1 Net WAC.
(2) The interest rate for each of these Lower Tier Interests for any
Distribution Date (and the related Accrual Period) is a per annum rate
equal to the Pool 2 Net WAC.
(3) The interest rate for the Class LT3A Interests for any Distribution
Date (and the related Accrual Period) is a per annum rate equal to the
Pool 3 Net WAC.
(4) The interest rate for each of these Lower Tier Interests for any
Distribution Date (and the related Accrual Period) is a per annum rate
equal to the Subordinate Net WAC.
(5) The Class LTR Certificate is the sole class of residual interest in
the Lower Tier REMIC. It does not have an interest rate or a principal
balance.
(6) On each Distribution Date on or before the Mandatory Auction
Distribution Date, the Class X-1 Certificates shall be entitled to a
specified portion of the interest that accrues on the Class LT1A-1
Interest. Specifically, for each such Distribution Date, the Class X-1
Certificate shall be entitled to interest accruals on the Class LT1A-1
Interest at a per annum rate equal to the excess, if any, of (i) the
Pool 1 Net WAC over (2) the Certificate Interest Rate on the Class
1-A1 Certificates for such Distribution Date (adjusted to reflect a
30/360 day count convention).
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(7) On each Distribution Date on or before the Mandatory Auction
Distribution Date, the Class X-1 Certificates shall be entitled to a
specified portion of the interest that accrues on the Class LT1A-2
Interest. Specifically, for each such Distribution Date, the Class X-1
Certificates shall be entitled to interest accruals on the Class
LT1A-1 Interest at a per annum rate equal to the excess, if any, of
(i) the Pool 1 Net WAC over (2) 3.455%.
(8) On each Distribution Date, the Class X-2A Certificates shall be
entitled to a specified portion of the interest accruing on the Class
LT2A-A Interest. Specifically, for each such Distribution Date, the
Class X-2A Certificates shall be entitled to interest accruals on the
Class LT2A-A Interest at a per annum rate equal to the excess of (i)
the Net WAC of the One-Month LIBOR Loans in Pool 2 over (ii) the
Certificate Interest Rate on the Class 2A Certificates (multiplied by
70% for the first Distribution Date only) for such Distribution Date.
(9) On each Distribution Date, the Class X-2B Certificates shall be
entitled to a specified portion of the interest accruing on the Class
LT2A-B Interest. Specifically, for each such Distribution Date, the
Class X-2B Certificates shall be entitled to interest accruals on the
Class LT2A-B Interest at a per annum rate equal to the excess of (i)
the Net WAC of the Six-Month LIBOR Loans in Pool 2 over (ii) the
Certificate Interest Rate on the Class 2A Certificates (multiplied by
70% for the first Distribution Date only) for such Distribution Date.
(10) On each Distribution Date, the Class X-B Certificates shall be
entitled to a specified portion of the interest accruing on the Class
LTB1 Interest. Specifically, for each such Distribution Date, the
Class X-B Certificates shall be entitled to interest accruals on the
Class LT1B Interest at a per annum rate equal to the excess of (i) the
Subordinate Net WAC over (ii) the Certificate Interest Rate on the
Class B-1 Certificates (multiplied by 70% for the first Distribution
Date only) for such Distribution Date.
On each Distribution Date, the Securities Administrator shall first pay
or charge as an expense of the Lower-Tier REMIC all expenses of the Trust for
such Distribution Date.
On each Distribution Date the Securities Administrator shall distribute
interest and principal on, and shall allocate realized losses among, the Lower
Tier Interests in the same manner that such amounts are distributed on and such
losses are allocated among the Corresponding Classes of Certificates, provided
however, that in determining distributions and the allocation of losses between
the Class LT2A-A and Class LT2A-B Interests, the Securities Administrator shall
make allocations to the Class LT2A-A Interest in accordance with the Class X-2A
Percentage for such Distribution Date and to the Class LT2A-B Interest in
accordance with the Class X-2B Percentage for such Distribution Date.
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THE CERTIFICATES
The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Principal Amount (or initial Class
Notional Amount), and minimum denomination for each Class of Certificates
comprising interests in the Trust Fund created hereunder.
Initial Class Minimum
Class Certificate Interest Principal Amount or Denominations or
Designation Rate Class Notional Amount Percentage Interest
- ----------- -------------------- --------------------- -------------------
Class 1A-1 (1) $ 50,000,000.00 $ 25,000.00
Class 1A-2 (2) $ 61,468,000.00 $ 25,000.00
Class 2A (3) $463,097,000.00 $ 25,000.00
Class 3A (4) $ 49,973,000.00 $ 25,000.00
Class X-1 (5) (12) 100%
Class X-2A (6) (13) 100%
Class X-2B (7) (14) 100%
Class X-B (8) (15) 100%
Class A-R 9(a) $100 100%
Class LTR 9(b) 9(b) 100%
Class B-1 (10) $ 9,069,000.00 $ 25,000.00
Class B-2 (11) $ 5,505,000.00 $ 25,000.00
Class B-3 (11) $ 3,886,000.00 $ 25,000.00
Class B-4 (11) $ 1,618,000.00 $100,000.00
Class B-5 (11) $ 970,000.00 $100,000.00
Class B-6 (11) $ 2,306,324.82 $100,000.00
- ---------------
(1) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) prior to the Mandatory Auction Distribution
Date for the Class 1-A1 Certificates will be the least of (i) LIBOR plus
0.130%; (ii) the Pool 1 Net WAC (adjusted to reflect an actual/360 day
count convention) and (iii) 11.000%; and from and after the Mandatory
Auction Distribution Date, such Certificate Interest Rate with respect to
any Distribution Date (and the related Accrual Period) will be the Pool 1
Net WAC.
(2) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) prior to the Mandatory Auction Distribution
Date for the Class 1-A2 Certificates will be equal to the lesser of (i)
3.455% and (ii) the Pool 1 Net WAC; and from and after the Mandatory
Auction Distribution Date, such Certificate Interest Rate with respect to
any Distribution Date (and the related Accrual Period) will be the Pool 1
Net WAC.
(3) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class 2A Certificates will be the least
of (i) LIBOR plus 0.300%; (ii) the Pool 2 Net WAC (adjusted to reflect a
30/360 day count convention) and (ii) 11.000%; provided, however, if the
Mortgage Loans and related property are not purchased pursuant to Section
7.01(c) on the Initial Optional Purchase Date, then with respect to each
subsequent Distribution Date the per annum rate calculated pursuant to
clause (i) above with respect to the Class 2A Certificates will be LIBOR
plus 0.600%.
(4) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class 3A Certificates will be the Pool
3 Net WAC.
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(5) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-1 Certificates will equal the
excess of the Pool 1 Net WAC over the weighted average of the Certificate
Interest Rates on the Class 1A-1 Certificates (adjusted to reflect a 30/360
day count convention) (multiplied by 70% for the first Distribution Date
only) and Class 1A-2 Certificates, weighted based on their relative Class
Principal Amounts.
(6) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-2A Certificates will equal the
excess of the Net WAC of the One-Month LIBOR Loans in Pool 2 over the
Certificate Interest Rate on the Class 2A Certificates (multiplied by 70%
for the first Distribution Date only).
(7) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-2B Certificates will equal the
excess of the Net WAC of Six-Month LIBOR Loans in Pool 2 over the
Certificate Interest Rate on the Class 2A Certificates (multiplied by 70%
for the first Distribution Date only).
(8) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-B Certificates will equal the
excess of the Subordinate Net WAC over the Certificate Interest Rate on the
Class B-1 Certificates (multiplied by 70% for the first Distribution Date
only).
(9)(a) The Certificate Interest Rate with respect to any Distribution Date
(and the related Accrual Period) for the Class A-R Certificate will
equal the Pool 1 Net WAC.
(9)(b) The Class LTR will be issued without a Certificate Interest Rate or
Class Principal Amount.
(10) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class B-1 Certificates will be the
least of (i) LIBOR plus 0.675%; (ii) the Subordinate Net WAC and (iii)
11.000%; provided, however, if the Mortgage Loans and related property are
not purchased pursuant to Section 7.01(c) on the Initial Optional Purchase
Date, then with respect to each subsequent Distribution Date the per annum
rate calculated pursuant to clause (i) above with respect to the Class B-1
Certificates will be LIBOR plus 1.0125%.
(11) The Certificate Interest Rates with respect to any Distribution Date (and
the related Accrual Period) for the Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates will be equal to the Subordinate Net WAC.
(12) The Class X-1 Certificate is an interest-only Class and for any
Distribution Date the Class X-1 Certificates shall bear interest at the
Certificate Interest Rate described above on a Class Notional Amount equal
to, (i) with respect to any Distribution Date on or before the Mandatory
Auction Distribution Date, the sum of the Class Principal Amounts of the
Class 1A-1 and Class 1A-2 Certificates immediately before such Distribution
Date, and (ii) for each Distribution Date thereafter, zero.
(13) The Class X-2A Certificate is an interest-only Class and for any
Distribution Date the Class X-2A Certificates shall bear interest at the
interest rate described above on a Class Notional Amount equal to the
product of (i) the Class Principal Amount of the Class 2A Certificates
immediately before such Distribution Date and (ii) the Class X-2A
Percentage for such Distribution Date.
(14) The Class X-2B Certificate is an interest-only Class and for any
Distribution Date the Class X-2B Certificates shall bear interest at the
Certificate Interest Rate described above on a Class Notional Amount equal
to the product of (i) the Class Principal Amount of the Class 2A
Certificates immediately before such Distribution Date and (ii) the Class
X-2B Percentage for such Distribution Date.
(15) The Class X-B Certificate is an interest-only Class and for any
Distribution Date the Class X-B Certificates shall bear interest at the
Certificate Interest Rate described above on a Class Notional Amount equal
to the Class Principal Amount of the Class B-1 Certificates immediately
before such Distribution Date.
5
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $647,892,424.82.
In consideration of the mutual agreements herein contained, the Depositor,
the Master Servicer, the Securities Administrator and the Trustee hereby agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. The following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accountant: A Person engaged in the practice of accounting who (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.
Accrual Period: With respect to any Distribution Date and any Class of
LIBOR Certificates, the period commencing on the 20th day of the month preceding
the month in which the Distribution Date occurs and ending on the 19th day of
the month in which the Distribution Date occurs; provided, however, that the
first Accrual Period with respect to the Class 1A-1 Certificates shall be the
21-day period beginning on the Closing Date and ending on August 19, 2002 and
such first Accrual Period with respect to the Class 2A and Class B-1
Certificates shall be a 20-day period. The Accrual Period applicable to the
Class 1A-2, Class 3A, Class X-1, Class X-2A, Class X-2B Class X-B, Class A-R,
Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates and to
each Class of Lower-Tier Interests shall be the calendar month immediately
preceding the month in which the related Distribution Date occurs. Prior to the
Distribution Date in January 2005, interest shall accrue on the Class 1A-1
Certificates on the basis of a 360-day year and the actual number of days
elapsed in each Accrual Period. From and after January 2005, interest on the
Class 1A-1 Certificates shall accrue on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue on all other Classes of
Certificates and on all Lower-Tier Interests on the basis of a 360-day year
consisting of twelve 30-day months.
Acknowledgements: The Assignment, Assumption and Recognition Agreements,
each dated July 30, 2002, assigning rights under the Purchase Agreements and the
Servicing Agreements from the Initial Seller to the Seller, from the Seller to
the Depositor and from the Depositor to the Trustee for the benefit of
Certificateholders.
Act: The Securities Act of 1933, as amended.
Additional Collateral: With respect to any Additional Collateral Mortgage
Loan, the marketable securities and other acceptable collateral pledged as
collateral pursuant to the related pledge agreements.
6
Additional Collateral Mortgage Loan: Each Mortgage Loan identified as such
in the Mortgage Loan Schedule.
Adjustment Date: As to any Mortgage Loan, the date on which the related
Mortgage Rate adjusts, in accordance with the terms of the related Mortgage
Note.
Advance: With respect to a Mortgage Loan, the payments required to be made
by the Master Servicer or the applicable Servicer with respect to any
Distribution Date pursuant to this Agreement or the Servicing Agreements, as
applicable, the amount of any such payment being equal to the aggregate of the
payments of principal and interest (net of the Master Servicing Fee and/or the
applicable Servicing Fee and net of any net income in the case of any REO
Property) on the Mortgage Loans that were due on the related Due Date and not
received as of the close of business on the related Determination Date, less the
aggregate amount of any such delinquent payments that the Master Servicer or the
Servicers have determined would constitute Nonrecoverable Advances if advanced.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Expense Rate: With respect to any Mortgage Loan, the sum of the
Master Servicing Fee Rate and the applicable Servicing Fee Rate.
Aggregate Senior Percentage: As to any Distribution Date, the percentage
equivalent of a fraction the numerator of which is the aggregate of the Class
Principal Amounts of the Class 1A-1, Class 1A-2, Class 2A, Class 3A and Class
A-R Certificates and the denominator of which is the Aggregate Stated Principal
Balance but in no event greater than 100%.
Aggregate Subordinate Percentage: As to any Distribution Date, the
difference between 100% and the Aggregate Senior Percentage for such
Distribution Date, but in no event less than zero.
Aggregate Stated Principal Balance: The aggregate of the Stated Principal
Balances for all Mortgage Loans at any date of determination.
Aggregate Voting Interests: The aggregate of the Voting Interests of all
the Certificates under this Agreement.
Agreement: This Pooling and Servicing Agreement and all amendments and
supplements hereto.
Allocable Share: With respect to each Class of Subordinated Certificates
and any Distribution Date, the percentage equivalent of a fraction, the
numerator of which is the Class
7
Principal Amount of such Class and the denominator of which is the aggregate of
the Class Principal Amounts of each Class of Subordinate Certificates.
Applicable Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Percentages of all
Classes of Certificates that rank lower in priority than such Class.
Apportioned Principal Balance: As to any Distribution and each Class of
Subordinate Certificates, the Class Principal Amount thereof multiplied by a
fraction, the numerator of which is the applicable Pool Subordinate Amount
(i.e., the Pool 1 Subordinate Amount, the Pool 2 Subordinate Amount or the Pool
3 Subordinate Amount), and the denominator of which is the sum of the Pool
Subordinate Amounts, in each case, on such date.
Appraised Value: With respect to any Mortgage Loan, the Appraised Value of
the related Mortgaged Property shall be: (i) with respect to a Mortgage Loan
other than a Refinancing Mortgage Loan, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the
time of the origination of such Mortgage Loan; and (ii) with respect to a
Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the
appraisal made at the time of the origination of such Refinancing Mortgage Loan.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.
Auction Administrator: The meaning given to such term in Section 6.21.
Auction Administration Agreement: The Auction Administration Agreement,
dated as of July 30, 2002, between GCD and the Auction Administrator.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10 until any successor authenticating agent for the
Certificates is named, and thereafter "Authenticating Agent" shall mean any such
successor. The Authenticating Agent shall be Wells Fargo Bank Minnesota,
National Association for so long as it is acting as Securities Administrator
under this Agreement.
Authorized Officer: Any Person who may execute an Officer's Certificate on
behalf of the Depositor.
Available Distribution Amount: With respect to any Distribution Date and
each Mortgage Pool, the total amount of all cash received by the Master Servicer
on the Mortgage Loans in such Mortgage Pool from each Servicer or otherwise
through the Distribution Account Deposit Date for deposit into the Distribution
Account in respect of such Distribution Date,
8
including (1) all scheduled installments of interest (net of the related
Servicing Fees) and principal collected on the related Mortgage Loans and due
during the Due Period related to such Distribution Date, together with any
Advances in respect thereof, (2) all Insurance Proceeds, Liquidation Proceeds
and the proceeds of any Additional Collateral from the related Mortgage Loans,
in each case for such Distribution Date, (3) all partial or full Principal
Prepayments, together with any accrued interest thereon, identified as having
been received from the related Mortgage Loans during the related Prepayment
Period, (4) any amounts paid by the Master Servicer and/or received from the
Servicers in respect of Prepayment Interest Shortfalls with respect to the
related Mortgage Loans and (5) the aggregate Purchase Price of all Defective
Mortgage Loans and Converted Mortgage Loans in such Mortgage Pool purchased from
the Trust Fund during the related Prepayment Period, minus:
(A) all related fees, charges and amounts payable or reimbursable to
the Master Servicer, the Securities Administrator, the Auction
Administrator or the Trustee under this Agreement, up to an
aggregate maximum amount equal to the product of (i) the applicable
Pool Percentage and (ii) $200,000 annually, or to the Servicers
under the Servicing Agreements;
(B) in the case of (2), (3), (4) and (5) above, any related
unreimbursed expenses incurred by the related Servicers in
connection with a liquidation or foreclosure and any unreimbursed
Advances or Servicing Advances due to the Master Servicer or the
related Servicers;
(C) any related unreimbursed Nonrecoverable Advances due to the
Master Servicer or the Servicers; and
(D) in the case of (1) through (4) above, any related amounts
collected which are determined to be attributable to a subsequent
Due Period or Prepayment Period.
Bankruptcy: As to any Person, the making of an assignment for the benefit
of creditors, the filing of a voluntary petition in bankruptcy, adjudication as
a bankrupt or insolvent, the entry of an order for relief in a bankruptcy or
insolvency proceeding, the seeking of reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief, or seeking, consenting
to or acquiescing in the appointment of a trustee, receiver or liquidator,
dissolution, or termination, as the case may be, of such Person pursuant to the
provisions of either the Bankruptcy Code or any other similar state laws.
Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.
Bankruptcy Loss: With respect to any Mortgage Loan losses that are
incurred as a result of a Deficient Valuation or Debt Service Reduction as
reported by the related Servicer to the Master Servicer.
Bankruptcy Loss Coverage Amount: As of any Distribution Date, the Initial
Bankruptcy Loss Coverage Amount as reduced by the aggregate amount of Bankruptcy
Losses allocated to the Certificates since the Cut-off Date; provided, however,
that the Bankruptcy Loss Coverage
9
Amount may also be reduced pursuant to a letter from each Rating Agency to the
Trustee to the effect that any such reduction shall not result in a downgrading
of the then current ratings assigned by such Rating Agency to the Senior
Certificates.
Bankruptcy Loss Coverage Termination Date: With respect to any Mortgage
Pool, the date on which the Bankruptcy Loss Coverage Amount is reduced to zero.
Basis Risk Reserve Fund: A fund created as part of the Trust Fund pursuant
to Section 5.06 of this Agreement but which is not an asset of any of the
REMICs.
Basis Risk Shortfall: With respect to any Distribution Date and any Class
of LIBOR Certificates, the excess, if any, of (i) the amount of Current Interest
that would have been payable on such Class for such Distribution Date if the
Certificate Interest Rate for such Class as set forth in the Preliminary
Statement hereto were determined without regard to clause (ii) in the definition
thereof, over (ii) the actual Current Interest payable on such Class for such
Distribution Date.
BBA: The British Banker's Association.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
and Certificate Registrar to the effect that any proposed transfer will not (i)
cause the assets of the Trust Fund to be regarded as plan assets for purposes of
the Plan Asset Regulations or (ii) give rise to any fiduciary duty on the part
of the Depositor or the Trustee.
Book-Entry Certificates: Beneficial interests in Certificates designated
as "Book-Entry Certificates" in this Agreement, ownership and transfers of which
shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a Book-Entry
Termination whereupon book-entry registration and transfer are no longer
permitted and Definitive Certificates are to be issued to Certificate Owners,
such Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of
the Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: the Class 1A-1, Class 1A-2, Class 2A, Class 3A, Class X-1, Class
X-2A, Class X-2B, Class X-B, Class B-1, Class B-2 and Class B-3.
Book-Entry Termination: The occurrence of any of the following events: (i)
the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book Entry Certificates, and the Depositor
is unable to locate a qualified successor; or (ii) the Depositor at its option
advises the Trustee and the Certificate Registrar in writing that it elects to
terminate the book-entry system through the Clearing Agency.
Business Day: Any day other than (i) a Saturday or a Sunday, (ii) a day on
which banking institutions in New York, New York or, if other than New York, the
city in which the Corporate Trust Office of the Trustee is located, or the
States of Maryland or Minnesota, are authorized or obligated by law or executive
order to be closed; or (iii) as used (a) for purposes of determining the
Distribution Date (pursuant to the definition thereof) in December 2004 or (b)
in the Swap Agreement and the Auction Administration Agreement, also a day on
which banking institutions in London are authorized or obligated by law or
execution order to be closed.
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Certificate: Any one of the certificates signed by the Trustee and
authenticated by the Securities Administrator as Authenticating Agent in
substantially the forms attached hereto as Exhibit A.
Certificate Group: Each of the Group 1 Certificates, the Group 2
Certificates and the Group 3 Certificates.
Certificate Interest Rate: With respect to each Class of Certificates and
any Distribution Date, the applicable per annum rate described in the
Preliminary Statement hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the owner of such Book-Entry Certificate, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate (other than
a Notional Certificate), at the time of determination, the maximum specified
dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the initial principal amount set forth on
the face of such Certificate, less (i) the amount of all principal distributions
previously made with respect to such Certificate; (ii) all Realized Losses
allocated to such Certificate; and (iii) in the case of a Subordinate
Certificate, any Subordinate Certificate Writedown Amount allocated to such
Certificates. For purposes of Article V hereof, unless specifically provided to
the contrary, Certificate Principal Amounts shall be determined as of the close
of business of the immediately preceding Distribution Date, after giving effect
to all distributions made on such date. Notional Certificates are issued without
Certificate Principal Amounts.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02. Wells Fargo National Bank
Minnesota, National Association will act as Certificate Registrar for so long as
it is the Securities Administrator under this Agreement.
Certificateholder: The meaning provided in the definition of "Holder."
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Class: All Certificates bearing the same class designation. In the case of
the Lower-Tier REMIC, the term "Class" refers to all Lower-Tier Interests having
the same alphanumeric designation.
Class Notional Amount: With respect to any Class of Notional Certificates,
the applicable class notional amount calculated as provided in the Preliminary
Statement hereto.
Class Subordination Percentage: With respect to each Class of Subordinate
Certificates, for each Distribution Subordination Date, the percentage obtained
by dividing the Class Principal Amount of such Class immediately prior to such
Distribution Date by the sum of the Class Principal Amounts of all Classes of
Certificates, immediately prior to such Distribution Date.
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Class Principal Amount: With respect to each Class of Certificates (other
than a Notional Certificate) the aggregate of the Certificate Principal Amounts
of all Certificates of such Class at the date of determination.
Class A-R Certificate: The Class A-R Certificate executed by the Trustee,
and authenticated and delivered by the Authenticating Agent, substantially in
the form annexed hereto as Exhibit A, and evidencing the ownership of the Class
LT1-R Interest, the Class LT2-R Interest, and the Class R Interest in the Upper
Tier REMIC.
Class LTR Certificate: The Class LTR Certificate executed by the Trustee
and authenticated and delivered by the Authenticating Agent, substantially in
the form annexed hereto as Exhibit A, and evidencing the ownership interest of
the Class LTI-R Interest in the Lower-Tier REMIC.
Class X-1 Required Basis Risk Deposit: For any Distribution Date, an
amount equal to the lesser of (i) the Current Interest for the Class X-1
Certificates for such Distribution Date and (ii) the amount required to maintain
the balance on deposit in the Class X-1 Sub Account at an amount equal to the
greater of (a) the Basis Risk Shortfalls for such Distribution Date with respect
to the Class 1A-1 Certificates and (b) $2,500.
Class X-2 Required Basis Risk Deposit: For any Distribution Date, an
amount equal to the lesser of (i) the Current Interest for the Class X-2A and
Class X-2B Certificates for such Distribution Date, and (ii) the amount required
to maintain the balance on deposit in the Class X-2 Sub Account in an amount
equal to the greater of (a) the sum of (I) the excess of (A) the Basis Risk
Shortfalls for such Distribution Date with respect to the Class 1A-1
Certificates over (B) the sum of amounts then on deposit in the Class X-1 Sub
Account and the Class X-B Sub Account (including the Class X-1 Required Basis
Risk Deposit and the Class X-B Required Basis Risk Deposit for such Distribution
Dates) and (II) the Basis Risk Shortfalls for such Distribution Date with
respect to the Class 2A Certificates and (b) $5,000. For any Distribution Date
for which the Class X-2 Required Basis Risk Deposit is less than the sum of
Current Interest for each such Class for such Distribution Date, the Class X-2A
and Class X-2B Certificates shall each fund a portion of the Class X-2 Required
Basis Risk Deposit in proportion to the relative amounts of Current Interest for
each such Class and for such Distribution Date.
Class X-2A Percentage: For any Distribution Date, the percentage
equivalent of a fraction the numerator of which is (i) the sum of the Stated
Principal Balances of the Pool 2 Mortgage Loans that are One-Month LIBOR Loans,
and the denominator of which is (ii) the sum of the Stated Principal Balances of
all of Pool 2 Mortgage Loans. For purposes of determining the Class X-2A
Percentage for any Distribution Date, the Stated Principal Balances of the
Mortgage Loans shall be determined as of the Due Date of the month preceding the
month in which such Distribution Date occurs.
Class X-2B Percentage: For any Distribution Date, the percentage
equivalent of a fraction the numerator of which is (i) the sum of the Stated
Principal Balances of the Pool 2 Mortgage Loans that are Six-Month LIBOR Loans,
and the denominator of which is (ii) the sum of the Stated Principal Balances of
all of the Pool 2 Mortgage Loans. For purposes of determining the Class X-2B
Percentage for any Distribution Date, the Stated Principal Balances
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of the Mortgage Loans shall be determined as of the Due Date of the month
preceding the month in which such Distribution Date occurs.
Class X-B Required Basis Risk Deposit: For any Distribution Date, an
amount equal to the lesser of (i) Current Interest for the Class X-B
Certificates for such Distribution Date, and (ii) the amount required to
maintain the balance on deposit in the Class X-B Sub Account in an amount equal
to the greater of (a) the sum of (I) the excess of (A) the Basis Risk Shortfalls
for such Distribution Date with respect to the Class 1A-1 Certificates over (B)
amounts on deposit in the Class X-1 Sub Account (including the Class X-1 Basis
Risk Deposit for such Distribution Date) and (II) the Basis Risk Shortfalls for
such Distribution Date with respect to the Class B-1 Certificates and (b)
$2,500.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date: July 30, 2002.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Compensating Interest Payment: As to any Distribution Date, the lesser of
(1) the Master Servicing Fee for such date; and (2) any Prepayment Interest
Shortfall for such date.
Converted Mortgage Loan: Any Mortgage Loan as to which the Mortgagor has
exercised the option to convert the Mortgage Rate to a different Index.
Cooperative Corporation: The entity that holds title (fee or an acceptable
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
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Corporate Trust Office: With respect to the Trustee, the principal
corporate trust office of the Trustee located at 452 Fifth Avenue, New York, New
York 10018, Attention: Trustee Sequoia Mortgage Trust 8, or at such other
address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Master Servicer and the Securities
Administrator or the principal corporate trust office of any successor Trustee.
With respect to the Certificate Registrar and presentment of Certificates for
registration of transfer, exchange or final payment, Wells Fargo Bank Minnesota,
National Association, 6th Avenue and Marquette, Minneapolis, Minnesota 55479,
Attention: Corporate Trust, Sequoia Mortgage Trust 8.
Corresponding Classes Of Certificates: With respect to each Lower-Tier
Regular Interest, the Class or Classes of Certificates appearing opposite such
Lower-Tier Regular Interest as described in the Preliminary Statement.
Credit Support Depletion Date: The first Distribution Date, if any, on
which the aggregate Certificate Principal Amount of the Subordinate Certificates
have been reduced to zero.
Current Interest: With respect to each Class of Certificates (other than
the Class LTR Certificate) and any Distribution Date, the aggregate amount of
interest accrued at the applicable Certificate Interest Rate during the related
Accrual Period on the Class Principal Amount (or Class Notional Amount) of such
Class immediately prior to such Distribution Date.
Custodial Accounts: Each custodial account (other than an Escrow Account)
established and maintained by a Servicer pursuant to a Servicing Agreement.
Custodian: A Person who is at anytime appointed by the Trustee and the
Depositor as a custodian of the Mortgage Documents and the Trustee Mortgage
Files. The initial Custodian is Deutsche Bank National Trust Company.
Custody Agreement: The Custody Agreement, dated as of July 1, 2002, among
the Depositor, the Seller, the Trustee and Deutsche Bank National Company, as
Custodian.
Cut-off Date: July 1, 2002.
Cut-off Date Balance: With respect to the Mortgage Loans in the Trust Fund
on the Closing Date, the Aggregate Stated Principal Balance as of the Cut-off
Date.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction by
a court of competent jurisdiction in a proceeding under the Bankruptcy Code in
the Scheduled Payment for such Mortgage Loan which became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any reduction that results in a permanent forgiveness of principal.
Defective Mortgage Loan: The meaning specified in Section 2.04.
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 indebtedness under the Mortgage Loan, or any
reduction in the amount of principal
14
to be paid in connection with any Scheduled Payment that results in a permanent
forgiveness of principal, which valuation results from an order of such court
which is final and non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificate: A Certificate of any Class issued in definitive,
fully registered, certificated form.
Deleted Mortgage Loan: As defined in the applicable Purchase Agreement.
Delinquent: Any Mortgage Loan with respect to which the Scheduled Payment
due on a Due Date is not received.
Depositor: Sequoia Residential Funding, Inc., a Delaware corporation and
indirect wholly owned subsidiary of the Initial Seller, having its principal
place of business in California or its successors in interest.
Determination Date: With respect to each Distribution Date, the 10th day
of the month in which such Distribution Date occurs, or, if such 10th day is not
a Business Day, the next succeeding Business Day.
Disqualified Organization: A "disqualified organization" as defined in
Section 860(e)(5) of the Code.
Distribution Account: The separate Eligible Account created and maintained
by the Securities Administrator, on behalf of the Trustee, pursuant to Section
4.01 in the name of the Trustee for the benefit of the Certificateholders and
designated "Wells Fargo Bank Minnesota, National Association, in trust for
registered holders of Sequoia Mortgage Trust 8, Mortgage Pass-Through
Certificates." Funds in the Distribution Account (exclusive of any earnings on
investments made with funds deposited in the Distribution Account) shall be held
in trust for the Trustee and the Certificateholders for the uses and purposes
set forth in this Agreement.
Distribution Account Deposit Date: The 18th day of each calendar month
after the initial issuance of the Certificates or, if such 18th day is not a
Business Day, the immediately preceding Business Day, commencing in August 2002.
Distribution Date: The 20th day of each month or, if such 20th day is not
a Business Day, the next succeeding Business Day, commencing in August 2002.
Due Date: With respect to any Mortgage Loan, the date on which a Scheduled
Payment is due under the related Mortgage Note as indicated in the applicable
Servicing Agreement.
Due Period: As to any Distribution Date, the period beginning on the
second day of the month preceding the month of such Distribution Date, and
ending on the first day of the month of such Distribution Date.
Effective Loan-to-Value Ratio: A fraction, expressed as a percentage, the
numerator of which is the original Stated Principal Balance of the Mortgage
Loan, less the amount of
15
Additional Collateral required to secure such Mortgage Loan at the time of
origination, if any, and the denominator of which is the Appraised Value of the
related Mortgage Property at such date.
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 debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each Rating Agency, the Certificateholders have
a claim with respect to the funds in such account or a perfected first priority
security interest against any 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 or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the trust department of a federal or state chartered depository institution or
trust company, acting in its fiduciary capacity or (iv) any other account
acceptable to each Rating Agency. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee, the Paying Agent, the Securities Administrator or the Master
Servicer.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of an
Underwriter's Exemption.
ERISA-Restricted Certificate: The Class A-R, Class LTR, Class B-4, Class
B-5 or Class B-6 Certificates.
Escrow Account: As defined in Section 1 of each Servicing Agreement.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 6.14.
Excess Loss: With respect to any Mortgage Loan, the amount of any (i)
Fraud Loss realized after the Fraud Loss Coverage Termination Date, (ii) Special
Hazard Loss realized after the Special Hazard Loss Coverage Termination Date or
(iii) Bankruptcy Loss realized after the Bankruptcy Loss Coverage Termination
Date.
Fannie Mae: The entity formerly known as the Federal National Mortgage
Association, a federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
16
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Fitch Ratings: Fitch, Inc., or any successor in interest
Fraud Loss Coverage Amount: As of the Closing Date, $19,436,773, subject
to reduction from time to time by the amount of any Fraud Losses allocated to
the Certificates. In addition, on each anniversary of the Cut-Off Date, the
Fraud Loss Coverage Amount shall be reduced as follows: (a) on the first
anniversary of the Cut-Off Date, to an amount equal to the lesser of (i) 2.00%
of the then current Aggregate Stated Principal Balance and (ii) the excess of
the Fraud Loss Coverage Amount as of the Cut-Off Date over the cumulative amount
of Fraud Losses allocated to the Certificates since the Cut-Off Date; (b) on the
second, third and fourth anniversaries of the Cut-Off Date, to an amount equal
to the lesser of (i) 1.00% of the then current Aggregate Stated Principal
Balance and (ii) the excess of the Fraud Loss Coverage Amount as of the
immediately preceding anniversary of the Cut-Off Date, over the cumulative
amount of Fraud Losses allocated to the Certificates since such preceding
anniversary; and (c) on the fifth anniversary of the Cut-Off Date, to zero;
provided, however, that the Fraud Loss Coverage Amount may also be reduced
pursuant to a letter from each Rating Agency to the Trustee to the effect that
any such reduction shall not result in the downgrading of the then current
ratings assigned by such Rating Agency to the Classes of Senior Certificates.
Fraud Loss Coverage Termination Date: The date on which the Fraud Loss
Coverage Amount is reduced to zero.
Fraud Losses: Realized Losses on any Mortgage Loan sustained by reason of
a default arising from fraud, dishonesty or misrepresentation in connection with
that Mortgage Loan, as reported by the related Servicer to the Master Servicer.
GCD: Greenwich Capital Derivatives, Inc.
Global Securities: The global certificates representing the Book-Entry
Certificates.
Group 1: All of the Group 1 Certificates.
Group 1 Certificate: Any Class 1A-1, Class 1A-2, Class A-R and Class X-1
Certificate.
Group 2: All of the Group 2 Certificates.
Group 2 Certificate: Any Class 2A, Class X-2A and Class X-2B Certificate.
Group 3: All of the Group 3 Certificates.
Group 3 Certificate: Any Class 3A Certificate.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the
17
Depositor, the Trustee, the Master Servicer, the Securities Administrator, the
Auction Administrator and any Servicer, or any Affiliate thereof shall be deemed
not to be outstanding in determining whether the requisite percentage necessary
to effect any such consent has been obtained, except that, in determining
whether the Trustee shall be protected in relying upon any such consent, only
Certificates which a Responsible Officer of the Trustee knows to be so owned
shall be disregarded. The Trustee may request and conclusively rely on
certifications by the Depositor, the Master Servicer, the Securities
Administrator, the Auction Administrator or any Servicer in determining whether
any Certificates are registered to an Affiliate of the Depositor, the Master
Servicer, the Securities Administrator, the Auction Administrator or any
Servicer.
HUD: The United States Department of Housing and Urban Development, or any
successor thereto.
Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission's Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
Index: As to each Mortgage Loan, the index from time to time in effect for
adjustment of the Mortgage Rate as set forth as such on the related Mortgage
Note.
Initial Bankruptcy Loss Coverage Amount: $126,045.
Initial LIBOR Rate: 1.81000%.
Initial Mortgage Loan Purchase and Sale Agreement: The mortgage loan
purchase and sale agreement, dated as of July 1, 2002, between the Initial
Seller and the Seller.
Initial Optional Purchase Date: The first Distribution Date following the
date on which the Aggregate Stated Principal Balance is less than 10.00% of the
Cut-off Date Balance.
Initial Seller: Redwood Trust, Inc., a Maryland corporation.
Insurance Policy: With respect to any Mortgage Loan, any insurance policy,
including all names and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid by any Insurance Policy (excluding
proceeds required to be applied to the restoration and repair of the related
Mortgaged Property or released to the Mortgagor), in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses and
(i) the proceeds from any Limited Purpose Surety Bond.
18
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Distribution Amount: For each Class of Certificates, on any
Distribution Date, the Current Interest for such Class, as reduced by such
Class's share of Net Prepayment Interest Shortfalls, Relief Act Reductions and
the interest portion of Excess Losses. Any such shortfalls and losses shall be
allocated among all Classes of Senior Certificates proportionately on the basis
of the Interest Distribution Amounts otherwise payable thereon and among the
Subordinate Certificates on the basis of their Apportioned Principal Balances
before taking into account any of the foregoing reductions.
Interest-Only Certificates: Any of the Class X-1, Class X-2A, Class X-2B
and Class X-B Certificates.
Interest Shortfall: As to any Class of Certificates and any Distribution
Date, (i) the amount by which the Interest Distribution Amount (as reduced by
any Basis Risk Shortfalls) for such Class on such Distribution Date and all
prior Distribution Dates exceeds (ii) amounts distributed in respect thereof to
such Class on prior Distribution Dates.
Interest Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, an amount equal to one month's interest on the
applicable Principal Transfer Amount at the weighted average Certificate
Interest Rate of the applicable Undercollateralized Group, plus any interest
accrued on such Undercollateralized Group remaining unpaid from prior
Distribution Dates.
Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.
Latest Possible Maturity Date: August 2035.
LIBOR: With respect to the first Accrual Period, the Initial LIBOR Rate.
With respect to each subsequent Accrual Period, a per annum rate determined on
the LIBOR Determination Date in the following manner by the Securities
Administrator on the basis of the "Interest Settlement Rate" set by the BBA for
one-month United States dollar deposits, as such rates appear on the Telerate
Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
(a) If on such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time),
or if the Telerate Page 3750 is not available on such date, the Securities
Administrator will obtain such rate from Reuters' "page LIBOR 01" or Bloomberg's
page "BBAM." If such rate is not published for such LIBOR Determination Date,
LIBOR for such date will be the most recently published Interest Settlement
Rate. In the event that the BBA no longer sets an Interest Settlement Rate, the
Securities Administrator will designate an alternative index that has performed,
or that the Securities Administrator expects to perform, in a manner
substantially similar to the BBA's Interest Settlement Rate. The Securities
Administrator will select a particular index as the alternative index only if it
receives an Opinion of Counsel, which opinion shall be an expense
19
reimbursed from the Distribution Account, that the selection of such index will
not cause any of the REMICs to lose their classification as REMICs for federal
income tax purposes.
(b) The establishment of LIBOR by the Securities Administrator and the
Securities Administrator's subsequent calculation of the Certificate Interest
Rate applicable to the LIBOR Certificates for the relevant Accrual Period, in
the absence of manifest error, will be final and binding.
LIBOR Business Day: Any day on which banks in London, England and The City
of New York are open and conducting transactions in foreign currency and
exchange.
LIBOR Certificate: Any Class 1A-1, Class 2A and Class B-1 Certificate.
LIBOR Determination Date: The second LIBOR Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Certificates.
Limited Purpose Surety Bond: Any Limited Purpose Surety Bond listed in
Exhibit G.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
related Servicer has certified (in accordance with its Servicing Agreement) that
it has received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan including the final disposition of an REO
Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of defaulted Mortgage Loans,
whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property.
Loan-To-Value Ratio: With respect to any Mortgage Loan and as to any date
of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at such date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Lower Tier Interest: As described in the Preliminary Statement.
Lower Tier REMIC: As described in the Preliminary Statement.
Mandatory Auction Distribution Date: The Distribution Date in December
2004.
Master Servicer: Wells Fargo Bank Minnesota, National Association, a
national banking association organized under the laws of the United States in
its capacity as Master Servicer and any Person succeeding as Master Servicer
hereunder or any successor in interest, or if any successor master servicer
shall be appointed as herein provided, then such successor master servicer.
20
Master Servicing Fee: With respect to any Distribution Date, an amount
equal to the product of one-twelfth of the Master Servicing Fee Rate and the
Stated Principal Balance of each Mortgage Loan as of the first day of the
related Due Period.
Master Servicing Fee Rate: 0.009% per annum.
Maximum Rate: As to any Mortgage Loan, the maximum rate set forth on the
related Mortgage Note at which interest can accrue on such Mortgage Loan.
Moody's: Moody's Investors Service, Inc., or any successor in interest.
Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage Documents: With respect to each Mortgage Loan, the mortgage
documents required to be delivered to the Custodian pursuant to the Custody
Agreement.
Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 (including any
Replacement Loan and REO Property), including without limitation, each Mortgage
Loan listed on the Mortgage Loan Schedule, as amended from time to time.
Mortgage Loan Purchase and Sale Agreements: Collectively, the Initial
Mortgage Loan Purchase and Sale Agreement and the Secondary Mortgage Loan
Purchase and Sale Agreement.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which
shall identify each Mortgage Loan, as such schedule may be amended by the
Depositor or the Servicer from time to time to reflect the addition of
Replacement Mortgage Loans to, or the deletion of Deleted Mortgage Loans from,
the Trust Fund. Such schedule shall, among other things (i) designate the
Servicer servicing such Mortgage Loan and the applicable Servicing Fee Rate;
(ii) identifying the designated Mortgage Pool in which such Mortgage Loan is
included; (iii) separately identify One-Month LIBOR Loans, Six-Month LIBOR Loans
and One-Year CMT Loans; and (iv) separately identifying Additional Collateral
Mortgage Loans.
Mortgage Note: The original executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: Each of Pool 1, Pool 2 and Pool 3.
Mortgaged Property: The underlying property, including any Additional
Collateral, securing a Mortgage Loan which, with respect to a Cooperative Loan,
is the related Cooperative Shares and Property Lease.
Mortgage Rate: As to any Mortgage Loan, the annual rate of interest borne
by the related Mortgage Notes.
Mortgagor: The obligor on a Mortgage Note.
21
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property, the related Liquidation
Proceeds net of Advances, Servicer Advances, related Servicing Fees and/or
Master Servicing Fees and any other accrued and unpaid servicing fees received
and retained in connection with the liquidation of such Mortgage Loan or
Mortgaged Property.
Net Mortgage Rate: With respect to any Mortgage Loan and any Distribution
Date, the related Mortgage Rate as of the Due Date in the month preceding the
month of such Distribution Date reduced by the Aggregate Expense Rate for such
Mortgage Loan.
Net Prepayment Interest Shortfall: With respect to any Mortgage Loan and
any Distribution Date, the amount by which any Prepayment Interest Shortfall for
such date exceeds the amount payable by the Master Servicer and/or the related
Servicers in respect of such shortfall.
Net WAC: As to any Distribution Date, the weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the Due Date of the month preceding
the month of such Distribution Date, weighted on the basis of their outstanding
Stated Principal Balances (after giving effect to the Scheduled Payments due on
or before such Due Date and Principal Prepayments received prior to such Due
Date) at such time. When the term "Net WAC" is used herein with reference to
only the One-Month LIBOR Loans or only the Six-Month LIBOR Loans, such weighted
average shall be computed with reference solely to the Mortgage Loans in the
relevant group.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Nonrecoverable Advance: Any portion of an Advance or Servicer Advance
previously made or proposed to be made by the Master Servicer and/or a Servicer
(as certified in an Officer's Certificate of the Servicer), which in the good
faith judgment of such party, shall not be ultimately recoverable by such party
from the related Mortgagor, related Liquidation Proceeds or otherwise.
Non-U.S. Person: Any person other than a "United States person" within the
meaning of Section 7701(a)(30) of the Code.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Class Notional
Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: Any Class X-1, Class X-2A, Class X-2B and Class X-B
Certificate.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by two Authorized Officers of
the Depositor or the Chairman of the Board, any Vice Chairman, the President,
any Vice President or any
22
Assistant Vice President of the Master Servicer or Securities Administrator, and
in each case delivered to the Trustee.
Officer's Certificate of the Servicer: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of a Servicer, or (ii) if provided for herein, signed by a Servicing
Officer, as the case may be, and delivered to the Trustee or the Master
Servicer, as required hereby.
One-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for one-month U.S. dollar deposits.
One-Year CMT Loans: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with the weekly average yield on United States Treasury
Securities adjusted to a constant maturity of one year, as published in Federal
Reserve Board Statistical Release H-15.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable in
form and substance to the Trustee, the Securities Administrator or the Master
Servicer, as required hereby, and who may be in-house or outside counsel to the
Depositor, the Master Servicer, the Securities Administrator or the Trustee but
which must be Independent outside counsel with respect to any such opinion of
counsel concerning the transfer of any Residual Certificate or concerning
certain matters with respect to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the taxation, or the federal income tax status,
of each REMIC.
Original Applicable Credit Support Percentage: With respect to each Class
of Subordinate Certificates, the corresponding percentage set forth opposite its
Class designation: Class B-2 -- 3.60%; Class B-2 -- 2.20%; Class B-3 -- 1.36%;
Class B-4 -- 0.76%; Class B-5 -- 0.51%; Class B-6 -- 0.36%.
Original Subordinate Principal Amount: The aggregate of the initial Class
Principal Amounts of the Classes of Subordinated Certificates.
Overcollateralized Group: On any Distribution Date, any Certificate Group
which is not an Undercollateralized Group.
Paying Agent: Any paying agent appointed pursuant to Section 3.08. The
initial Paying Agent shall be Wells Fargo Bank Minnesota, National Association,
for so long as it is acting as Securities Administrator under this Agreement.
Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than a Notional Certificate, the Class A-R
Certificate or the Class LTR Certificate, the Percentage Interest evidenced
thereby shall equal the initial Certificate Principal Amount thereof divided by
the initial Class Principal Amount of all Certificates of the same Class. With
respect to the Class A-R Certificate and the Class LTR Certificate, the
Percentage Interest evidenced thereby shall be as specified on the face
23
thereof, or otherwise, be equal to 100%. With respect to any Notional
Certificate, the Percentage Interest evidenced thereby shall equal its initial
Notional Amount as set forth on the face thereof divided by the initial Class
Notional Amount of such Class.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof, provided
that such obligations are backed by the full faith and credit of the
United States;
(ii) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency, or such lower rating as shall
not result in the downgrading or withdrawal of the ratings then assigned
to the Certificates by the Rating Agencies, as evidenced by a signed
writing delivered by each Rating Agency;
(iii) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each Rating
Agency, or such lower rating as shall not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by the Rating
Agencies, as evidenced by a signed writing delivered by each Rating
Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long-term unsecured
debt obligations of such depository institution or trust company (or in
the case of the principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt obligations of
such holding company, but only if Moody's is not the applicable Rating
Agency) are then rated one of the two highest long-term and the highest
short-term ratings of each Rating Agency for such securities, or such
lower ratings as shall not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by the Rating Agencies, as
evidenced by a signed writing delivered by each Rating Agency;
(v) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation acceptable to the Rating Agencies
at the time of the issuance of such agreements, as evidenced by a signed
writing delivered by each Rating Agency;
(vii) repurchase obligations with respect to any security described
in clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (iv) above;
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(viii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof
which, at the time of such investment, have one of the two highest ratings
of each Rating Agency (except if the Rating Agency is Moody's, such rating
shall be the highest commercial paper rating of Moody's for any such
series), or such lower rating as shall not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by the Rating
Agencies, as evidenced by a signed writing delivered by each Rating
Agency;
(ix) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable rating by each
Rating Agency rating such fund or such lower rating as shall not result in
a change in the rating then assigned to the Certificates by each Rating
Agency including funds for which the Trustee, the Master Servicer, the
Securities Administrator or any of its Affiliates is investment manager or
adviser;
(x) short-term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by each applicable Rating Agency in their respective highest
applicable rating category or such lower rating as shall not result in a
change in the rating then specified stated maturity and bearing interest
or sold at a discount acceptable to each Rating Agency as shall not result
in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies; and
(xi) such other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to the Rating Agencies
as shall not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by the Rating Agencies;
provided, that no such instrument shall be a Permitted Investment if (i)
such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument or (ii) such instrument
would require the Depositor to register as an investment company under the
Investment Company Act of 1940, as amended.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan Asset Regulations: The Department of Labor regulations set forth in
29 C.F.R. 2510.3-101.
Pool 1: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 1.
Pool 1 Mortgage Loans: Any Mortgage Loan in Pool 1.
25
Pool 1 Net WAC: With respect to any Distribution Date, the weighted
average of the Net Mortgage Rates of the Pool 1 Mortgage Loans as of the first
day of the calendar month immediately preceding the calendar month of such
Distribution Date, weighted on the basis of their Stated Principal Balances.
Pool Percentage: With respect to each Mortgage Pool and any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate Stated Principal Balance of the Mortgage Loans in such Mortgage Pool
as of the Due Date in the month preceding the month of such Distribution Date
and the denominator of which is the Aggregate Stated Principal Balance as of
such Due Date.
Pool Subordinate Amount: Any of the Pool, 1, Pool 2 or Pool 3 Subordinate
Amounts.
Pool 1 Subordinate Amount: For any Distribution Date, the excess of the
Stated Principal Balance of the Pool 1 Mortgage Loans as of the first day of the
month preceding the month in which such Distribution Date occurs over the sum of
the Class Principal Amounts of the Class 1A-1, Class 1A-2 and Class A-R
Certificates immediately before such Distribution Date.
Pool 2: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 2.
Pool 2 Mortgage Loans: Any Mortgage Loan in Pool 2.
Pool 2 Net WAC: With respect to any Distribution Date, the weighted
average of the Net Mortgage Rates of the Pool 2 Mortgage Loans as of the first
day of the calendar month immediately preceding the calendar month of such
Distribution Date, weighted on the basis of their Stated Principal Balances.
Pool 2 Subordinate Amount: For any Distribution Date, the excess of the
Stated Principal Balance of the Pool 2 Mortgage Loans as of the first day of the
month preceding the month in which such Distribution Date occurs over the sum of
the Class Principal Amounts of the Class 2A Certificates immediately before such
Distribution Date.
Pool 3: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 3.
Pool 3 Net WAC: With respect to any Distribution Date, the weighted
average of the Net Mortgage Rates of the Pool 3 Mortgage Loans as of the first
day of the calendar month immediately preceding the calendar month of such
Distribution Date, weighted on the basis of their Stated Principal Balances.
Pool 3 Subordinate Amount: For any Distribution Date, the excess of the
Stated Principal Balance of the Pool 3 Mortgage Loans as of the first day of the
month preceding the month in which such Distribution Date occurs over the sum of
the Class Principal Amounts of the Class 3A Certificates immediately before such
Distribution Date.
26
Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full
month's interest at the applicable Mortgage Rate on the outstanding principal
balance of such Mortgage Loan immediately prior to such Principal Prepayment
over (ii) the amount of interest actually received with respect to such Mortgage
Loan in connection with such Principal Prepayment.
Prepayment Period: With respect to each Distribution Date, the calendar
month immediately preceding the month in which the Distribution Date occurs.
Primary Mortgage Insurance Policy: Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with respect to any
Mortgage Loan.
Principal Distribution Amount: With respect to any Mortgage Pool and any
Distribution Date, the sum of (a) each Scheduled Payment of principal collected
or advanced on the related Mortgage Loans (before taking into account any
Deficient Valuations or Debt Service Reductions) and due during the related Due
Period, (b) that portion of the Purchase Price representing principal of any
Mortgage Loans in such Mortgage Pool purchased in accordance with Section 2.04
or Section 2.05 hereof and received during the related Prepayment Period, (c)
the principal portion of any related Substitution Amount received during the
related Prepayment Period, (d) the principal portion of all Insurance Proceeds
received during the related Prepayment Period with respect to Mortgage Loans in
such Mortgage Pool that are not yet Liquidated Mortgage Loans, (e) the principal
portion of all Net Liquidation Proceeds received during the related Prepayment
Period with respect to Liquidated Mortgage Loans in such Mortgage Pool, (f) the
principal portion of the proceeds of any Additional Collateral with respect to
the Mortgage Loans in such Mortgage Pool, (g) the principal portion of all
partial and full principal prepayments of Mortgage Loans in such Mortgage Pool
applied by the Servicers during the related Prepayment Period, and (h) on the
Distribution Date on which the Trust Fund is to be terminated pursuant to
Article X hereof, that portion of the Redemption Price in respect of principal
for such Mortgage Pool.
Principal Prepayment: Any Mortgagor payment of principal or other recovery
of principal on a Mortgage Loan that is recognized as having been received or
recovered in advance of its scheduled Due Date and applied to reduce the
principal balance of the Mortgage Loan in accordance with the terms of the
Mortgage Note or the Servicing Agreement.
Principal Prepayment In Full: Any Principal Prepayment of the entire
principal balance of the Mortgage Loans.
Principal Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, the excess, if any, of the aggregate Class Principal
Amount of such Undercollateralized Group over the aggregate Stated Principal
Balance of the related Mortgage Pool, in each case immediately prior to such
Distribution Date.
Pro Rata Senior Percentage: With respect to each Distribution Date and
each Mortgage Pool, the percentage equivalent of a fraction the numerator of
which is the aggregate Class Principal Amount of the Class or Classes of the
Related Certificate Group immediately prior to such Distribution Date and the
denominator of which is the aggregate of the Stated Principal
27
Balance of all Mortgage Loans in that Mortgage Pool for such Distribution Date;
provided, however, that on any Distribution Date after a Senior Termination Date
has occurred with respect to any two Mortgage Pools, the Pro Rata Senior
Percentage of the remaining Senior Certificates is the percentage equivalent of
a fraction, the numerator of which is the aggregate of the Class Principal
Amounts of the remaining Classes of Senior Certificates immediately prior to
such date and the denominator of which is the aggregate Class Principal Amount
of all Classes of Certificates, immediately prior to such date.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Property, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated July 26, 2002, together with
the accompanying prospectus dated June 26, 2002, relating to the initial sale of
the Class 1A-1, Class 1A-2, Class 2A, Class 3A, Class B-1, Class B-2, Class B-3,
Class X-1, Class X-2A, Class X-2B, Class X-B and Class A-R Certificates.
Purchase Agreements: The mortgage purchase agreements listed in Exhibit F
hereto, as each such agreement may be amended or supplemented from time to time
as permitted hereunder.
Purchase Price: With respect to any Mortgage Loan required or permitted to
be purchased by the Seller or Depositor pursuant to this Agreement, by the
Servicers pursuant to the Servicing Agreements, or by the Initial Seller or
Seller pursuant to the Purchase Agreements, an amount equal to the sum of (i)
100% of the unpaid principal balance of the Mortgage Loan on the date of such
purchase, and (ii) accrued interest thereon at the applicable Net Mortgage Rate
from the date through which interest was last paid by the Mortgagor to the Due
Date in the month in which the Purchase Price is to be distributed to
Certificateholders, or such other amount as may be specified in the related
Servicing Agreement or Purchase Agreement.
Rapid Prepayment Conditions: As to any Distribution Date, if (1) the
Aggregate Subordinate Percentage on such date is less than 200% of the Aggregate
Subordinate Percentage on the Closing Date; or (2) the outstanding Stated
Principal Balance of the Mortgage Loans in any Mortgage Pool delinquent 60 days
or months, as a percentage of such Mortgage Pool's Pool Subordinate Amount, is
greater than or equal to 50%.
Rating Agency: Each of Moody's, S&P and Fitch Ratings.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Net Mortgage Rate from the Due Date as to which interest
was last paid or advanced (and not reimbursed) to Certificateholders up to the
Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the
28
Liquidation Proceeds and the proceeds of any Additional Collateral, if any,
received during the month in which such liquidation occurred, to the extent
applied as recoveries of interest at the Net Mortgage Rate and to principal of
the Liquidated Mortgage Loan. With respect to each Mortgage Loan which has
become the subject of a Deficient Valuation, if the principal amount due under
the related Mortgage Note has been reduced, the difference between the principal
balance of the Mortgage Loan outstanding immediately prior to such Deficient
Valuation and the principal balance of the Mortgage Loan as reduced by the
Deficient Valuation.
Record Date: As to any Distribution Date (i) with respect to the
Book-Entry Certificates, the last Business Day preceding such Distribution Date
(or the Closing Date, in the case of the first Distribution Date), and (ii) in
the case of all other Certificates (including Book-Entry Certificates that are
subsequently reissued as Definitive Certificates), the last Business Day of the
month preceding the month of each Distribution Date.
Redemption Date: Any Distribution Date on which Certificates may be
redeemed.
Redemption Price: With respect to any Class of Certificates to be
redeemed, an amount equal to 100% of the related Class Principal Amount of the
Certificates to be so redeemed, together with interest on such amount at the
applicable Certificate Interest Rate through the related Accrual Period (as
increased by any Interest Shortfalls but excluding any Unpaid Basis Risk
Shortfalls), and including, in the case of the Redemption Price payable in
connection with the redemption and retirement of all of the Certificates, the
payment of all amounts (including, without limitation, all previously
unreimbursed Advances and Servicing Advances and accrued and unpaid Servicing
Fees) payable or reimbursable to the Trustee, the Master Servicer and the
Servicers pursuant to this Agreement and the Servicing Agreements, or to the
Custodian under the Custody Agreement (to the extent such amounts are not paid
to the Custodian by the Seller).
Refinancing Mortgage Loan: Any Mortgage Loan originated in connection with
the refinancing of an existing mortgage loan.
Related Certificate Group: The Certificate Group related to a particular
Mortgage Pool as indicated by the same numerical designation (e.g., Group 1
Certificates are related to Pool 1).
Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Civil Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan for the most recently ended calendar
month is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.
REMIC: Each pool of assets in the Trust Fund designated as a REMIC as
described in the Preliminary Statement.
REMIC Provisions: The provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations, including proposed regulations
29
and rulings, and administrative pronouncements promulgated thereunder, as the
foregoing may be in effect from time to time.
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.
Replacement Mortgage Loan: A mortgage loan substituted by the Initial
Seller or Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in a Request for Release, substantially in the form
attached to the Custody Agreement, (i) have a Stated Principal Balance, after
deduction of the principal portion of the Scheduled Payment due in the month of
substitution, not in excess of, and not more than 10% less than, the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) be accruing interest at a
rate no lower than and not more than 1% per annum higher than, that of the
Deleted Mortgage Loan; (iii) have an Effective Loan-to-Value Ratio no higher
than that of the Deleted Mortgage Loan; (iv) have a Mortgage Rate based upon the
same Index and a Margin at least equal to and not greater than 50 basis points
higher than that of the Deleted Mortgage Loan; (v) have a Maximum Rate that is
no less than the Maximum Rate of the Deleted Mortgage Loan; (vi) have Adjustment
Dates that are no more or less frequent than the Deleted Mortgage Loan; (vii)
have a remaining term to maturity no greater than (and not more than one year
less than that of) the Deleted Mortgage Loan; (viii) not be a Cooperative Loan
unless the Deleted Mortgage Loan was a Cooperative Loan; (ix) comply with each
representation and warranty set forth in Article III of each Purchase Agreement;
and (x) shall be accompanied by an Opinion of Counsel that such Replacement
Mortgage Loan would not adversely affect the REMIC status of the Trust Estate or
would not otherwise be prohibited by this Indenture.
Required Basis Risk Deposit: Each of the Class X-1 Required Basis Risk
Deposit, the Class X-2 Required Basis Risk Deposit and the Class X-B Required
Basis Risk Deposit.
Residual Certificate: The Class A-R and Class LTR Certificate.
Responsible Officer: With respect to the Trustee, any officer in the
corporate trust department or similar group of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.
Restricted Certificate: Any Class B4, Class B5, Class B6 or Class LTR
Certificate.
Restricted Global Security: As defined in Section 3.01(c).
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor in interest.
SAIF: The Saving's Association Insurance Fund, or any successor thereto.
30
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan which,
unless otherwise specified in the Servicing Agreements, shall give effect to any
related Debt Service Reduction and any Deficient Valuation that affects the
amount of the monthly payment due on such Mortgage Loan.
Secondary Mortgage Loan Purchase and Sale Agreement: The mortgage loan
purchase and sale agreement, dated as of July 1, 2002, between the Seller and
the Depositor.
Seller: RWT Holdings, Inc., a Delaware corporation.
Senior Certificate: Any one of the Class 1A-1, Class 1A-2, Class 2A, Class
3A, Class X-1, Class X-2A, Class X-2B, Class X-B or Class A-R Certificates.
Securities Administrator: Wells Fargo Bank Minnesota, National
Association, not in its individual capacity but solely as Securities
Administrator, or any successor in interest, or if any successor Securities
Administrator shall be appointed as herein provided, then such successor
Securities Administrator.
Senior Percentage: Except as provided in this definition, with respect to
any Distribution Date and Mortgage Pool before August 2012, 100%. The Senior
Percentage for any Distribution Date occurring (i) before the Distribution Date
in August 2012 but in or after August 2005 on which the Two Times Test is
satisfied, or (ii) in or after August 2012, is the Pro Rata Senior Percentage.
If the Two Times Test is satisfied with respect to any Distribution Date prior
to the Distribution Date in August 2005, the Senior Percentage is the Pro Rata
Senior Percentage plus 50% of an amount equal to 100% minus the related Pro Rata
Senior Percentage. With respect to any Distribution Date after the Senior
Termination Date, the related Senior Percentage for such Mortgage Pool will
equal zero. If on any Distribution Date the allocation to the Senior
Certificates then entitled to distributions of principal of full and partial
principal prepayments and other amounts in the percentage required above would
reduce the sum of the Class Principal Amounts of those Certificates to below
zero, the related Senior Percentage for such Distribution Date shall be limited
to the percentage necessary to reduce that Class Principal Amount to zero.
Senior Prepayment Percentage: With respect to any Distribution Date and
each Mortgage Pool, during the ten years beginning on the first Distribution
Date, 100%. Except as provided herein, the Senior Prepayment Percentage for each
Mortgage Pool and any Distribution Date occurring on or after the tenth
anniversary of the first Distribution Date shall be as follows: (i) from August
2012 through July 2013, the Senior Percentage plus 70% of the Senior Percentage
for that Distribution Date; (ii) from August 2013 through July 2014, the Senior
Percentage plus 60% of the Senior Percentage for that Distribution Date; (iii)
from August 2014 through July 2015, the Senior Percentage plus 40% of the Senior
Percentage for that Distribution Date; (iv) from August 2015 through July 2016,
the Senior Percentage plus 20% of the Senior Percentage for that Distribution
Date; and (v) from and after August 2016, the related Senior Percentage for that
Distribution Date; provided, however, that there shall be no reduction in the
Senior Prepayment Percentage unless both Step Down Conditions are satisfied; and
provided, further, that if on any such Distribution Date the Pro Rata Senior
Percentage exceeds the initial
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Pro Rata Senior Percentage, the Senior Prepayment Percentage for that
Distribution Date shall again equal 100%.
Notwithstanding the above, if on any Distribution Date the Two Times Test
is satisfied, the Senior Prepayment Percentage with respect to any Mortgage Pool
shall equal the Senior Percentage for such Distribution Date. In addition, if on
any Distribution Date the allocation to the Senior Certificates then entitled to
distributions of principal of full and partial principal prepayments and other
amounts in the percentage required above would reduce the sum of the Class
Principal Amounts of those Certificates to below zero, the related Senior
Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce that Class Principal Amount to zero.
Senior Principal Distribution Amount: With respect to any Mortgage Pool
and any Distribution Date, the sum of:
(1) the related Senior Percentage of all amounts described in
clauses (a) through (d) of the definition of "Principal Distribution
Amount" for that Distribution Date;
(2) with respect to each Mortgage Loan which became a Liquidated
Mortgage Loan during the related Prepayment Period, the lesser of
(x) the related Senior Percentage of the Stated Principal
Balance of that Mortgage Loan and
either
(y) the related Senior Prepayment Percentage of the amount of
the Net Liquidation Proceeds allocable to principal received with
respect to that Mortgage Loan.
or
(z) if an Excess Loss was sustained with respect to such
Liquidated Mortgage Loan during such related Prepayment Period, the
related Senior Percentage of the amount of Net Liquidation Proceeds
allocable to principal received with respect to that Mortgage Loan;
and
(3) the related Senior Prepayment Percentage of the amounts
described in clause (g) of the definition of "Principal Distribution
Amount for that Mortgage Pool";
provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
with respect to any Mortgage Loan that is not a Liquidated Mortgage Loan, such
Senior Principal Distribution Amount shall be reduced on such Distribution Date
by the related Senior Percentage of the principal portion of such Bankruptcy
Loss; and provided, further, that on any Distribution Date after a Senior
Termination Date, the Senior Principal Distribution Amount for the remaining
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Certificate Group will be calculated pursuant to the above formula based on all
Mortgage Loans rather than the Mortgage Loans in the related Mortgage Pool only.
Senior Termination Date: For each Certificate Group, the Distribution Date
when the aggregate of the Class Certificate Principal Balances of that Group has
been reduced to zero.
Servicers: Each Servicer under a Servicing Agreement.
Servicer Advance: A "Servicing Advance" as defined in the applicable
Servicing Agreement.
Servicing Agreement: The agreements listed in Exhibit E, as each such
agreement has been modified by the related Acknowledgement and as it may be
amended or supplemented from time to time as permitted thereby.
Servicing Fee: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b)
the outstanding principal balance of such Mortgage Loan as of the first day of
the related Due Period.
Servicing Fee Rate: With respect to each Mortgage Loan and any
Distribution Date, the rate specified in the related Servicing Agreement.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Servicing Officer: Any officer of the Servicers involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Master Servicer by the Servicers on the Closing Date pursuant to the
Servicing Agreements, as such list may from time to time be amended.
Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for six-month U.S. dollar deposits.
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged Property on
account of direct physical loss, as reported by the related Servicer to the
Master Servicer, but not including (i) any loss of a type covered by a hazard
insurance policy or a flood insurance policy required to be maintained with
respect to such Mortgaged Property to the extent of the amount of such loss
covered thereby, or (ii) any loss caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the Trustee,
the Master Servicer, a Servicer or any of their agents or employees
(without regard to any portion of the loss not covered by any errors
and omissions policy);
(c) errors in design, faulty workmanship or faulty materials, unless the
collapse of the property or a part thereof ensues and then only for
the ensuing loss;
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(d) nuclear or chemical reaction or nuclear radiation or radioactive or
chemical contamination, all whether controlled or uncontrolled, and
whether such loss be direct or indirect, proximate or remote or be in
whole or in part caused by, contributed to or aggravated by a peril
covered by the definition of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war, including action
in hindering, combating or defending against an actual, impending or
expected attack:
1. by any government or sovereign power, de jure or de facto, or by
any authority maintaining or using military, naval or air forces;
or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or forces;
(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any
government or public authority or risks of contraband or illegal
transportation or trade.
Special Hazard Loss Coverage Amount: With respect to the first
Distribution Date, $15,500,000. With respect to any Distribution Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1% of the
aggregate of the Stated Principal Balances of the Mortgage Loan, (ii) twice the
Stated Principal Balance of the largest Mortgage Loan and (iii) the aggregate of
the Stated Principal Balances of the Mortgage Loans secured by Mortgaged
Properties located in the single five-digit ZIP code area in the State of
California having the highest aggregate Stated Principal Balance of any such ZIP
code area and (b) the Special Hazard Loss Coverage Amount as of the Closing Date
less the amount, if any, of Special Hazard Losses allocated to the Certificates
since the Closing Date; provided, however, that the Special Hazard Loss Coverage
Amount may also be reduced pursuant to a letter from each Rating Agency to the
Trustee to the effect that any such reduction shall not result in the
downgrading of the then current ratings assigned by such Rating Agency to the
Classes of Senior Certificates. All Stated Principal Balances for the purpose of
the definition will be calculated as of the first day of the calendar month
preceding the month of such Distribution Date after giving effect to Scheduled
Payments on the Mortgage Loans then due, whether paid or not.
Special Hazard Loss Coverage Termination Date: The date on which the
Special Hazard Loss Coverage Amount is reduced to zero.
Stated Principal Balance: As to any Mortgage Loan and Due Date, the unpaid
principal balance of such Mortgage Loan as of such Due Date as specified in the
amortization schedule at the time relating thereto (before any adjustment to
such amortization schedule by reason of any
34
moratorium or similar waiver or grace period) after giving effect to any
previous partial Principal Prepayments and Liquidation Proceeds allocable to
principal (other than with respect to any Liquidated Mortgage Loan) and to the
payment of principal due on such Due Date and irrespective of any delinquency in
payment by the related Mortgagor.
Step Down Conditions: As of the first Distribution Date as to which any
decrease in any Senior Prepayment Percentage applies, (i) the outstanding Stated
Principal Balance of all Mortgage Loans 60 days or more Delinquent (including
Mortgage Loans in REO and foreclosure) (averaged over the preceding six month
period), as a percentage of the aggregate of the Class Principal Amounts of the
Classes of Subordinate Certificates on such Distribution Date, does not equal or
exceed 50% and (ii) cumulative Realized Losses with respect to the Mortgage
Loans do not exceed (a) with respect to each Distribution Date from August 2012
through July 2013, 30% of the Original Subordinate Principal Amount, (b) with
respect to each Distribution Date from August 2013 through July 2014, 35% of the
Original Subordinate Principal Amount, (c) with respect to each Distribution
Date from August 2014 through July 2015, 40% of the Original Subordinate
Principal Amount, (d) with respect to each Distribution Date from August 2015
through July 2016, 45% of the Original Subordinate Principal Amount and (e) with
respect to each Distribution Date from and after August 2016, 50% of the
Original Subordinate Principal Amount.
Sub-Account: Any of the sub-accounts constituting the Basis Risk Reserve
Fund.
Subordinate Certificate: Any of the Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 or Class B-6 Certificates.
Subordinate Certificate Writedown Amount: The amount described in Section
5.03(c).
Subordinate Class Percentage: As to any Distribution Date and any Class of
Subordinate Certificates, a fraction, expressed as a percentage, the numerator
of which is the Class Principal Amount of such Class on such date, and the
denominator of which is the aggregate Class Principal Amount of all Classes of
Subordinate Certificates on such date.
Subordinate Net WAC: For any Distribution Date, the weighted average of
the Pool 1 Net WAC, the Pool 2 Net WAC and the Pool 3 Net WAC, in each case
weighted on the basis of the relative Pool Subordinate Amounts for Pool 1, Pool
2 and Pool 3, respectively, immediately prior to such Distribution Date.
Subordinate Percentage: With respect to each Mortgage Pool and any
Distribution Date, the difference between 100% and the related Senior Percentage
for such Mortgage Pool for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution Date
and for any Mortgage Pool, the difference between 100% and the related Senior
Prepayment Percentage for such Mortgage Pool for that Distribution Date.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date and each Mortgage Pool, an amount equal to the sum of:
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(1) the related Subordinate Percentage of all amounts
described in clauses (a) through (d) of the definition of "Principal
Distribution Amount" for that Distribution Date;
(2) with respect to each Mortgage Loan in the related Mortgage
Pool that became a Liquidated Mortgage Loan during the related
Prepayment Period the amount of the Net Liquidation Proceeds
allocated to principal received with respect thereto remaining after
application thereof pursuant to clause (2) of the definition of
"Senior Principal Distribution Amount" for that Distribution Date,
up to the Subordinate Percentage of the Stated Principal Balance of
such Mortgage Loan; and
(3) the related Subordinate Prepayment Percentage of all
amounts described in clause (g) of the definition of "Principal
Distribution Amount" for that Mortgage Pool and that Distribution
Date;
minus the sum of:
any Principal Transfer Amount paid from the Available
Distribution Amount of the Related Certificate Group to an
Undercollateralized Group; and
the amount of principal distributions made to the Senior
Certificates pursuant to Section 5.12(g).
provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
with respect to any Mortgage Loan that is not a Liquidated Mortgage Loan
Payment, such related Subordinate Principal Distribution Amount shall be reduced
on such Distribution Date by the related Subordinate Percentage of the principal
portion of such Bankruptcy Loss; and provided, further, on any Distribution Date
after a Senior Termination Date has occurred with respect to two Mortgage Pools,
the Subordinate Principal Distribution Amount will not be calculated with
respect to a Mortgage Pool, but will equal the amount calculated as above based
on a Subordinate Percentage or Subordinate Prepayment Percentage, is applicable,
for the Subordinate Certificates for such Distribution Date with respect to all
of the Mortgage Loans.
Substitution Amount: As defined in Section 2.04(b).
Swap Agreement: The transactions evidenced by the ISDA Master Agreement,
together with the Schedule, the Swap Confirmation and any related documents
thereto, dated as of July 30, 2002, between GCD and the Auction Administrator.
Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions which shall initially be the Class LTR Holder.
Telerate Page 3750: The display currently so designated as "Page 3750" on
the Bridge Telerate Service (or such other page selected by the Master Servicer
as may replace Page 3750 on that service for the purpose of displaying daily
comparable rates on prices).
36
Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of the Mortgage Loans and all interest and principal received thereon
on or after the Cut-off Date (other than Scheduled Payments due on or prior to
the Cut-off Date), the Depositor's rights assigned to the Trustee under the
Purchase Agreements and the Servicing Agreements, as modified by the
Acknowledgements and the Mortgage Loan Purchase and Sale Agreements, the
Insurance Policies relating to the Mortgage Loans, all cash, instruments or
property held or required to be held in the Custodial Accounts and the
Distribution Account, property that secured a Mortgage Loan, the pledge, control
and guaranty agreements and Limited Purpose Surety Bond relating to the
Additional Collateral Mortgage Loans, and the Basis Risk Reserve Fund.
Trustee: HSBC Bank USA, a New York banking corporation organized and
existing under the laws of the State of New York and any Person succeeding the
Trustee hereunder, or if any successor trustee or any co-trustee shall be
appointed as herein provided, then such successor trustee and such co-trustee,
as the case may be.
Trustee Mortgage Files: With respect to each Mortgage Loan, the Mortgage
Documents to be retained in the custody and possession of the Trustee or
Custodian on behalf of the Trustee.
Two Times Test: As to any Distribution Date, (i) the Aggregate Subordinate
Percentage is at least two times the Aggregate Subordinate Percentage as of the
Closing Date; (ii) the aggregate of the Stated Principal Balances of all
Mortgage Loans Delinquent 60 days or more (including Mortgage Loans in REO and
foreclosure) (averaged over the preceding six-month period), as a percentage of
the aggregate of the Class Principal Amount of the Subordinate Certificates on
such Distribution Date, does not equal or exceed 50%; and (iii) cumulative
Realized Losses with respect to the Mortgage Loans do not exceed 20% of the
Original Subordinate Principal Amount.
UCC: The Uniform Commercial Code as enacted in the relevant jurisdiction.
Undercollateralized Group: With respect to any Distribution Date, and any
Certificate Group, the aggregate Class Principal Amount of any Certificate Group
is greater than the aggregate Stated Principal Balance of the Mortgage Loans in
the related Mortgage Pool.
Underwriters: Greenwich Capital Markets, Inc., Morgan Stanley & Co.
Incorporated, Banc of America Securities LLC and Bear, Stearns and Co. Inc.
Underwriter's Exemption: Prohibited Transaction Exemption ("PTE") 90-59
(Exemption Application No. D-8374), as amended by PTE 97-34 (Exemption
Application No. D-10245 and D-10246) and by PTE 2000-58 (Exemption Application
No. D-10829), as amended (or any successor thereto), or any substantially
similar administrative exemption granted by the U.S. Department of Labor to the
Underwriters.
Uniform Commercial Code: The Uniform Commercial Code as in effect in any
applicable jurisdiction from time to time.
Unpaid Basis Risk Shortfall: With respect to any Distribution Date and any
Class of LIBOR Certificates, the aggregate of all Basis Risk Shortfalls with
respect to such Certificate
37
remaining unpaid from previous Distribution Dates, plus interest accrued thereon
at the applicable Certificate Interest Rate determined without regard to clause
(ii) of the definition therefor to the extent not paid on prior Distribution
Dates.
Upper Tier REMIC: As described in the Preliminary Statement.
Voting Interests: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions of
this Agreement. At all times during the term of this Agreement, 95% of all
Voting Interests shall be allocated to the Class 1A-1, Class 1A-2, Class 2A,
Class 3A and Class A-R Certificates. Voting Interests shall be allocated among
such Certificates (other than the Class A-R Certificates) based on the product
of (i) 95% and (ii) the fraction, expressed as a percentage, the numerator of
which is the aggregate Class Principal Amounts for each Class then outstanding
and the denominator of which is the Aggregate Stated Principal Balance
outstanding, and the remainder of such percentage of Voting Interests shall be
allocated to the Class A-R Certificates. At all times during the term of this
Agreement, 5% of all Voting Interests shall be allocated among the Class X-1,
Class X-2A, Class X-2B, Class X-B Certificates, while they remain outstanding in
proportion to their relative Class Notional Amounts. Voting Interests shall be
allocated among the Certificates within each such Class in proportion to their
Certificate Principal Amounts or Percentage Interests.
Section 1.02 Calculations Respecting Mortgage Loans.
Calculations required to be made pursuant to this Agreement with respect
to any Mortgage Loan in the Trust Fund shall be made based upon current
information as to the terms of the Mortgage Loans and reports of payments
received from the Mortgagor on such Mortgage Loans and payments to be made to
the Securities Administrator as supplied to the Securities Administrator by the
Master Servicer. The Securities Administrator shall not be required to
recompute, verify or recalculate the information supplied to it by the Master
Servicer or any Servicer.
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01 Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby transfer, assign, set over, deposit with and otherwise
convey to the Trustee, without recourse, subject to Sections 2.02, 2.04 and
2.05, in trust, all the right, title and interest of the Depositor in and to the
Mortgage Loans. Such conveyance includes, without limitation, (i) the right to
all payments of principal and interest received on or with respect to the
Mortgage Loans on and after the Cut-off Date (other than Scheduled Payments due
on or before such date), and all such payments due after such date but received
prior to such date and intended by the related Mortgagors to be applied after
such date; (ii) all of the Depositor's right, title and interest in and to all
amounts from time to time credited to and the proceeds of the Distribution
Account, any
38
Custodial Accounts or any Escrow Account established with respect to the
Mortgage Loans; (iii) all of the Depositor's right, title or interest in REO
Property and the proceeds thereof; (iv) all of the Depositor's rights under any
Insurance Policies related to the Mortgage Loans; (v) the Depositor's security
interest in any collateral pledged to secure the Mortgage Loans, including the
Mortgaged Properties and any Additional Collateral relating to the Additional
Collateral Mortgage Loans, including, but not limited to, the pledge, control
and guaranty agreements and the Limited Purpose Surety Bond and any proceeds of
the foregoing, to have and to hold, in trust; and the Trustee declares that,
subject to the review provided for in Section 2.02, it has received and shall
hold the Trust Fund, as trustee, in trust, for the benefit and use of the
Holders of the Certificates and for the purposes and subject to the terms and
conditions set forth in this Agreement, and, concurrently with such receipt, has
caused to be executed, authenticated and delivered to or upon the order of the
Depositor, in exchange for the Trust Fund, Certificates in the authorized
denominations evidencing the entire ownership of the Trust Fund.
The foregoing sale, transfer, assignment, set-over, deposit and conveyance
does not and is not intended to result in the creation or assumption by the
Trustee of any obligation of the Depositor, the Initial Seller or the Seller or
any other Person in connection with the Mortgage Loans or any other agreement or
instrument relating thereto except as specifically set forth therein.
In connection with such transfer and assignment of the Mortgage Loans, the
Depositor does hereby deliver to, and deposit with, or cause to be delivered to
and deposited with, the Custodian acting on the Trustee's behalf, the following
documents or instruments with respect to each Mortgage Loan (each a "Trustee
Mortgage File") so transferred and assigned:
(i) with respect to each Mortgage Loan, the original Mortgage Note
endorsed without recourse in proper form to the order of the Trustee, or
in blank (in each case, with all necessary intervening endorsements, as
applicable);
(ii) with respect to each Mortgage Loan (other than a Cooperative
Loan), the original mortgage, deed of trust or other instrument creating a
first lien on the underlying property securing the Mortgage Loan and
bearing evidence that such instrument has been recorded in the appropriate
jurisdiction where the Mortgaged Property is located (or, in lieu of the
original of the Mortgage, a true copy of certified by the originator, or a
duplicate or conformed copy of the Mortgage, together with a certificate
of either the closing attorney or an officer of the title insurer that
issued the related title insurance policy, certifying that such copy
represents a true and correct copy of the original and that such original
has been or is currently submitted to be recorded in the appropriate
governmental recording office of the jurisdiction where the Mortgaged
Property is located);
(iii) with respect to each Mortgage Loan (other than a Cooperative
Loan), the Assignment of Mortgage in form and substance acceptable for
recording in the relevant jurisdiction, such assignment being either (A)
in blank, without recourse, or (B) or endorsed to "HSBC Bank USA, as
Trustee of the Sequoia Mortgage Trust 8, Mortgage Pass-Through
Certificates, without recourse."
39
(iv) with respect to each Mortgage Loan (other than a Cooperative
Loan), the originals or certified copies of all Intervening Assignments of
the Mortgage, if any, with evidence of recording thereon, showing a
complete chain of title to the last endorsee, including any warehousing
assignment;
(v) with respect to each Mortgage Loan (other than a Cooperative
Loan), any assumption, modification, written assurance, substitution,
consolidation, extension or guaranty agreement, if applicable;
(vi) with respect to each Mortgage Loan (other than a Cooperative
Loan), the original policy of title insurance (or a true copy thereof)
with respect to any Mortgage Loan, or, if such policy has not yet been
delivered by the insurer, the title commitment or title binder to issue
same; and
(vii) if the Mortgage Note or Mortgage or any other material
document or instrument relating to the Mortgage Loan has been signed by a
person on behalf of the Mortgagor, the original power of attorney or other
instrument that authorized and empowered such person to sign bearing
evidence that such instrument has been recorded, if so required, in the
appropriate jurisdiction where the Mortgaged Property is located (or, in
lieu thereof, a duplicate or conformed copy of such instrument, together
with a certificate of receipt from the recording office, certifying that
such copy represents a true and complete copy of the original and that
such original has been or is currently submitted to be recorded in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located).
(viii) with respect to each Cooperative Mortgage Loan:
(a) the original loan and security agreement;
(b) the original Cooperative Shares;
(c) a stock power executed in blank by the person in whose
name the Cooperative Shares are issued;
(d) the Proprietary Lease or occupancy agreement accompanied
by an assignment in blank of such proprietary lease;
(e) the recognition agreement executed by the Cooperative
Corporation, which requires the Cooperative Corporation to recognize
the rights of the lender and its successors in interest and assigns,
under the cooperative;
(f) UCC-1 financing statements with recording information
thereon from the appropriate governmental recording offices if
necessary to perfect the security interest of the Cooperative Loan
under the Uniform Commercial Code in the jurisdiction in which the
cooperative project is located, accompanied by UCC-3 financing
statements executed in blank for recordation of the change in the
secured party thereunder.
40
(g) the original policy of title insurance or with respect to
any Mortgage Loan, if such policy has not yet been delivered by the
insurer, the title commitment or title binder to issue same; and
(h) Any guarantees, if applicable.
(b) The Depositor shall cause Assignments of Mortgage with respect to each
Mortgage Loan other than a Cooperative Loan to be completed in the form
specified in Sections 2.01(a)(iii) above within 30 days of the Closing Date for
purpose of their recording; provided, however, that such Assignments need not be
recorded if, on or prior to the Closing Date, the Depositor delivers, at its own
expense, an Opinion of Counsel (which must be Independent counsel) acceptable to
the Trustee, and the Rating Agencies, to the effect that recording in such
states is not required to protect the Trustee's interest in the related Mortgage
Loans. Subject to the preceding sentence, as soon as practicable after the
Closing Date (but in no event more than 270 days thereafter except to the extent
delays are caused by the applicable recording office), the Depositor at its own
expense and with the cooperation of the applicable Servicer, shall cause to be
properly recorded by each Servicer in each public recording office where the
related Mortgages are recorded each Assignment of Mortgage endorsed in the form
described in Sections 2.01(a)(iii) above with respect to each such Mortgage
Loan.
(c) In instances where a Title Insurance Policy is required to be
delivered to the Trustee or the applicable Custodian on behalf of the Trustee
under Sections 2.01(a)(vi) above and is not so delivered, the Depositor will
provide a copy of such Title Insurance Policy to the Trustee, or to the
Custodian on behalf of the Trustee, as promptly as practicable after the
execution and delivery hereof, but in any case within 180 days of the Closing
Date.
(d) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of delivering
the above documents, herewith delivers to the Trustee, or to the Custodian on
behalf of the Trustee, an Officer's Certificate which shall include a statement
to the effect that all amounts received in connection with such prepayment that
are required to be deposited in the Distribution Account pursuant to Section
4.01 have been so deposited. All original documents that are not delivered to
the Trustee or the Custodian on behalf of the Trustee shall be held by the
Master Servicer or the applicable Servicer in trust for the benefit of the
Trustee and the Certificateholders.
Section 2.02 Acceptance of Trust Fund by Trustee; Review of Documentation
for Trust Fund.
(a) The Trustee, by execution and delivery hereof, acknowledges receipt by
it or by the Custodian on its behalf of the Trustee Mortgage Files pertaining to
the Mortgage Loans listed on the Mortgage Loan Schedule, subject to review
thereof by the Custodian on behalf of the Trustee in accordance with Section
4(a) of the Custody Agreement (a form of which is attached hereto as Exhibit D).
The Custodian on behalf of the Trustee, will execute and deliver to the Trustee
and the Depositor an Initial Trust Receipt and Schedule of Exceptions, on the
Closing Date in the forms required by the Custody Agreement.
41
(b) Within 270 days after the Closing Date, the Custodian on behalf of the
Trustee, will, for the benefit of Holders of the Certificates, review each
Trustee Mortgage File to ascertain that all required documents set forth in
Section 2.01 have been received and appear on their face to conform with the
requirements set forth in Section 4A and 4B of the Custody Agreement.
(c) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee, any Custodian or the
Certificateholders of any unsatisfied duty, claim or other liability on any
Mortgage Loan or to any Mortgagor.
(d) Each of the parties hereto acknowledges that the Custodian shall
perform the applicable review of the Mortgage Loans and respective
certifications as provided in the Custody Agreement.
(e) Upon execution of this Agreement, the Depositor hereby delivers to the
Trustee and the Trustee acknowledges receipt of the Acknowledgements, together
with the related Purchase Agreements, Servicing Agreements and the Mortgage Loan
Purchase and Sale Agreements.
Section 2.03 Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Trustee, for the
benefit of the Certificateholders and to the Master Servicer and the Securities
Administrator as of the Closing Date or such other date as is specified, that:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and has full corporate power and authority to own its property, to carry
on its business as presently conducted, to enter into and perform its
obligations under this Agreement, and to create the trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this Agreement
have been duly authorized by all necessary corporate action on the part of
the Depositor; neither the execution and delivery of this Agreement, nor
the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of,
or constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on the
Depositor or its properties or the certificate of incorporation or bylaws
of the Depositor;
(iii) the execution, delivery and performance by the Depositor of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect of,
any state, federal or other governmental authority or agency, except such
as has been obtained, given, effected or taken prior to the date hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by the
Trustee, the Master Servicer and the Securities Administrator, constitutes
a valid and binding obligation of
42
the Depositor enforceable against it in accordance with its terms except
as such enforceability may be subject to (A) applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of the
rights of creditors generally and (B) general principles of equity
regardless of whether such enforcement is considered in a proceeding in
equity or at law;
(v) there are no actions, suits or proceedings pending or, to the
knowledge of the Depositor, threatened or likely to be asserted against or
affecting the Depositor, before or by any court, administrative agency,
arbitrator or governmental body (A) with respect to any of the
transactions contemplated by this Agreement or (B) with respect to any
other matter which in the judgment of the Depositor will be determined
adversely to the Depositor and will if determined adversely to the
Depositor materially and adversely affect it or its business, assets,
operations or condition, financial or otherwise, or adversely affect its
ability to perform its obligations under this Agreement;
(vi) immediately prior to the transfer and assignment of the
Mortgage Loans to the Trustee, the Depositor was the sole owner of record
and holder of each Mortgage Loan, and the Depositor had good and
marketable title thereto, and had full right to transfer and sell each
Mortgage Loan to the Trustee free and clear, subject only to (1) liens of
current real property taxes and assessments not yet due and payable and,
if the related Mortgaged Property is a condominium unit, any lien for
common charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording of such Mortgage acceptable to mortgage
lending institutions in the area in which the related Mortgaged Property
is located and specifically referred to in the lender's Title Insurance
Policy or attorney's opinion of title and abstract of title delivered to
the originator of such Mortgage Loan, and (3) such other matters to which
like properties are commonly subject which do not, individually or in the
aggregate, materially interfere with the benefits of the security intended
to be provided by the Mortgage, of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and had full
right and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign each Mortgage Loan
pursuant to this Agreement;
(vii) This Agreement creates a valid and continuing security
interest (as defined in the applicable Uniform Commercial Code (the
"UCC"), in the Mortgage Loans in favor of the Trustee, which security
interest is prior to all other liens, and is enforceable as such against
creditors of and purchasers from the Depositor;
(viii) The Mortgage Loans constitute "instruments" within the
meaning of the applicable UCC;
(ix) Other than the security interest granted to the Trustee
pursuant to this Agreement, the Depositor has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Mortgage
Loans. The Depositor has not authorized the filing of and is not aware of
any financing statement against the Depositor that includes a description
of the collateral covering the Mortgage Loans other than a financing
statement relating to the security interest granted to the Trustee
hereunder or that has
43
been terminated. The Depositor is not aware of any judgment or tax lien
filings against the Depositor;
(x) None of the Mortgage Loans have any marks or notations
indicating that such Mortgage Loans have been pledged, assigned or
otherwise conveyed to any Person other than the Trustee; and
(xi) The Depositor has received all consents and approvals required
by the terms of the Mortgage Loans to convey the Mortgage Loans hereunder
to the Trustee.
Section 2.04 Discovery of Breach; Repurchase or Substitution of Mortgage
Loans.
(a) Pursuant to Sections 2(b) and 2(d) of each of the Initial Mortgage
Loan Purchase and Sale Agreement and the Secondary Mortgage Loan Purchase and
Sale Agreement, each of the Initial Seller and the Seller, respectively, have
made certain representations and warranties as to the characteristics of the
Mortgage Loans (set forth in Schedule B-1 and B-2 of this Agreement) and the
conveyance thereof from the Initial Seller to the Seller and, in turn, from the
Seller to the Depositor, for the benefit of the Trustee and the
Certificateholders and each of the Initial Seller and the Seller have agreed to
comply with the provisions of this Section 2.04 in respect of a breach of any of
such representations and warranties.
It is understood and agreed that such representations and warranties set
forth in Section 2(b) and 2(d) of the Mortgage Loan Purchase and Sale Agreements
shall survive delivery of the Trustee Mortgage Files and the Assignment of
Mortgage of each Mortgage Loan to the Trustee and shall continue throughout the
term of this Agreement. Upon discovery by the Depositor or receipt of written
notice of any materially defective document in, or, following the date of
delivery to the Trustee of the Custodian's Final Trust Receipt as required under
the Custody Agreement, that a document is missing from, a Trustee Mortgage File,
or discovery by the Depositor, the Initial Seller or the Seller of the breach by
the Initial Seller or the Seller of any representation or warranty under the
Mortgage Loan Purchase and Sale Agreements in respect of any Mortgage Loan which
materially adversely affects the value of that Mortgage Loan or the interest
therein of the Certificateholders (a "Defective Mortgage Loan") (each of such
parties hereby agreeing to give written notice thereof to the Trustee and the
other of such parties), the Trustee, or its designee, shall promptly notify the
Depositor in writing of such defective or missing document or breach and request
that the Depositor deliver such missing document or cure or cause the cure of
such defect or breach within 90 days from the date that the Depositor discovered
or was notified of such missing document, defect or breach, and if the Depositor
does not deliver such missing document or cure such defect or breach in all
material respects during such period, the Trustee shall enforce the Initial
Seller's or Seller's obligation under its respective Mortgage Loan Purchase and
Sale Agreements and cause the Initial Seller or the Seller, as applicable, to
repurchase that Mortgage Loan from the Trust Fund at the Purchase Price on or
prior to the Determination Date following the expiration of such 90 day period
(subject to Section 2.04(b) below); provided, however, that, in connection with
any such breach that could not reasonably have been cured within such 90 day
period, if the Initial Seller or the Seller shall have commenced to cure such
breach within such 90 day period, the Initial Seller or the Seller shall be
permitted to proceed thereafter diligently and expeditiously to cure the same
within an additional 90 day period. The Purchase Price for the repurchased
Mortgage Loan shall
44
be deposited in the related Distribution Account, and the Trustee, or its
designee, upon receipt of written certification from the Securities
Administrator of such deposit, shall release to the Initial Seller or the
Seller, as applicable, the related Trustee Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranties, as either party shall furnish to it and
as shall be necessary to vest in such party any Mortgage Loan released pursuant
hereto and the Trustee, or its designee, shall have no further responsibility
with regard to such Trustee Mortgage File (it being understood that the Trustee
shall have no responsibility for determining the sufficiency of such assignment
for its intended purpose). In lieu of repurchasing any such Mortgage Loan as
provided above, either party may cause such Mortgage Loan to be removed from the
Trust Fund (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Replacement Mortgage Loans in the manner and subject to
the limitations set forth in Section 2.04(b) below. It is understood and agreed
that the obligation of either the Initial Seller or 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 such party respecting such omission, defect or breach available to the
Trustee on behalf of the Certificateholders.
(b) Any substitution of Replacement Mortgage Loans for Deleted Mortgage
Loans made pursuant to Section 2.04(a) above must be effected prior to the last
Business Day that is within two years after the Closing Date. As to any Deleted
Mortgage Loan for which either the Initial Seller or the Seller substitutes a
Replacement Mortgage Loan or Loans, such substitution shall be effected by
delivering to the Custodian, on behalf of the Trustee, for such Replacement
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, together with an Officers' Certificate stating that each
such Replacement Mortgage Loan satisfies the definition thereof and specifying
the Substitution Amount (as described below), if any, in connection with such
substitution. The Custodian shall acknowledge receipt for such Replacement
Mortgage Loan and, within 45 days thereafter, shall review such Mortgage
Documents as specified in the Custody Agreement and deliver to the Trustee and
the Depositor, with respect to such Replacement Mortgage Loans, a certification
substantially in the form of a revised Trust Receipt, with any exceptions noted
thereon. Within one year of the date of substitution, the Custodian shall
deliver to the Trustee and the Depositor a certification substantially in the
form of a revised Final Trust Receipt, with respect to such Replacement Mortgage
Loans, with any exceptions noted thereon. Monthly Payments due with respect to
Replacement Mortgage Loans in the month of substitution shall not be included as
part of the Trust Fund and shall be retained by the Initial Seller or the
Seller, as applicable. For the month of substitution, distributions to
Certificateholders shall reflect the collections and recoveries in respect of
such Deleted Mortgage in the Due Period preceding the month of substitution and
the Seller shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. Upon such substitution, such
Replacement Mortgage Loan shall constitute part of the Trust Fund and shall be
subject in all respects to the terms of this Agreement and the Mortgage Loan
Purchase and Sale Agreements, including all representations and warranties
thereof included in the Mortgage Loan Purchase and Sale Agreements, in each case
as of the date of substitution.
45
For any month in which either the Initial Seller or the Seller substitutes
one or more Replacement Mortgage Loans for one or more Deleted Mortgage Loans,
the related Servicer shall determine the excess (each, a "Substitution Amount"),
if any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans
exceeds the aggregate Stated Principal Balance of the Replacement Mortgage Loans
replacing such Deleted Mortgage Loans, together with one month's interest on
excess at the applicable Net Mortgage Rate. On the date of such substitution,
the Initial Seller or the Seller, as applicable, shall deliver or cause to be
delivered to the Servicer for deposit in the Custodial Account an amount equal
to the related Substitution Amount, if any, and the Custodian, on behalf of the
Trustee, upon receipt of the related Replacement Mortgage Loan or Loans and
certification by the Servicer of such deposit, shall release to the Initial
Seller or the Seller, as applicable, the related Trustee 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 Deleted Mortgage Loan released pursuant hereto.
In addition, the Initial Seller or the Seller, as applicable, shall obtain
at its own expense and deliver to the Trustee and the Securities Administrator
an Opinion of Counsel to the effect that such substitution (either specifically
or as a class of transactions) shall 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) either REMIC created hereunder 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.
(c) Upon discovery by the Initial Seller, the Seller, the Depositor 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 applicable party shall repurchase or, subject to
the limitations set forth in Section 2.04(b), substitute one or more Replacement
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.
Any such repurchase or substitution shall be made in the same manner as set
forth in Section 2.04(a) above, if made by the Initial Seller or the Seller. The
Trustee shall re-convey to the Initial Seller or the Seller, as applicable, the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.
(d) Each of the Initial Seller and the Seller indemnifies and holds the
Trust Fund, the Master Servicer, the Securities Administrator, the Trustee, the
Depositor and each Certificateholder harmless against any and all taxes, claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trust Fund, the
Trustee, the Master Servicer, the Securities Administrator, the Depositor and
any Certificateholder may sustain in connection with any actions of such party
relating to a repurchase of a Mortgage Loan other than in compliance with the
terms of this Section 2.04 and the related Mortgage Loan Purchase and Sale
Agreements, to the extent that any such action
46
causes (i) any federal or state tax to be imposed on the Trust Fund, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860G(d)(1) of the Code, or (ii) any REMIC formed hereby to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
Section 2.05 Purchases of Converted Mortgage Loans.
The Master Servicer shall enforce any originator's obligation under a
Purchase Agreement to purchase at the Purchase Price any Converted Mortgage Loan
from the Trust Fund. Such party shall, to the extent provided in the related
Purchase Agreement, purchase each Converted Mortgage Loan from the Trust Fund on
or prior to the Determination Date following the receipt of notification from
the Mortgagor of its election to exercise the conversion option. The Purchase
Price for the Converted Mortgage Loan shall be deposited in the related
Custodial Account, and, upon receipt of such deposit and receipt by the
Custodian of the request for release of such Converted Mortgage Loan, the
Custodian shall release to the purchaser the related Trustee Mortgage File, and
the Custodian shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the purchaser shall furnish to it
and as shall be necessary to vest in the purchaser any Converted Mortgage Loan
released pursuant hereto and the Trustee and the Custodian shall have no further
responsibility with regard to such Trustee Mortgage File (it being understood
that the Custodian and the Trustee shall have no responsibility for determining
the sufficiency of such assignment for its intended purpose). It is understood
and agreed that the obligation of an originator to purchase any Converted
Mortgage Loan shall constitute the sole remedy against such party respecting
such Converted Mortgage Loan available to the Trustee and the Master Servicer on
behalf of the Certificateholders.
Section 2.06 Grant Clause.
(a) It is intended that the conveyance of the Depositor's right, title and
interest in and to property constituting the Trust Fund pursuant to this
Agreement shall constitute, and shall be construed as, a sale of such property
and not a grant of a security interest to secure a loan. However, if such
conveyance is deemed to be in respect of a loan, it is intended that: (1) the
rights and obligations of the parties shall be established pursuant to the terms
of this Agreement; (2) the Depositor hereby grants to the Trustee for the
benefit of the Holders of the Certificates a first priority security interest in
all of the Depositor's right, title and interest in, to and under, whether now
owned or hereafter acquired, the Trust Fund and all proceeds of any and all
property constituting the Trust Fund to secure payment of the Certificates; and
(3) this Agreement shall constitute a security agreement under applicable law.
If such conveyance is deemed to be in respect of a loan and the trust created by
this Agreement terminates prior to the satisfaction of the claims of any Person
holding any Certificate, the security interest created hereby shall continue in
full force and effect and the Trustee shall be deemed to be the collateral agent
for the benefit of such Person, and all proceeds shall be distributed as herein
provided.
(b) The Depositor shall, to the extent consistent with this Agreement,
take such reasonable actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans and
the other property described above, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement. The Depositor will, at
its
47
own expense, make all initial filings on or about the Closing Date and shall
forward a copy of such filing or filings to the Trustee. Without limiting the
generality of the foregoing, the Depositor shall prepare and forward for filing,
or shall cause to be forwarded for filing, at the expense of the Depositor, all
filings necessary to maintain the effectiveness of any original filings
necessary under the relevant UCC to perfect the Trustee's security interest in
or lien on the Mortgage Loans, including without limitation (x) continuation
statements, and (y) such other statements as may be occasioned by (1) any change
of name of the Seller, the Depositor or the Trustee, (2) any change of location
of the place of business or the chief executive office of the Seller or the
Depositor, (3) any transfer of any interest of the Seller or the Depositor in
any Mortgage Loan or (4) any change under the relevant UCC or other applicable
laws. Neither the Seller nor the Depositor shall organize under the law of any
jurisdiction other than the State under which each is organized as of the
Closing Date (whether changing its jurisdiction of organization or organizing
under an additional jurisdiction) without giving 30 days prior written notice of
such action to its immediate and intermediate transferee, including the Trustee.
Before effecting such change, the Seller or the Depositor proposing to change
its jurisdiction of organization shall prepare and file in the appropriate
filing office any financing statements or other statements necessary to continue
the perfection of the interests of its immediate and mediate transferees,
including the Trustee, in the Mortgage Loans. In connection with the
transactions contemplated by this Agreement, each of the Seller and the
Depositor authorizes its immediate or mediate transferee to file in any filing
office any initial financing statements, any amendments to financing statements,
any continuation statements, or any other statements or filings described in
this paragraph (b).
ARTICLE III
THE CERTIFICATES
Section 3.01 The Certificates.
(a) The Certificates shall be issuable in registered form only and shall
be securities governed by Article 8 of the New York Uniform Commercial Code. The
Book-Entry Certificates will be evidenced by one or more certificates,
beneficial ownership of which will be held in the dollar denominations in
Certificate Principal Amount, or Notional Amount, as applicable, or in the
Percentage Interests, specified herein. Each Class of Book-Entry Certificates
will be issued in the minimum denominations in Certificate Principal Amount (or
Notional Amount) specified in the Preliminary Statement hereto and in integral
multiples of $1 in excess thereof. Each Class of Non-Book-Entry Certificates
other than the Residual Certificates shall be issued in definitive, fully
registered form in the minimum denominations in Certificate Principal Amount
specified in the Preliminary Statement hereto and in integral multiples of $1 in
excess thereof. The Residual Certificates shall be issued as single Certificates
and maintained in definitive, fully registered form in a denomination equal to
100% of the Percentage Interest of each such Class. The Class X-1, Class X-2A,
Class X-2B and Class X-B Certificates shall be issued as single Certificates in
a denomination equal to 100% of the Percentage Interest of each such Class.
48
(b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Authenticating Agent upon the order of
the Depositor upon receipt by the Trustee of the Trustee Mortgage Files
described in Section 2.01. No Certificate shall be entitled to any benefit under
this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Authenticating Agent, by
manual signature, and such certification 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. At any time and from time to time after the execution
and delivery of this Agreement, the Depositor may deliver Certificates executed
by the Trustee to the Authenticating Agent for authentication and the
Authenticating Agent shall authenticate and deliver such Certificates as in this
Agreement provided and not otherwise.
(c) The Class B-4, Class B-5, Class B-6, Class A-R and Class A-R(LTR)
Certificates offered and sold in reliance on the exemption from registration
under Rule 144A under the Act shall be issued initially in the form of one or
more permanent global Certificates in definitive, fully registered form without
interest coupons with the applicable legends set forth in Exhibit A added to the
forms of such Certificates (each, a "Restricted Global Security").
Section 3.02 Registration.
The Securities Administrator is hereby appointed, and the Securities
Administrator hereby accepts its appointment as, initial Certificate Registrar
in respect of the Certificates and shall maintain books for the registration and
for the transfer of Certificates (the "Certificate Register"). The Trustee may
appoint a bank or trust company to act as successor Certificate Registrar. A
registration book shall be maintained for the Certificates collectively. The
Certificate Registrar may resign or be discharged or removed and a new successor
may be appointed in accordance with the procedures and requirements set forth in
Sections 6.06 and 6.07 hereof with respect to the resignation, discharge or
removal of the Securities Administrator and the appointment of a successor
Securities Administrator. The Certificate Registrar may appoint, by a written
instrument delivered to the Holders and the Master Servicer, any bank or trust
company to act as co-registrar under such conditions as the Certificate
Registrar may prescribe; provided, however, that the Certificate Registrar shall
not be relieved of any of its duties or responsibilities hereunder by reason of
such appointment.
Section 3.03 Transfer and Exchange of Certificates.
(a) A Certificate (other than Book-Entry Certificates which shall be
subject to Section 3.09 hereof) may be transferred by the Holder thereof only
upon presentation and surrender of such Certificate at the office of the
Certificate Registrar duly endorsed or accompanied by an assignment duly
executed by such Holder or his duly authorized attorney in such form as shall be
satisfactory to the Certificate Registrar. Upon the transfer of any Certificate
in accordance with the preceding sentence, the Trustee shall execute, and the
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount (or Notional Amount) as the
Certificate being transferred. No service charge shall be made to a
49
Certificateholder for any registration of transfer of Certificates, 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 registration
of transfer of Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any number of
new Certificates of the same Class, in authorized denominations, representing in
the aggregate the same Certificate Principal Amount (or Notional Amount) as the
Certificate surrendered, upon surrender of the Certificate to be exchanged at
the office of the Certificate Registrar duly endorsed or accompanied by a
written instrument of transfer duly executed by such Holder or his duly
authorized attorney in such form as is satisfactory to the Certificate
Registrar. Certificates delivered upon any such exchange will evidence the same
obligations, and will be entitled to the same rights and privileges, as the
Certificates surrendered. No service charge shall be made to a Certificateholder
for any exchange of Certificates, 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 exchange of Certificates. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute, and the
Authenticating Agent shall authenticate, date and deliver the Certificates which
the Certificateholder making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein.
The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the Depositor
or an affiliate (as defined in Rule 405 under the 1933 Act) of the
Depositor or (y) being made to a "qualified institutional buyer" (a "QIB")
as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Act") by a transferor that has provided the Certificate Registrar with a
certificate in the form of Exhibit H hereto; and
(ii) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is being made to an
"accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the Act,
or to any Person all of the equity owners in which are such accredited
investors, by a transferor who furnishes to the Certificate Registrar a
letter of the transferee substantially in the form of Exhibit I hereto.
(d) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Certificate
Registrar has received (A) a certificate substantially in the form of Exhibit J
hereto from such transferee or (B) an Opinion of Counsel satisfactory to the
Certificate Registrar to the effect that the purchase and holding of such a
Certificate will not constitute or result in the assets of the Trust Fund being
deemed to be "plan assets" subject to the prohibited transactions provisions of
ERISA or Section 4975 of the Code and will not subject the Trustee, the
Certificate Registrar, the Master Servicer, the Securities
50
Administrator or the Depositor to any obligation in addition to those undertaken
in the Agreement; provided, however, that the Certificate Registrar will not
require such certificate or opinion in the event that, as a result of a change
of law or otherwise, counsel satisfactory to the Certificate Registrar has
rendered an opinion to the effect that the purchase and holding of an
ERISA-Restricted Certificate by a Plan or a Person that is purchasing or holding
such a Certificate with the assets of a Plan will not constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code. The preparation
and delivery of the certificates and opinions referred to above shall not be an
expense of the Trust Fund, the Trustee, the Certificate Registrar, the Master
Servicer, the Securities Administrator or the Depositor.
Notwithstanding the foregoing, no opinion or certificate shall be required
for the initial issuance of the ERISA-Restricted Certificates. Notwithstanding
anything to the contrary herein, any purported transfer of an ERISA-Restricted
Certificate to or on behalf of an employee benefit plan subject to Section 406
of ERISA or a plan subject to Section 4975 of 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;
provided that the restriction set forth in this sentence shall not be applicable
if there has been delivered to the Certificate Registrar, an Opinion of Counsel
meeting the requirements of clause (B) of the first sentence of this paragraph
(d). The Trustee, the Certificate Registrar and the Depositor shall be under no
liability to any Person for any registration of transfer of any ERISA-Restricted
Certificate that is in fact not permitted by this Section 3.03(d) or for the
Paying Agent making any payments due on such 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 transfer was registered by the Certificate
Registrar in accordance with the foregoing requirements. The last preceding
Holder of such Certificate that is not a plan or a Person acting on behalf of a
plan shall be entitled to recover from any purported Holder of any
ERISA-Restricted Certificate that was in fact an employee benefit plan subject
to Section 406 of ERISA or a plan subject to Section 4975 of the Code or a
Person acting on behalf of any such plan at the time it became a Holder or, at
such subsequent time as it became such a plan or Person acting on behalf of such
a plan , all payments made on such ERISA-Restricted Certificate at and after
either such time; provided that none of the Depositor, the Certificate Registrar
or the Trustee shall be responsible for such recovery if they otherwise made a
good faith effort to comply with this Section 3.03(d).
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of a Certificate.
(f) Notwithstanding anything to the contrary contained herein, no Residual
Certificate may be owned, pledged or transferred, directly or indirectly, by or
to (i) a Disqualified Organization or (ii) an individual, corporation or
partnership or other person unless such person is (A) not a Non-U.S. Person or
(B) is a Non-U.S. Person that holds a Residual Certificate in connection with
the conduct of a trade or business within the United States and has furnished
the
51
transferor and the Certificate Registrar with an effective Internal Revenue
Service Form 4224 or successor form at the time and in the manner required by
the Code (any such person who is not covered by clause (A) or (B) above is
referred to herein as a "Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee and the Certificate Registrar an affidavit in
substantially the form attached hereto as Exhibit B representing and warranting,
among other things, that such transferee is neither a Disqualified Organization,
an agent or nominee acting on behalf of a Disqualified Organization, nor a
Non-permitted Foreign Holder (any such transferee, a "Permitted Transferee"),
and the proposed transferor shall deliver to the Trustee and the Certificate
Registrar an affidavit in substantially the form attached hereto as Exhibit C.
In addition, the Trustee or the Certificate Registrar may (but shall have no
obligation to) require, prior to and as a condition of any such transfer, the
delivery by the proposed transferee of an Opinion of Counsel, addressed to the
Trustee and the Certificate Registrar, that such proposed transferee or, if the
proposed transferee is an agent or nominee, the proposed beneficial owner, is
not a Disqualified Organization, agent or nominee thereof, or a Non-permitted
Foreign Holder. Notwithstanding the registration in the Certificate Register of
any transfer, sale, or other disposition of a Residual Certificate to a
Disqualified Organization, an agent or nominee thereof, or Non-permitted Foreign
Holder, such registration shall be deemed to be of no legal force or effect
whatsoever and such Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder shall not be deemed to be a Certificateholder for
any purpose hereunder, including, but not limited to, the receipt of
distributions on such Residual Certificate. The Depositor, the Certificate
Registrar and the Trustee shall be under no liability to any Person for any
registration or transfer of a Residual Certificate to a Disqualified
Organization, agent or nominee thereof or Non-permitted Foreign Holder or for
the Paying Agent making any payments due on such Residual Certificate to the
Holder thereof or for taking any other action with respect to such Holder under
the provisions of the Agreement, so long as the transfer was effected in
accordance with this Section 3.03(f), unless the Certificate Registrar shall
have actual knowledge at the time of such transfer or the time of such payment
or other action that the transferee is a Disqualified Organization, or an agent
or nominee thereof, or Non-permitted Foreign Holder. The Certificate Registrar
shall be entitled to recover from any Holder of a Residual Certificate that was
a Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder at the time it became a Holder or any subsequent time it became a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder, all payments made on such Residual Certificate at and after either such
times (and all costs and expenses, including but not limited to attorneys' fees,
incurred in connection therewith). Any payment (not including any such costs and
expenses) so recovered by the Certificate Registrar shall be paid and delivered
to the last preceding Holder of such Residual Certificate.
If any purported transferee shall become a registered Holder of a Residual
Certificate in violation of the provisions of this Section 3.03(f), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Residual Certificate was not in fact permitted by this Section 3.03(f), the
last preceding Permitted Transferee shall be restored to all rights as Holder
thereof retroactive to the date of such registration of transfer of such
Residual Certificate. The Depositor, the Certificate Registrar and the Trustee
shall be under no liability to any Person for any registration of transfer of a
Residual Certificate that is in fact not permitted by this
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Section 3.03(f), or for the Paying Agent making any payment due on such
Certificate to the registered Holder thereof or for taking any other action with
respect to such Holder under the provisions of this Agreement so long as the
transfer was registered upon receipt of the affidavit described in the preceding
paragraph of this Section 3.03(f).
(g) Each Holder or Certificate Owner of a Restricted Certificate,
ERISA-Restricted Certificate or Residual Certificate, or an interest therein, by
such Holder's or Owner's acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this section.
Section 3.04 Cancellation of Certificates.
Any Certificate surrendered for registration of transfer or exchange shall
be cancelled and retained in accordance with normal retention policies with
respect to cancelled certificates maintained by the Trustee or the Certificate
Registrar.
Section 3.05 Replacement of Certificates.
If (i) any Certificate is mutilated and is surrendered to the Trustee or
the Certificate Registrar or (ii) the Trustee or the Certificate Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and there is delivered to the Trustee 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 Depositor, the Trustee or the
Certificate Registrar that such destroyed, lost or stolen Certificate has been
acquired by a protected purchaser, the Trustee shall execute and the
Authenticating Agent 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 Certificate Principal Amount. Upon the issuance of any new
Certificate under this Section 3.05, the Trustee, the Depositor 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, the Depositor or
the Certificate Registrar) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the applicable Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
If after the delivery of such new Certificate, a protected purchaser of
the original Certificate in lieu of which such new Certificate was issued
presents for payment such original Certificate, the Depositor, the Certificate
Registrar and the Trustee or any agent shall be entitled to recover such new
Certificate from the Person to whom it was delivered or any Person taking
therefrom, except a protected purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage,
cost or expenses incurred by the Depositor, the Certificate Registrar, the
Trustee or any agent in connection therewith.
Section 3.06 Persons Deemed Owners.
Subject to the provisions of Section 3.09 with respect to Book-Entry
Certificates, the Depositor, the Master Servicer, the Trustee, the Certificate
Registrar, the Paying Agent and any agent of any
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of them shall treat the Person in whose name any Certificate is registered upon
the books of the Certificate Registrar as the owner of such Certificate for the
purpose of receiving distributions pursuant to Sections 5.01 and 5.02 and for
all other purposes whatsoever, and neither the Depositor, the Master Servicer,
the Trustee, the Certificate Registrar, the Paying Agent nor any agent of any of
them shall be affected by notice to the contrary.
Section 3.07 Temporary Certificates.
(a) Pending the preparation of definitive Certificates, upon the order of
the Depositor, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver temporary Certificates that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such variations as the authorized officers executing such
Certificates may determine, as evidenced by their execution of such
Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Certificate Registrar without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver in exchange therefor a like aggregate Certificate
Principal Amount of definitive Certificates of the same Class in the authorized
denominations. Until so exchanged, the temporary Certificates shall in all
respects be entitled to the same benefits under this Agreement as definitive
Certificates of the same Class.
Section 3.08 Appointment of Paying Agent.
The Trustee may appoint a Paying Agent (which may be the Trustee) for the
purpose of making distributions to Certificateholders hereunder. The Trustee
hereby appoints the Securities Administrator as the initial Paying Agent. The
Trustee shall cause any Paying Agent, other than the Securities Administrator,
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Certificateholders in an Eligible Account (which shall be
the Distribution Account) in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to the Certificateholders. All
funds remitted by the Trustee to any such Paying Agent for the purpose of making
distributions shall be paid to Certificateholders on each Distribution Date and
any amounts not so paid shall be returned on such Distribution Date to the
Trustee. If the Paying Agent is not the Trustee, the Trustee shall cause to be
remitted to the Paying Agent on or before the Business Day prior to each
Distribution Date, by wire transfer in immediately available funds, the funds to
be distributed on such Distribution Date. Any Paying Agent shall be either a
bank or trust company or otherwise authorized under law to exercise corporate
trust powers.
Section 3.09 Book-Entry Certificates.
(a) Each Class of Book-Entry Certificates, upon original issuance, shall
be issued in the form of one or more typewritten Certificates representing the
Book-Entry Certificates. The
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Book-Entry Certificates shall initially be registered on the Certificate
Register in the name of the nominee of the Clearing Agency, and no Certificate
Owner will receive a definitive certificate representing such Certificate
Owner's interest in the Book-Entry Certificates, except as provided in Section
3.09(c). Unless Definitive Certificates have been issued to Certificate Owners
of Book-Entry Certificates pursuant to Section 3.09(c):
(i) the provisions of this Section 3.09 shall be in full force and
effect;
(ii) the Certificate Registrar, the Paying Agent and the Trustee
shall deal with the Clearing Agency for all purposes (including the making
of distributions on the Book-Entry Certificates) as the authorized
representatives of the Certificate Owners and the Clearing Agency and
shall be responsible for crediting the amount of such distributions to the
accounts of such Persons entitled thereto, in accordance with the Clearing
Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09
conflict with any other provisions of this Agreement, the provisions of
this Section 3.09 shall control; and
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and shall
be limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency and/or the Clearing Agency
Participants. Unless and until Definitive Certificates are issued pursuant
to Section 3.09(c), the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal of and interest on the Book-Entry Certificates
to such Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the
Securities Administrator shall give all such notices and communications
specified herein to be given to Holders of the Book-Entry Certificates to the
Clearing Agency.
(c) If (i) (A) the Clearing Agency or the Depositor advises the Paying
Agent in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities with respect to the Book-Entry
Certificates, and (B) the Depositor is unable to locate a qualified successor
satisfactory to the Depositor and the Paying Agent, (ii) the Depositor, at its
option, advises the Paying Agent in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, Certificate Owners representing beneficial interests
aggregating not less than 50% of the Class Principal Amount of a Class of
Book-Entry Certificates advise the Paying Agent and the Clearing Agency through
the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners of a Class of Book-Entry Certificates, the Certificate
Registrar shall notify the Clearing Agency to effect notification to all
Certificate Owners, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Certificate Registrar of the
Book-Entry Certificates by the Clearing
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Agency, accompanied by registration instructions from the Clearing Agency for
registration, the Certificate Registrar shall issue the Definitive Certificates.
Neither the Depositor, the Certificate Registrar nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Certificate Registrar, to the extent applicable, with respect
to such Definitive Certificates and the Certificate Registrar shall recognize
the holders of the Definitive Certificates as Certificateholders hereunder.
Notwithstanding the foregoing, the Certificate Registrar, upon the instruction
of the Depositor, shall have the right to issue Definitive Certificates on the
Closing Date in connection with credit enhancement programs.
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01 Custodial Accounts; Distribution Account.
(a) On or prior to the Closing Date, the Master Servicer shall have caused
the Servicers to establish and maintain one or more Custodial Accounts, as
provided in the related Servicing Agreements, into which all Scheduled Payments
and unscheduled payments with respect to the Mortgage Loans, net of any
deductions or reimbursements permitted under the related Servicing Agreement,
shall be deposited. On each Distribution Account Deposit Date, the Servicers
shall remit to the Securities Administrator for deposit into the Distribution
Account, all amounts so required to be deposited into such account in accordance
with the terms of the related Servicing Agreement.
(b) The Securities Administrator, as Paying Agent for the Trustee, shall
establish and maintain an Eligible Account entitled "Distribution Account of
HSBC Bank, USA, as Trustee for the benefit of Sequoia Mortgage Trust 8 holders
of Mortgage Pass-Through Certificates." The Securities Administrator shall,
promptly upon receipt from the Servicers on each Distribution Account Deposit
Date, deposit into the Distribution Account and retain on deposit until the
related Distribution Date the following amounts:
(i) the aggregate of collections with respect to the Mortgage Loans
remitted by the Servicers from the related Custodial Accounts in
accordance with the Servicing Agreements;
(ii) any amounts required to be deposited by the Master Servicer
with respect to the Mortgage Loans for the related Due Period pursuant to
this Agreement, including the amount of any Advances or Compensation
Interest Payments with respect to the Mortgage Loans not paid by the
Servicers; and
(iii) any other amounts so required to be deposited in the
Distribution Account in the related Due Period pursuant to this Agreement.
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(c) In the event the Master Servicer or a Servicer has remitted in error
to the Distribution Account any amount not required to be remitted in accordance
with the definition of Available Distribution Amount, it may at any time direct
the Securities Administrator to withdraw such amount from the Distribution
Account for repayment to the Master Servicer or Servicer, as applicable, by
delivery of an Officer's Certificate to the Securities Administrator and the
Trustee which describes the amount deposited in error.
(d) On each Distribution Date and Redemption Date, the Securities
Administrator, as Paying Agent, shall distribute the Available Distribution
Amount to the Certificateholders and any other parties entitled thereto in the
amounts and priorities set forth in Section 5.02. The Securities Administrator
may from time to time withdraw from the Distribution Account and pay the Master
Servicer, the Trustee, the Securities Administrator, the Auction Administrator
or any Servicer any amounts permitted to be paid or reimbursed to such Person
from funds in the Distribution Account pursuant to the clauses (A) through (D)
of the definition of Available Distribution Amount.
(e) Funds in the Distribution Account may be invested in Permitted
Investments selected by and at the written direction of the Securities
Administrator, which shall mature not later than one Business Day prior to the
Distribution Date (except that if such Permitted Investment is an obligation of
the Securities Administrator, then such Permitted Investment shall mature not
later than such applicable Distribution Date) and any such Permitted Investment
shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be made in the name of the Trustee (in its capacity as such)
or its nominee. All income and gain realized from any Permitted Investment shall
be for the benefit of the Securities Administrator and shall be subject to its
withdrawal or order from time to time, and shall not be part of the Trust Fund.
The amount of any losses incurred in respect of any such investments shall be
deposited in such Distribution Account by the Securities Administrator out of
its own funds, without any right of reimbursement therefor, immediately as
realized.
Section 4.02 Reports to Trustee and Certificateholders.
On each Distribution Date, the Securities Administrator shall have
prepared and shall make available to the Trustee and each Certificateholder a
written report setting forth the following information (on the basis of Mortgage
Loan level information obtained from the Master Servicer and the Servicers).
(a) the amount of the distributions, separately identified, with respect
to each Class of Certificates;
(b) the amount of the distributions set forth in the clause (a) allocable
to principal, separately identifying the aggregate amount of any Principal
Prepayments or other unscheduled recoveries of principal included in that
amount;
(c) the amount of the distributions set forth in the clause (a) allocable
to interest and how it was calculated;
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(d) the amount of any unpaid Interest Shortfall, Basis Risk Shortfall or
Unpaid Basis Risk Shortfall (if applicable) and the related accrued interest
thereon, with respect to each Class of Certificates;
(e) the Class Principal Amount of each Class of Certificates after giving
effect to the distribution of principal on that Distribution Date;
(f) the Aggregated Stated Principal Balance of the Mortgage Loans in each
Mortgage Pool, and the applicable Net WAC of the Mortgage Loans in each Mortgage
Pool at the end of the related Prepayment Period;
(g) the Stated Principal Balance of the Mortgage Loans in each Mortgage
Pool whose Mortgage Rates adjust on the basis of the One-Month LIBOR index and
the Six-Month LIBOR index (or the One-Year Treasury Index or Prime Rate Index,
if the Mortgage Rate has been converted by the borrower) at the end of the
related Prepayment Period;
(h) the Pro Rata Senior Percentage, Senior Percentage and the Subordinate
Percentage for each Mortgage Pool for the following Distribution Date;
(i) the Senior Prepayment Percentage and Subordinate Prepayment Percentage
for each Mortgage Pool for the following Distribution Date;
(j) in the aggregate and with respect to each Mortgage Pool, the amount of
the Master Servicing Fee and the Servicing Fee paid to or retained by the Master
Servicer and by each Servicer, respectively;
(k) in the aggregate and with respect to each Mortgage Pool, the amount of
Advances for the related Due Period;
(l) in the aggregate and with respect to each Mortgage Pool, the number
and Stated Principal Balance of the Mortgage Loans that were (A) Delinquent
(exclusive of Mortgage Loans in foreclosure) (1) 30 to 59 days, (2) 60 to 89
days and (3) 90 or more days, (B) in foreclosure and Delinquent (1) 30 to 59
days, (2) 60 to 89 days and (3) 90 or more days and (C) in bankruptcy as of the
close of business on the last day of the calendar month preceding that
Distribution Date;
(m) in the aggregate and with respect to each Mortgage Pool, for any
Mortgage Loan as to which the related Mortgaged Property was an REO property
during the preceding calendar month, the principal balance of that Mortgage Loan
as of the close of business on the last day of the related Due Period;
(n) in the aggregate and with respect to each Mortgage Pool, the total
number and principal balance of any REO properties as of the close of business
on the last day of the preceding Due Period;
(o) in the aggregate and with respect to each Mortgage Pool, the amount of
Realized Losses incurred during the preceding calendar month;
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(p) in the aggregate and with respect to each Mortgage Pool, the
cumulative amount of Realized Losses incurred since the Closing Date;
(q) the aggregate amount of Special Hazard Losses, Bankruptcy Losses and
Fraud Losses incurred during the preceding calendar month;
(r) the cumulative amount of Special Hazard Losses, Bankruptcy Losses and
Fraud Losses incurred since the Closing Date;
(s) the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage
Amount and the Bankruptcy Loss Coverage Amount, in each case as of the related
Determination Date;
(t) the Realized Losses and Excess Losses, if any, allocated to each Class
of Certificates on that Distribution Date; and
(u) the Certificate Interest Rate for each Class of Certificates for that
Distribution Date.
(v) the amount of any Principal Transfer Amounts or Interest Transfer
Amounts paid to an Undercollateralized Group or Principal Transfers among Groups
in the event of Rapid Prepayment Conditions.
The Securities Administrator shall make such reports available each month
via the Master Servicer's website at http://www.ctslink.com. Assistance in using
the website may be obtained by calling the Master Servicer's customer service
desk at (301) 815-6600. Certificateholders and other parties that are unable to
use the website are entitled to have a paper copy mailed to them via first class
mail by contacting the Securities Administrator and indicating such. In
preparing or furnishing the foregoing information to the Trustee, the Securities
Administrator shall be entitled to rely conclusively on the accuracy of the
information or data regarding the Mortgage Loans and the related REO Properties
that has been provided to the Securities Administrator by the Master Servicer
and the Servicers, and the Securities Administrator shall not be obligated to
verify, recompute, reconcile or recalculate any such information or data.
Upon the reasonable advance written request of any Certificateholder that
is a savings and loan, bank or insurance company, which request, if received by
the Trustee or any agent thereof, shall be promptly forwarded to the Securities
Administrator, the Securities Administrator shall provide, or cause to be
provided, (or, to the extent that such information or documentation is not
required to be provided by a Servicer under the applicable Servicing Agreement,
shall use reasonable efforts to obtain such information and documentation from
such Servicer, and provide) to such Certificateholders such reports and access
to information and documentation regarding the Mortgage Loans as such
Certificateholders may reasonably deem necessary to comply with applicable
regulations of the Office of Thrift Supervision or its successor or other
regulatory authorities with respect to an investment in the Certificates;
provided, however, that the Securities Administrator shall be entitled to be
reimbursed by such Certificateholders for the Securities Administrator's actual
expenses incurred in providing such reports and access.
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The Securities Administrator shall prepare and file with the Internal
Revenue Service ("IRS"), on behalf of the Trust Fund, an application for an
employer identification number on IRS Form SS-4 or by any other acceptable
method. The Securities Administrator shall also file a Form 8811 as required.
The Securities Administrator, upon receipt from the IRS of the Notice of
Taxpayer Identification Number Assigned, shall upon request promptly forward a
copy of such notice to the Trustee and the Depositor. The Securities
Administrator shall furnish any other information that is required by the Code
and regulations thereunder to be made available to Certificateholders. The
Master Servicer shall cause each Servicer to provide the Securities
Administrator with such information as is necessary for the Securities
Administrator to prepare such reports.
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01 Distributions Generally.
(a) Subject to Section 7.01 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee or the Paying Agent shall
make distributions in accordance with this Article V. Such distributions shall
be made by check mailed to each Certificateholder's address as it appears on the
Certificate Register of the Certificate Registrar or, upon written request made
to the Securities Administrator at least five Business Days prior to the related
Record Date by any Certificateholder owning an aggregate initial Certificate
Principal Amount of at least $2,500,000, or in the case of a Class of
Interest-Only Certificates, a Percentage Interest of not less than 10%, by wire
transfer in immediately available funds to an account specified in the request
and at the expense of such Certificateholder; provided, however, that the final
distribution in respect of any Certificate shall be made only upon presentation
and surrender of such Certificate at the Certificate Registrar's Corporate Trust
Office; provided, further, that the foregoing provisions shall not apply to any
Class of Certificates as long as such Certificate remains a Book-Entry
Certificate in which case all payments made shall be made through the Clearing
Agency and its Clearing Agency Participants. Wire transfers will be made at the
expense of the Holder requesting such wire transfer by deducting a wire transfer
fee from the related distribution. Notwithstanding such final payment of
principal of any of the Certificates, each Residual Certificate will remain
outstanding until the termination of each REMIC and the payment in full of all
other amounts due with respect to the Residual Certificates and at such time
such final payment in retirement of any Residual Certificate will be made only
upon presentation and surrender of such Certificate at the Certificate
Registrar's Corporate Trust Office. If any payment required to be made on the
Certificates is to be made on a day that is not a Business Day, then such
payment will be made on the next succeeding Business Day.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Class Principal Amounts or initial Class Notional
Amounts (or Percentage Interests).
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Section 5.02 Distributions from the Certificate Account.
(a) Subject to Sections 5.02(g) and (h), on each Distribution Date, the
Available Distribution Amount for the related Mortgage Pool (in the case of the
Senior Certificates other than the Class X-B Certificates) and the Mortgage
Pools in the aggregate (in the case of the Subordinate Certificates and the
Class X-B Certificates) shall be allocated among the classes of Senior
Certificates and Subordinate Certificates in the following order of priority:
(i) Concurrently, from the related Available Distribution Amount, to
the payment of the Interest Distribution Amount and any Interest
Shortfalls for each Class of Senior Certificates; provided, however, that
on each Distribution Date, the Interest Distribution Amount that would
otherwise be distributable to a Class of Interest-Only Certificates shall
be deposited in the Basis Risk Reserve Fund to the extent of the Required
Basis Risk Deposit for such Class and shall not be distributed to such
Class;
(ii) Concurrently, to the Senior Certificates from the Available
Distribution Amount remaining in the related Mortgage Pool after
application of amounts pursuant to clause (i) above, as follows:
(a) sequentially to the Class A-R, Class 1A-1 and Class 1A-2
Certificates, in that order, the Senior Principal
Distribution Amount for Pool 1, until their respective
Class Principal Amounts have been reduced to zero;
(b) to the Class 2A Certificates, the Senior Principal
Distribution Amount for Pool 2, until the Class Principal
Amount of such Class has been reduced to zero; and
(c) to the Class 3A Certificates, the Senior Principal
Distribution Amount for Pool 3, until the Class Principal
Amount of such Class has been reduced to zero.
(iii) From the Available Distribution Amount from the Mortgage Pools
in the aggregate remaining after the application of amounts pursuant to
clauses (i) and (ii) above, to the Class B-1 Certificates, the Interest
Distribution Amount and any Interest Shortfalls, in each case, for such
Class on such date;
(iv) From the Available Distribution Amount from the Mortgage Pools
in the aggregate remaining after application of amounts pursuant to
clauses (i) through (iii) above, to the Class B-1 Certificates, such
Class' Subordinate Class Percentage of the Subordinate Principal
Distribution Amount for each Mortgage Pool, until its Class Principal
Amount has been reduced to zero;
(v) From the Basis Risk Reserve Fund, for payment to the Class 1A-1,
Class 2A and Class B-1 Certificates, sequentially in that order, any
related Basis Risk Shortfall or related Unpaid Basis Risk Shortfall for
such date;
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(vi) From the remaining Available Distribution Amount from the
Mortgage Pools in the aggregate remaining after application of amounts
pursuant to clauses (i) through (v) in the following order of priority:
(A) to the Class B-2 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(B) to the Class B-2 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount
for each Mortgage Pool, until its Class Principal Amount has been
reduced to zero;
(C) to the Class B-3 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(D) to the Class B-3 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount
for each Mortgage Pool, until its Class Principal Amount has been
reduced to zero;
(E) to the Class B-4 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(F) to the Class B-4 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount
for each Mortgage Pool, until its Class Principal Amount has been
reduced to zero;
(G) to the Class B-5 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(H) to the Class B-5 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount
for each Mortgage Pool, until its Class Principal Amount has been
reduced to zero;
(I) to the Class B-6 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(J) to the Class B-6 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount
for each Mortgage Pool, until its Class Principal Amount has been
reduced to zero; and
(vii) To the Class A-R Certificate and the Class LTR Certificate,
any remaining amount of the Available Distribution Amount from the
Mortgage Pools in the aggregate allocated as provided in Section 5.02(c).
(b) On each Distribution Date on and after the Credit Support Depletion
Date, the Available Distribution Amount for each Mortgage Pool shall be
distributed to the remaining Classes of Certificates of a Certificate Group, on
a pro rata basis, first, to pay the Interest Distribution Amount and any accrued
but unpaid Interest Shortfalls; second, to pay the Senior
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Principal Distribution Amount for such Mortgage Pool; third, to pay any related
Basis Risk Shortfall or any related Unpaid Basis Risk Shortfall; and fourth, to
the Class A-R Certificate, any remaining Available Distribution Amount from such
Mortgage Pool. Amounts distributed pursuant to clause second, in respect of Pool
1 shall be allocated pro rata to the Class 1A-1 and Class 1A-2 Certificates.
(c) Notwithstanding the priority and allocation set forth in Section
5.02(a)(vi) above, if with respect to any Class of Subordinate Certificates on
any Distribution Date the sum of the related Class Subordination Percentages of
such Class and of all other Classes of Subordinate Certificates which have a
higher numerical Class designation than such Class is less than the Original
Applicable Credit Support Percentage for such Class, no distribution of
Principal Prepayments shall be made to any such Classes and the amount of such
Principal Prepayment otherwise distributable to such Classes shall be
distributed to any Classes of Subordinate Certificates having lower numerical
Class designations than such Class, pro rata, based on the Class Principal
Amounts of the respective Classes immediately prior to such Distribution Date
and shall be distributed in the sequential order provided in Section 5.02(a)(vi)
above.
(d) Amounts distributed to the Residual Certificates pursuant to
subparagraph (a)(vii) of this Section 5.02 on any Distribution Date shall be
allocated among the REMIC residual interests represented thereby such that each
such interest is allocated the excess of funds available to the related REMIC
over required distributions to the regular interests in such REMIC on such
Distribution Date.
(e) For purposes of distributions provided in paragraph (a), each Mortgage
Pool shall "relate" to the Senior Class or Classes of the applicable Related
Certificate Group.
(f) To the extent a Basis Risk Shortfall is experienced on the Class 1A-1,
Class 2A or Class B-1 Certificates, the Securities Administrator shall withdraw
from the related Sub-Account of the Basis Risk Reserve Fund an amount for
distribution to such Class equal to the lesser of (1) the amount of such Basis
Risk Shortfall and (2) the amounts available therefor on deposit in the related
Sub-Account as provided in Section 5.06.
(g) For purposes of distributions of interest in paragraph (a) such
distributions to a Class of Certificates on any Distribution Date shall be made
first, in respect of Current Interest; and second, in respect of Interest
Shortfalls.
(h) Notwithstanding the priority of distributions set forth in paragraph
(a) above, if on any Distribution Date prior to the Credit Support Depletion (1)
either one of the Rapid Prepayment Conditions is satisfied on such date and (2)
the Certificate Principal Amount of the Senior Certificates relating to one or
more Mortgage Pools have been reduced to zero, then that portion of the
Available Distribution Amount for each Mortgage Pool described in Section
5.02(a)(ii) that represents principal collections on the Mortgage Loans shall be
applied as an additional distribution to the remaining Classes of Senior
Certificates in reduction of, and in proportion to, the Class Principal Amounts
thereof; provided, however, that any such amounts distributable to the Class
A-R, Class 1A-1 and Class 1A-2 Certificates shall be distributed sequentially
thereto in such order.
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(i) If, on any Distribution Date, any Certificate Group would constitute
an Undercollateralized Group and one or both of the other Certificate Groups
constitute an Overcollateralized Group, then notwithstanding Section
5.02(a)(ii), the Available Distribution Amount for the Overcollateralized Group
or Groups, to the extent remaining following distributions of interest and
principal to the related Senior Certificates of that Certificate Group or Groups
shall be distributed up to the sum of the Interest Transfer Amount and the
Principal Transfer Amount for the Undercollateralized Group or Groups to the
Senior Certificates related to the Undercollateralized Group in payment of
accrued but unpaid interest, if any, and then to such Senior Certificates as
principal, in the same order and priority as such Certificates would receive
other distributions of principal. To the extent (1) more than one
Overcollateralized Group exists on a Distribution Date, amounts distributable
therefrom shall be allocated in proportion to the Certificate Principal Amounts
of each related Certificate Group; and (2) more than one Undercollateralized
Group exists on a Distribution Date, amounts distributable thereto shall be
allocated first, on the basis of any outstanding Interest Shortfalls; and
second, as principal to the Undercollateralized Groups allocated in proportion
to the Certificate Principal Amounts of each such Undercollateralized Group.
Section 5.03 Allocation of Losses.
(a) On or prior to each Distribution Date, the Master Servicer shall
aggregate the information provided by each Servicer with respect to the total
amount of Realized Losses, including Excess Losses, with respect to the Mortgage
Loans for the related Distribution Date.
(b) On each Distribution Date, the principal portion of Realized Losses,
Bankruptcy Losses, Fraud Losses and Special Hazard Losses with respect to such
Distribution Date shall be allocated as follows:
(i) Realized Losses, Bankruptcy Losses, Fraud Losses and Special
Hazard Losses (other than Excess Losses) shall be allocated in the
following order:
first, to the Classes of Subordinate Certificates in reverse
order of their respective numerical Class designations (beginning
with the Class of Subordinate Certificates with the highest
numerical Class designation) until the Class Principal Amount of
each such Class is reduced to zero; and
second, to each Class of Senior Certificates relating to the
Mortgage Pool which sustained such loss (allocated, in the case of
Pool among the related Senior Classes on a pro rata basis), in each
case, until the Class Principal Amount of each Class of Senior
Certificates is reduced to zero;
(ii) the principal portion of any Excess Losses in respect of a
Mortgage Pool shall be allocated proportionately on a pro rata basis to
(A) the Classes of Senior Certificates of the related Mortgage Pool on the
basis of their Class Certificate Principal Amounts; and (B) to the Classes
of Subordinate Certificates on the basis of their Apportioned Principal
Balances.
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(iii) The Class Principal Amount of the Class of Subordinate
Certificates then outstanding with the highest numerical Class designation
shall be reduced on each Distribution Date by the amount, if any, by which
the aggregate of the Class Principal Amounts of all outstanding Classes of
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses, Bankruptcy Losses, Fraud Losses and Special
Hazard Losses and Excess Losses on such Distribution Date) exceeds the
Aggregate Stated Principal Balance for the following Distribution Date.
(iv) Any allocation of a loss pursuant to this section to a Class of
Certificates shall be achieved by reducing the Class Principal Amount
thereof by the amount of such loss.
Section 5.04 Advances by Master Servicer.
If any Servicer fails to remit any Advance required to be made under the
applicable Servicing Agreement, the Master Servicer shall itself make, or shall
cause the successor Servicer to make, such Advance. If the Master Servicer
determines that an Advance is required, it shall on the Business Day preceding
the related Distribution Date immediately following such Determination Date
remit to the Securities Administrator from its own funds (or funds advanced by
the applicable Servicer) for deposit in the Account immediately available funds
in an amount equal to such Advance. The Master Servicer and each Servicer shall
be entitled to be reimbursed for all Advances made by it. Notwithstanding
anything to the contrary herein, in the event the Master Servicer determines in
its reasonable judgment that an Advance is non-recoverable, the Master Servicer
shall be under no obligation to make such Advance. If the Master Servicer
determines that an Advance is non-recoverable, it shall, on or prior to the
related Distribution Date, deliver an Officer's Certificate to the Trustee to
such effect.
Section 5.05 Compensating Interest Payments.
The amount of the aggregate Master Servicing Fees payable to the Master
Servicer in respect of any Distribution Date shall be reduced (but not below
zero) by the amount of any Compensating Interest Payment for such Distribution
Date, but only to the extent that Prepayment Interest Shortfalls relating to
such Distribution Date are required to be paid but not actually paid by the
Servicers. Such amount shall not be treated as an Advance and shall not be
reimbursable to the Master Servicer.
Section 5.06 Basis Risk Reserve Fund.
(a) On the Closing Date, the Securities Administrator shall establish and
maintain in its name, in trust for the benefit of the holders of the LIBOR
Certificates and the Interest Only Certificates, a Basis Risk Reserve Fund, into
which the Depositor shall deposit $10,000. The Basis Risk Reserve Fund shall be
an Eligible Account, and funds on deposit therein shall be held separate and
apart from, and shall not be commingled with, any other moneys, including,
without limitation, other moneys of the Trustee held pursuant to this Agreement.
The Basis Risk Reserve Fund shall not be an asset of any REMIC established
hereby.
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(b) The Basis Risk Reserve Fund will be comprised of three sub accounts:
the "Class X-1 Sub Account," the "Class X-2 Sub Account," and the "Class X-B Sub
Account." On each Distribution Date, Current Interest that would otherwise be
distributable with respect to the Class X-1, Class X-2A, Class X-2B and Class
X-B Certificates shall instead be deposited in the Sub Account with the same
numerical designation as such Class (or alphabetical designation in the case of
the Class X-B Certificates) to the extent of the applicable Class X-1 Required
Basis Risk Deposit, Class X-2 Required Basis Risk Deposit or Class X-B Required
Basis Risk Deposit.
(c) On any Distribution Date for which a Basis Risk Shortfall exists with
respect to the Class 1A-1 Certificates, the Securities Administrator shall
withdraw first from the Class X-1 Sub Account; second, from the Class X-B Sub
Account; and third from the Class X-2 Sub Account, the amount of such Basis Risk
Shortfall for distribution on such Distribution Date pursuant to Section
5.02(e).
(d) On any Distribution Date for which a Basis Risk Shortfall exists with
respect to the Class 2A Certificates, the Securities Administrator shall
withdraw from the Class X-2 Sub Account the amount of such Basis Risk Shortfall
for distribution on such Distribution Date pursuant to Section 5.02(e).
(e) On any Distribution Date for which a Basis Risk Shortfall exists with
respect to the Class B-1 Certificates, the Securities Administrator shall
withdraw first from the Class X-B Sub Account the amount of such Basis Risk
Shortfall for distribution on such Distribution Date pursuant to Section
5.02(e).
(f) Funds in each of the Class X-1 Sub Account, Class X-2 Sub Account and
Class X-B Sub Account shall be invested in Permitted Investments. Any earnings
on amounts in the Class X-1 Sub Account shall be for the benefit of the Class
X-1 Certificateholders, any earnings on amounts in the Class X-2 Sub Account
shall be for the benefit of the Class X-2A and Class X-2B Certificateholders and
any earnings on amounts in the Class X-B Sub Account shall be for the benefit of
the Class X-B Certificateholders. The Interest-Only Certificates shall evidence
ownership of the related Sub-Account for federal income tax purposes and the
Holders thereof shall direct the Securities Administrator, in writing, as to
investment of amounts on deposit therein. The applicable Interest-Only
Certificateholder(s) shall be liable for any losses incurred on such
investments. In the absence of written instructions from the applicable
Interest-Only Certificateholder as to investment of funds on deposit in the
related Sub-Account, such funds shall be invested in money market funds as
described in paragraph (ix) of the definition of Permitted Investments in
Article I. For all Federal income tax purposes, amounts transferred by the
Upper-Tier REMIC to the Basis Risk Reserve Fund shall be treated as amounts
distributed by the Upper-Tier REMIC to the applicable Interest-Only
Certificateholders.
(g) Upon termination of the Trust Fund any amounts remaining in the
related Sub-Account shall be distributed to the applicable Interest-Only
Certificateholders.
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ARTICLE VI
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR; EVENTS OF DEFAULT
Section 6.01 Duties of Trustee and the Securities Administrator.
(a) The Trustee, except during the continuance of an Event of Default and
the Securities Administrator undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement. Any permissive right of
the Trustee or the Securities Administrator provided for in this Agreement shall
not be construed as a duty of the Trustee or the Securities Administrator. If an
Event of Default has occurred and has not otherwise been cured or waived, the
Trustee or the Securities Administrator 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, unless the Trustee is
acting as Master Servicer, in which case it shall use the same degree of care
and skill as the Master Servicer hereunder.
(b) Each of the Trustee and the Securities Administrator, upon receipt of
all resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to the Trustee or the Securities Administrator
which are specifically required to be furnished pursuant to any provision of
this Agreement, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that neither the Trustee nor the
Securities Administrator shall be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Master Servicer or any Servicer to the Trustee
or the Securities Administrator pursuant to this Agreement, and shall not be
required to recalculate or verify any numerical information furnished to the
Trustee or the Securities Administrator pursuant to this Agreement. Subject to
the immediately preceding sentence, if any such resolution, certificate,
statement, opinion, report, document, order or other instrument is found not to
conform to the form required by this Agreement in a material manner the Trustee
shall take such action as it deems appropriate to cause the instrument to be
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders and will, at
the expense of the Trust Fund, which expense shall be reasonable given the scope
and nature of the required action, take such further action as directed by the
Certificateholders.
(c) Neither the Trustee nor the Securities Administrator shall have any
liability arising out of or in connection with this Agreement, except for its
negligence or willful misconduct. Notwithstanding anything in this Agreement to
the contrary, neither the Trustee nor the Securities Administrator shall be
liable for special, indirect or consequential losses or damages of any kind
whatsoever (including, but not limited to, lost profits). No provision of this
Agreement shall be construed to relieve the Trustee or the Securities
Administrator from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) Neither the Trustee nor the Securities Administrator shall 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 Holders
of Certificates as provided in Section 6.18 hereof;
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(ii) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any Event of Default (other than resulting from a
failure by the Master Servicer (i) to remit funds (or to make Advances) or
(ii) to furnish information to the Trustee when required to do so) unless
a Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and
such notice references the Holders of the Certificates and this Agreement;
(iii) For all purposes under this Agreement, the Securities
Administrator shall not be deemed to have notice of any Event of Default
(other than resulting from a failure by the Master Servicer to furnish
information to the Securities Administrator when required to do so) unless
a Responsible Officer of the Securities Administrator has actual knowledge
thereof or unless written notice of any event which is in fact such a
default is received by the Securities Administrator at the address
provided in Section 11.07, and such notice references the Holders of the
Certificates and this Agreement;
(iv) No provision of this Agreement shall require the Trustee or the
Securities Administrator to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that 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 or the Securities Administrator to
perform, or be responsible for the manner of performance of, any of the
obligations of the Master Servicer under this Agreement;
(v) Neither the Trustee nor the Securities Administrator shall be
responsible for any act or omission of the Master Servicer, the Depositor,
the Initial Seller, the Seller or any Custodian.
(d) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided, however,
that the Trustee shall promptly remit to the applicable Servicer upon receipt
any such complaint, claim, demand, notice or other document (i) which is
delivered to the Corporate Trust Office of the Trustee, (ii) of which a
Responsible Officer has actual knowledge, and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document relates is a Mortgaged Property.
(e) Neither the Trustee nor the Securities Administrator shall 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
Certificateholders of any Class holding Certificates which evidence, as to such
Class, Percentage Interests aggregating not less than 25% as to the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or the Securities Administrator or exercising any trust or power conferred upon
the Trustee or the Securities Administrator, as applicable, under this
Agreement.
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(f) Neither the Trustee nor the Securities Administrator shall be required
to perform services under this Agreement, or to expend or risk its own funds or
otherwise incur financial liability for the performance of any of its duties
hereunder or the exercise of any of its rights or powers if there is reasonable
ground for believing that the timely payment of its fees and expenses or 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 or the Securities
Administrator, as applicable, to perform, or be responsible for the manner of
performance of, any of the obligations of the Master Servicer or any Servicer
under this Agreement or any Servicing 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 Master Servicer in accordance with the terms of
this Agreement.
(g) The Trustee shall not be held liable by reason of any insufficiency in
the Distribution Account or the Basis Risk Reserve Fund 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).
(h) Except as otherwise provided herein, neither the Trustee nor the
Securities Administrator shall have any duty (A) to see to 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, (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, or (D) to confirm
or verify the contents of any reports or certificates of the Master Servicer or
any Servicer delivered to the Trustee or the Securities Administrator pursuant
to this Agreement believed by the Trustee or the Securities Administrator, as
applicable, to be genuine and to have been signed or presented by the proper
party or parties.
(i) Neither the Securities Administrator nor the Trustee shall be liable
in its individual capacity for an error of judgment made in good faith by a
Responsible Officer or other officers of the Trustee or the Securities
Administrator, as applicable, unless it shall be proved that the Trustee or the
Securities Administrator, as applicable, was negligent in ascertaining the
pertinent facts.
(j) Notwithstanding anything in this Agreement to the contrary, neither
the Securities Administrator nor the Trustee shall be liable for special,
indirect or consequential losses or damages of any kind whatsoever (including,
but not limited to, lost profits), even if the Trustee or the Securities
Administrator, as applicable, has been advised of the likelihood of such loss or
damage and regardless of the form of action.
(k) Neither the Securities Administrator nor the Trustee shall be
responsible for the acts or omissions of the other, it being understood that
this Agreement shall not be construed to render them agents of one another.
Section 6.02 Certain Matters Affecting the Trustee and the Securities
Administrator.
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Except as otherwise provided in Section 6.01:
(i) Each of the Trustee and the Securities Administrator may
request, and may rely 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, approval, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) Each of the Trustee and the Securities Administrator may
consult with counsel and any advice of its counsel 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) Neither the Trustee nor the Securities Administrator shall be
personally liable for any action taken, suffered or omitted by it in good
faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;
(iv) Unless an Event of Default shall have occurred and be
continuing, neither the Trustee nor the Securities Administrator shall be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document
(provided the same appears regular on its face), unless requested in
writing to do so by the Holders of at least a majority in Class Principal
Amount (or Percentage Interest) of each Class of Certificates; provided,
however, that, if the payment within a reasonable time to the Trustee or
the Securities Administrator, as applicable, of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee or the Securities
Administrator, as applicable, not reasonably assured to the Trustee or the
Securities Administrator by the security afforded to it by the terms of
this Agreement, the Trustee or the Securities Administrator, as
applicable, may require reasonable indemnity against such expense or
liability or payment of such estimated expenses from the
Certificateholders as a condition to proceeding. The reasonable expense
thereof shall be paid by the party requesting such investigation and if
not reimbursed by the requesting party shall be reimbursed to the Trustee
by the Trust Fund;
(v) Each of the Trustee and the Securities Administrator may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, custodians or attorneys, which
agents, custodians or attorneys shall have any and all of the rights,
powers, duties and obligations of the Trustee and the Securities
Administrator conferred on them by such appointment, provided that each of
the Trustee and the Securities Administrator shall continue to be
responsible for its duties and obligations hereunder to the extent
provided herein, and provided further that neither the Trustee nor the
Securities Administrator shall be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed with due
care by the Trustee or the Securities Administrator, as applicable;
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(vi) Neither the Trustee nor the Securities Administrator shall be
under any obligation to exercise any of the trusts or powers vested in it
by this Agreement or to institute, conduct or defend any litigation
hereunder or in relation hereto, in each case at the request, order or
direction of any of the Certificateholders pursuant to the provisions of
this Agreement, unless such Certificateholders shall have offered to the
Trustee or the Securities Administrator, as applicable, reasonable
security or indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby;
(vii) The right of the Trustee and the Securities Administrator to
perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and neither the Trustee nor the Securities
Administrator shall be answerable for other than its negligence or willful
misconduct in the performance of such act; and
(viii) Neither the Trustee nor the Securities Administrator shall be
required to give any bond or surety in respect of the execution of the
Trust Fund created hereby or the powers granted hereunder.
Section 6.03 Trustee and Securities Administrator Not Liable for
Certificates.
The Trustee and the Securities Administrator make no representations as to
the validity or sufficiency of this Agreement or of the Certificates (other than
the certificate of authentication on the Certificates) or of any Mortgage Loan,
or related document save that the Trustee and the Securities Administrator
represent that, assuming due execution and delivery by the other parties hereto,
this Agreement has been duly authorized, executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms except that such enforceability may be subject to (A)
applicable bankruptcy and insolvency laws and other similar laws affecting the
enforcement of the rights of creditors generally, and (B) general principles of
equity regardless of whether such enforcement is considered in a proceeding in
equity or at law. The Trustee and the Securities Administrator shall not be
accountable for the use or application by the Depositor of funds paid to the
Depositor in consideration of the assignment of the Mortgage Loans to the Trust
Fund by the Depositor or for the use or application of any funds deposited into
the Distribution Account or any other fund or account maintained with respect to
the Certificates. The Trustee and the Securities Administrator shall not be
responsible for the legality or validity of this Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder. Except as otherwise provided herein, the
Trustee and the Securities Administrator shall have no 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 or to record this Agreement.
Section 6.04 Trustee and the Securities Administrator May Own
Certificates.
The Trustee and the Securities Administrator and any Affiliate or agent of
either of them in its individual or any other capacity may become the owner or
pledgee of Certificates and may transact banking and trust business with the
other parties hereto and their Affiliates with the same rights it would have if
it were not Trustee, Securities Administrator or such agent.
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Section 6.05 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be (i) an institution insured by
the FDIC, (ii) a corporation or national banking association, organized and
doing business under the laws of any State or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by federal or state authority and (iii) not an Affiliate of the
Master Servicer or any Servicer. If such corporation or national banking
association 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, the combined capital and surplus of such
corporation or national banking association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with provisions of this Section, the Trustee shall resign immediately
in the manner and with the effect specified in Section 6.06.
Section 6.06 Resignation and Removal of Trustee and the Securities
Administrator.
(a) Each of the Trustee and the Securities Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Trustee or the Securities Administrator, as applicable, the
Depositor and the Master Servicer. Upon receiving such notice of resignation,
the Depositor will promptly appoint a successor trustee or a successor
securities administrator, as applicable, by written instrument, one copy of
which instrument shall be delivered to the resigning Trustee or resigning
Securities Administrator, as applicable, one copy to the successor trustee or
successor securities administrator, as applicable, and one copy to the Master
Servicer. If no successor trustee or successor securities administrator shall
have been so appointed and shall have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee or resigning
Securities Administrator, as applicable, may petition any court of competent
jurisdiction for the appointment of a successor trustee or successor securities
administrator, as applicable.
(b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.05 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee or the Securities
Administrator shall become incapable of acting, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Trustee or the Securities Administrator of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or the Securities Administrator or of either of their
property or affairs for the purpose of rehabilitation, conservation or
liquidation, (iii) a tax is imposed or threatened with respect to the Trust Fund
by any state in which the Trustee or the Trust Fund held by the Trustee is
located, or (iv) the continued use of the Trustee or Securities Administrator
would result in a downgrading of the rating by any Rating Agency of any Class of
Certificates with a rating, then the Depositor shall remove the Trustee or the
Securities Administrator, as applicable, and the Depositor shall appoint a
successor trustee or successor securities administrator, as applicable,
acceptable to the Master Servicer by written instrument, one copy of which
instrument shall be delivered to the Trustee or Securities Administrator so
removed, one copy each to the successor trustee or successor securities
Administrator, as applicable, and one copy to the Master Servicer.
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(c) The Holders of more than 50% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates may at any time upon 30 days'
written notice to the Trustee or the Securities Administrator, as applicable,
and to the Depositor remove the Trustee or the Securities Administrator, as
applicable, by such written instrument, signed by such Holders or their
attorney-in-fact duly authorized, one copy of which instrument shall be
delivered to the Depositor, one copy to the Trustee or Securities Administrator,
as applicable and one copy to the Master Servicer; the Depositor shall thereupon
appoint a successor trustee or successor securities administrator, as
applicable, in accordance with this Section.
(d) Any resignation or removal of the Trustee or the Securities
Administrator, as applicable, and appointment of a successor trustee or
successor securities administrator pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
trustee or the successor securities administrator, as applicable, as provided in
Section 6.07.
Section 6.07 Successor Trustee and Successor Securities Administrator.
(a) Any successor trustee or successor securities administrator appointed
as provided in Section 6.06 shall execute, acknowledge and deliver to the
Depositor and to its predecessor trustee or predecessor securities
administrator, as applicable, an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
or predecessor securities administrator, as applicable, shall become effective
and such successor trustee or successor securities administrator, as applicable,
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 or securities administrator, as
applicable, herein. The predecessor trustee or predecessor securities
administrator, as applicable, shall deliver to the successor trustee (or assign
to the Trustee its interest under the Custody Agreement, to the extent permitted
thereunder) or successor securities administrator, as applicable, all Trustee
Mortgage Files and documents and statements related to each Trustee Mortgage
File held by it hereunder, and shall duly assign, transfer, deliver and pay over
to the successor trustee the entire Trust Fund, together with all necessary
instruments of transfer and assignment or other documents properly executed
necessary to effect such transfer and such of the records or copies thereof
maintained by the predecessor trustee in the administration hereof as may be
requested by the successor trustee and shall thereupon be discharged from all
duties and responsibilities under this Agreement. In addition, the Depositor and
the predecessor trustee or predecessor securities administrator, as applicable,
shall execute and deliver such other instruments and do such other things as may
reasonably be required to more fully and certainly vest and confirm in the
successor trustee or successor securities administrator, as applicable, all such
rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.
(c) Upon acceptance of appointment by a successor trustee or successor
securities administrator, as applicable, as provided in this Section, the
predecessor trustee or predecessor securities administrator, as applicable,
shall mail notice of the succession of such trustee or
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securities administrator, as applicable, hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register and to any
Rating Agency. The expenses of such mailing shall be borne by the Master
Servicer.
Section 6.08 Merger or Consolidation of Trustee or the Securities
Administrator.
Any Person into which the Trustee or Securities Administrator may be
merged or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Trustee or Securities
Administrator shall be a party, or any Persons succeeding to the business of the
Trustee or Securities Administrator, shall be the successor to the Trustee or
Securities Administrator 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 that, in the case of the Trustee, such
Person shall be eligible under the provisions of Section 6.05.
Section 6.09 Appointment of Co-Trustee, Separate Trustee or Custodian.
(a) Notwithstanding any other provisions hereof, at any time, the Trustee,
the Depositor or the Certificateholders evidencing more than 50% of the Class
Principal Amount (or Percentage Interest) of every Class of Certificates shall
have the power from time to time to appoint one or more Persons, approved by the
Trustee, to act either as co-trustees jointly with the Trustee, or as separate
trustees, or as custodians, for the purpose of holding title to, foreclosing or
otherwise taking action with respect to any Mortgage Loan outside the state
where the Trustee has its principal place of business where such separate
trustee or co-trustee is necessary or advisable (or the Trustee has been advised
by the Master Servicer that such separate trustee or co-trustee is necessary or
advisable) under the laws of any state in which a property securing a Mortgage
Loan is located or for the purpose of otherwise conforming to any legal
requirement, restriction or condition in any state in which a property securing
a Mortgage Loan is located or in any state in which any portion of the Trust
Fund is located. The separate Trustees, co-trustees, or custodians so appointed
shall be trustees or custodians for the benefit of all the Certificateholders
and shall have such powers, rights and remedies as shall be specified in the
instrument of appointment; provided, however, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee. The
obligation of the Master Servicer to make Advances pursuant to Section 5.04
hereof shall not be affected or assigned by the appointment of a co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(ii) all other 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, co-trustee, or
custodian jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
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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 Fund or any portion thereof in
any such jurisdiction, shall be exercised and performed by such separate
trustee, co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be personally liable
by reason of any act or omission of any other trustee or custodian
hereunder; and
(iv) the Trustee may at any time, by an instrument in writing
executed by it, with the concurrence of the Depositor, accept the
resignation of or remove any separate trustee, co-trustee or custodian, so
appointed by it or them, if such resignation or removal does not violate
the other terms of this Agreement.
(c) 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, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. 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 given
to the Master Servicer.
(d) Any separate trustee, co-trustee or custodian 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, co-trustee or custodian 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.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.
(g) The Trust shall pay the reasonable compensation of the co-trustees
(which compensation shall not reduce any compensation payable to the Trustee
under such Section).
Section 6.10 Authenticating Agents.
(a) The Trustee may appoint one or more Authenticating Agents which shall
be authorized to act on behalf of the Trustee in authenticating Certificates.
The Trustee hereby appoints the Securities Administrator as initial
Authenticating Agent, and the Securities
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Administrator accepts such appointment. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor authenticating agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor authenticating agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor authenticating agent
shall be appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Section 6.11 Indemnification of Trustee, Securities Administrator and
Auction Administrator.
The Trustee, the Securities Administrator, the Auction Administrator and
their respective directors, officers, employees and agents shall be entitled to
indemnification from the Depositor and the Trust Fund (provided that the Trust
Fund's indemnification under this Section 6.11 is limited by Section 4.01(d) for
any loss, liability or expense (including, without limitation, reasonable
attorneys' fees and disbursements (and, in the case of the Trustee, in
connection with the Custody Agreement, including the reasonable compensation and
the expenses and disbursements of its agents or counsel), incurred without
negligence or willful misconduct on their part, arising out of, or in connection
with, the acceptance or administration of the trusts created hereunder or in
connection with the performance of their duties hereunder (and, in the case of
the Auction Administrator, under the Auction Administration Agreement and the
Swap Agreement), including the costs and expenses of defending themselves
against any claim in connection with the exercise or performance of any of their
powers or duties hereunder, provided that:
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(i) with respect to any such claim, the Trustee, the Securities
Administrator or the Auction Administrator, as applicable, shall have
given the Depositor written notice thereof promptly after the Trustee, the
Securities Administrator or the Auction Administrator, as applicable,
shall have knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee,
the Securities Administrator or the Auction Administrator, as applicable,
shall cooperate and consult fully with the Depositor in preparing such
defense; and
(iii) notwithstanding anything to the contrary in this Section 6.11,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee, the Securities Administrator or the Auction Administrator, as
applicable, entered into without the prior consent of the Depositor, which
consent shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of this
Agreement and the Auction Administration Agreement and the resignation or
removal of the Trustee, the Securities Administrator or the Auction
Administrator, as applicable, and shall be construed to include, but not be
limited to any loss, liability or expense under any environmental law.
Section 6.12 Fees and Expenses of Securities Administrator, Trustee and
Auction Administrator.
(a) Compensation for the services of the Securities Administrator
hereunder and for the services of the Auction Administrator under the Auction
Administration Agreement shall be paid by the Master Servicer. The Securities
Administrator shall be entitled to all disbursements and advancements incurred
or made by the Securities Administrator in accordance with this Agreement
(including fees and expenses of its counsel and all persons not regularly in its
employment), except any such expenses arising from its negligence, bad faith or
willful misconduct.
(b) As compensation for its services hereunder, the Trustee shall be
entitled to receive a Trustee fee (which shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust) which
shall be paid by the Master Servicer pursuant to a separate agreement between
the Trustee and the Master Servicer. Any expenses incurred by the Trustee shall
be reimbursed in accordance with Section 6.11.
Section 6.13 Collection of Monies.
Except as otherwise expressly provided in this Agreement, the Trustee may
demand payment or delivery of, and shall receive and collect, all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement. The Trustee shall hold all such money and property received by it as
part of the Trust Fund and shall distribute it as provided in this Agreement.
Section 6.14 Events of Default; Trustee To Act; Appointment of Successor.
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(a) The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(i) Any failure by the Master Servicer to furnish the Securities
Administrator the Mortgage Loan data sufficient to prepare the reports
described in Section 4.02 which continues unremedied for a period of one
Business Day after the date upon which written notice of such failure
shall have been given to such Master Servicer by the Trustee or the
Securities Administrator or to such Master Servicer, the Securities
Administrator and the Trustee by the Holders of not less than 25% of the
Class Principal Amount (or Class Notional Amount) of each Class of
Certificates affected thereby; or
(ii) Any failure on the part of the Master Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this Agreement
which continues unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Master Servicer by the Trustee or the Securities
Administrator, or to the Master Servicer, the Securities Administrator and
the Trustee by the Holders of more than 50% of the Aggregate Voting
Interests of the Certificates; or
(iii) A decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Master Servicer, and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days or any Rating Agency
reduces or withdraws or threatens to reduce or withdraw the rating of the
Certificates because of the financial condition or loan servicing
capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, voluntary liquidation or
similar proceedings of or relating to the Master Servicer or of or
relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose of all
or substantially all of its assets, or consolidate with or merge into
another entity or shall permit another entity to consolidate or merge into
it, such that the resulting entity does not meet the criteria for a
successor servicer as specified in Section 9.05 hereof; or
(vii) If a representation or warranty set forth in Section 9.03
hereof shall prove to be incorrect as of the time made in any respect that
materially and adversely affects the interests of the Certificateholders,
and the circumstance or condition in respect of which such representation
or warranty was incorrect shall not have been eliminated or cured
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within 30 days after the date on which written notice of such incorrect
representation or warranty shall have been given to the Master Servicer by
the Trustee or the Securities Administrator, or to the Master Servicer,
the Securities Administrator and the Trustee by the Holders of more than
50% of the Aggregate Voting Interests of the Certificates; or
(viii) A sale or pledge of any of the rights of the Master Servicer
hereunder or an assignment of this Agreement by the Master Servicer or a
delegation of the rights or duties of the Master Servicer hereunder shall
have occurred in any manner not otherwise permitted hereunder and without
the prior written consent of the Trustee and Certificateholders holding
more than 50% of the Aggregate Voting Interests of the Certificates; or
(ix) After receipt of notice from the Trustee, any failure of the
Master Servicer to make any Advances required to be made hereunder.
If an Event of Default described in clauses (i) through (ix) of this
Section shall occur, then, in each and every case, subject to applicable law, so
long as any such Event of Default shall not have been remedied within any period
of time prescribed by this Section, the Trustee, by notice in writing to the
Master Servicer may, and shall, if so directed by Certificateholders evidencing
more than 50% of the Class Principal Amount (or Class Notional Amount) of each
Class of Certificates, terminate all of the rights and obligations of the Master
Servicer hereunder and in and to the Mortgage Loans and the proceeds thereof. On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer, and only in its capacity as Master
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee; and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the defaulting
Master Servicer as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents or otherwise. The defaulting Master Servicer agrees to
cooperate with the Trustee and the Securities Administrator in effecting the
termination of the defaulting Master Servicer's responsibilities and rights
hereunder as Master Servicer including, without limitation, notifying Servicers
of the assignment of the master servicing function and providing the Trustee or
its designee all documents and records in electronic or other form reasonably
requested by it to enable the Trustee or its designee to assume the defaulting
Master Servicer's functions hereunder and the transfer to the Trustee for
administration by it of all amounts which shall at the time be or should have
been deposited by the defaulting Master Servicer in the Distribution Account and
any other account or fund maintained with respect to the Certificates or
thereafter received with respect to the Mortgage Loans. The Master Servicer
being terminated shall bear all costs of a master servicing transfer, including
but not limited to those of the Trustee or Securities Administrator reasonably
allocable to specific employees and overhead, legal fees and expenses,
accounting and financial consulting fees and expenses, and costs of amending the
Agreement, if necessary.
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Notwithstanding the termination of its activities as Master Servicer, each
terminated Master Servicer shall continue to be entitled to reimbursement under
this Agreement to the extent such reimbursement relates to the period prior to
such Master Servicer's termination.
If any Event of Default shall occur, the Trustee, upon becoming aware of
the occurrence thereof, shall promptly notify the Securities Administrator and
each Rating Agency of the nature and extent of such Event of Default. The
Trustee or the Securities Administrator shall immediately give written notice to
the Master Servicer upon the Master Servicer's failure to make Advances as
required under this Agreement.
(b) On and after the time the Master Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee receives
the resignation of the Master Servicer evidenced by an Opinion of Counsel
pursuant to Section 9.06, the Trustee, unless another master servicer shall have
been appointed, shall be the successor in all respects to the Master Servicer in
its capacity as such under this Agreement and the transactions set forth or
provided for herein and shall have all the rights and powers and be subject to
all the responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Master Servicer hereunder, including the obligation to
make Advances; provided, however, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by this Agreement shall not be considered a default by the Trustee
hereunder. In addition, the Trustee shall have no responsibility for any act or
omission of the Master Servicer prior to the issuance of any notice of
termination. The Trustee shall have no liability relating to the representations
and warranties of the Master Servicer set forth in Section 9.03. In the
Trustee's capacity as such successor, the Trustee shall have the same
limitations on liability herein granted to the Master Servicer. As compensation
therefor, the Trustee shall be entitled to receive all compensation payable to
the Master Servicer under this Agreement, including the Master Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be unwilling
to continue to so act, or shall, if it is unable to so act, petition a court of
competent jurisdiction to appoint, or appoint on its own behalf any established
housing and home finance institution servicer, master servicer, servicing or
mortgage servicing institution having a net worth of not less than $15,000,000
and meeting such other standards for a successor master servicer as are set
forth in this Agreement, as the successor to such Master Servicer in the
assumption of all of the responsibilities, duties or liabilities of a master
servicer, like the Master Servicer. Any entity designated by the Trustee as a
successor master servicer may be an Affiliate of the Trustee; provided, however,
that, unless such Affiliate meets the net worth requirements and other standards
set forth herein for a successor master servicer, the Trustee, in its individual
capacity shall agree, at the time of such designation, to be and remain liable
to the Trust Fund for such Affiliate's actions and omissions in performing its
duties hereunder. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted to the
Master Servicer hereunder. The Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate any
such succession and may make other arrangements with respect to the servicing to
be conducted hereunder which are not inconsistent
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herewith. The Master Servicer shall cooperate with the Trustee and any successor
master servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder including, without limitation, notifying
Mortgagors of the assignment of the master servicing functions and providing the
Trustee and successor master servicer, as applicable, all documents and records
in electronic or other form reasonably requested by it to enable it to assume
the Master Servicer's functions hereunder and the transfer to the Trustee or
such successor master servicer, as applicable, all amounts which shall at the
time be or should have been deposited by the Master Servicer in the Distribution
Account and any other account or fund maintained with respect to the
Certificates or thereafter be received with respect to the Mortgage Loans.
Neither the Trustee nor any other successor master servicer shall be deemed to
be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Master Servicer to deliver, or any delay in delivering, cash,
documents or records to it, (ii) the failure of the Master Servicer to cooperate
as required by this Agreement, (iii) the failure of the Master Servicer to
deliver the Mortgage Loan data to the Trustee as required by this Agreement or
(iv) restrictions imposed by any regulatory authority having jurisdiction over
the Master Servicer. No successor master servicer shall be deemed to be in
default hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Trustee to deliver, or any delay in delivering cash, documents or records to it
related to such distribution, or (ii) the failure of Trustee to cooperate as
required by this Agreement.
Section 6.15 Additional Remedies of Trustee Upon Event of Default.
During the continuance of any Event of Default, so long as such Event of
Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as trustee
of the Trust Fund, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
Section 6.16 Waiver of Defaults.
More than 50% of the Aggregate Voting Interests of Certificateholders may
waive any default or Event of Default by the Master Servicer in the performance
of its obligations hereunder, except that a default in the making of any
required deposit to the Distribution Account that would result in a failure of
the Trustee to make any required payment of principal of or interest on the
Certificates may only be waived with the consent of 100% of the affected
Certificateholders. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
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Section 6.17 Notification to Holders.
Upon termination of the Master Servicer or appointment of a successor to
the Master Servicer, in each case as provided herein, the Trustee shall promptly
mail notice thereof by first class mail to the Securities Administrator, and the
Certificateholders at their respective addresses appearing on the Certificate
Register. The Trustee shall also, within 45 days after the occurrence of any
Event of Default known to the Trustee, give written notice thereof to the
Securities Administrator and the Certificateholders, unless such Event of
Default shall have been cured or waived prior to the issuance of such notice and
within such 45-day period.
Section 6.18 Directions by Certificateholders and Duties of Trustee During
Event of Default.
Subject to the provisions of Section 8.01 hereof, during the continuance
of any Event of Default, Holders of Certificates evidencing not less than 25% of
the Class Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Agreement; provided,
however, that the Trustee shall be under no obligation to pursue any such
remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
terminating of the Master Servicer or any successor master servicer from its
rights and duties as master servicer hereunder) at the request, order or
direction of any of the Certificateholders, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the cost,
expenses and liabilities which may be incurred therein or thereby; and, provided
further, that, subject to the provisions of Section 8.01, the Trustee shall have
the right to decline to follow any such direction if the Trustee, in accordance
with an Opinion of Counsel, determines that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith determines that the
action or proceeding so directed would involve it in personal liability for
which it is not indemnified to its satisfaction or be unjustly prejudicial to
the non-assenting Certificateholders.
Section 6.19 Action Upon Certain Failures of the Master Servicer and Upon
Event of Default.
In the event that the Trustee shall have actual knowledge of any action or
inaction of the Master Servicer that would become an Event of Default upon the
Master Servicer's failure to remedy the same after notice, the Trustee shall
give notice thereof to the Master Servicer.
Section 6.20 Preparation of Tax Returns and Other Reports.
(a) The Securities Administrator shall prepare or cause to be prepared on
behalf of the Trust Fund, based upon information calculated in accordance with
this Agreement pursuant to instructions given by the Depositor, and the
Securities Administrator shall file federal tax returns, all in accordance with
Article X hereof. If the Trustee notifies the Securities Administrator in
writing that a state tax return or other return is required, then, at the sole
expense of the Trust Fund, the Securities Administrator shall prepare and file
such state income
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tax returns and such other returns as may be required by applicable law relating
to the Trust Fund, and, if required by state law, and shall file any other
documents to the extent required by applicable state tax law (to the extent such
documents are in the Securities Administrator's possession). The Securities
Administrator shall forward copies to the Depositor of all such returns and Form
1099 supplemental tax information and such other information within the control
of the Securities Administrator as the Depositor may reasonably request in
writing, and shall forward to the Trustee for distribution to each
Certificateholder such forms and furnish such information within the control of
the Securities Administrator as are required by the Code and the REMIC
Provisions to be furnished to them, and will prepare and disseminate to the
Trustee for distribution to Certificateholders Form 1099 (supplemental tax
information) (or otherwise furnish information within the control of the
Securities Administrator and the Trustee) to the extent required by applicable
law. The Master Servicer will indemnify the Securities Administrator and the
Trustee for any liability of or assessment against the Securities Administrator
and the Trustee, as applicable, resulting from any error in any of such tax or
information returns directly resulting from errors in the information provided
by such Master Servicer.
(b) The Securities Administrator shall prepare and file with the Internal
Revenue Service ("IRS"), on behalf of each of the Lower Tier REMIC and Upper
Tier REMIC, an application on IRS Form SS-4. The Securities Administrator, upon
receipt from the IRS of the Notice of Taxpayer Identification Number Assigned
for each REMIC, shall promptly forward copies of such notices to the Master
Servicer, the Trustee and the Depositor. The Securities Administrator will file
an IRS Form 8811.
(c) The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K. Thereafter, within 15 days after each Distribution
Date, the Depositor shall, in accordance with industry standards, file with the
Securities and Exchange Commission (the "Commission") via the Electronic Data
Gathering and Retrieval System (EDGAR), a Form 8-K with a copy of the statement
to the Certificateholders for such Distribution Date as an exhibit thereto.
Prior to July 25, 2003, the Depositor shall, in accordance with industry
standards, file a Form 15 Suspension Notification with respect to the Trust
Fund, if applicable. Prior to July 25, 2003, the Depositor shall file a Form
10-K, in substance conforming to industry standards, with respect to the Trust
Fund. The Securities Administrator agrees to promptly furnish to the Depositor,
from time to time upon request, such further information, reports, and financial
statements within its control related to this Agreement and the Mortgage Loans
as the Depositor reasonably deems appropriate to prepare and file all necessary
reports with the Commission.
Section 6.21 Auction Administration Agreement; Swap Agreement.
(a) Concurrently with the execution and delivery hereof, the Depositor
hereby directs Wells Fargo Bank Minnesota, National Association, acting solely
as an auction administrator and intermediary agent (the "Auction Administrator")
for the Holders of the Class 1A-1 and Class 1A-2 Certificates and not as
Securities Administrator or on behalf of the Trust, to execute and deliver the
Auction Administration Agreement and the Swap Agreement in the forms presented
by GCD. The Securities Administrator shall have no duty to determine the
adequacy of the Auction Administration Agreement or the Swap Agreement. The
Auction Administrator shall
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not enter into any amendment or modification of the Auction Administration
Agreement without the prior written consent of the Depositor, which consent
shall not be unreasonably withheld. In addition, the Auction Administrator shall
furnish to the Depositor all notices and documents received or issued by it
pursuant to the Auction Administration Agreement or the Swap Agreement in timely
fashion.
(b) Each Holder of a Class 1A-1 or Class 1A-2 Certificate is deemed, by
acceptance of such Certificate, (i) to authorize the Auction Administrator to
execute and deliver the Auction Administration Agreement and the Swap Agreement
as their intermediary agent and (ii) to acknowledge and accept and agree to be
bound by the provisions of the Auction Administration Agreement and the Swap
Agreement.
(c) None of the Auction Administration Agreement, Swap Agreement or any
accounts created thereunder shall be an asset of any REMIC established hereby.
ARTICLE VII
PURCHASE OF MORTGAGE LOANS AND
TERMINATION OF THE TRUST FUND
Section 7.01 Purchase of Mortgage Loans; Termination of Trust Fund Upon
Purchase or Liquidation of All Mortgage Loans.
(a) The respective obligations and responsibilities of the Trustee, the
Securities Administrator and the Master Servicer created hereby (other than the
obligation of the Securities Administrator to make payments to
Certificateholders as set forth in Section 7.02), shall terminate on the
earliest of (i) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust Fund and the disposition of all REO Property, (ii) the
sale of the property held by the Trust Fund in accordance with Section 7.01(b)
(if the Class LTR Holder so chooses to sell the assets of the Trust Fund in
connection with the redemption of the Certificates) or Section 7.01(c) and (iii)
the Latest Possible Maturity Date; provided, however, that in no event shall the
Trust Fund 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's, living on the date
hereof. Any termination of the Trust Fund shall be carried out in such a manner
so that the termination of each REMIC included therein shall qualify as a
"qualified liquidation" under the REMIC Provisions.
(b) The Certificates shall be subject to optional redemption by the holder
of the Class LTR Certificate, in whole but not in part, on any Distribution Date
on or after the date on which the Aggregate Stated Principal Balance is equal to
or less than 20% of the Cut-off Date Balance. If the Class LTR Certificateholder
elects to redeem the Certificates, it shall, no later than 30 days prior to the
Distribution Date selected for redemption (the "Redemption Date"), deliver
notices to the Trustee and the Securities Administrator and either (a) deposit
in the Distribution Account the Redemption Price therefore or (b) state in such
notice that the Redemption Price shall be deposited in the Distribution Account
not later than 10:00 A.M., New York City time on the applicable Redemption Date.
In connection with such redemption, if the Class LTR Holder
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elects to liquidate the assets of the Trust Fund, such Holder shall cause the
Trustee to cause each REMIC to adopt a plan of complete liquidation for federal
income tax purposes by complying with the provision of Section 7.02.
(c) On any Distribution Date occurring on or after the Initial Optional
Purchase Date, the Depositor has the option to cause the Trust Fund to adopt a
plan of complete liquidation pursuant to Section 7.03(a)(i) hereof to sell all
of its property. If the Depositor elects to exercise such option, it shall no
later than 30 days prior to the Distribution Date selected for purchase of the
assets of the Trust Fund (the "Purchase Date") deliver notices to the Trustee
and the Securities Administrator and either (a) deposit in the Distribution
Account the Redemption Price or (b) state in such notice that the Redemption
Price shall be deposited in the Distribution Account not later than 10:00 a.m.,
New York City time on the applicable Purchase Date. Upon exercise of such
option, the property of the Trust Fund shall be sold to the Depositor at a price
equal to the Redemption Price.
(d) The Depositor, the Master Servicer, each Servicer, the Securities
Administrator, the Auction Administrator and the Custodian shall be reimbursed
from the Redemption Price for any Advances, Servicer Advances, accrual and
unpaid Servicing Fees or other amounts with respect to the Mortgage Loans that
are reimbursable to such parties under this Agreement, the related Servicing
Agreement or the Custody Agreement.
Section 7.02 Procedure Upon Redemption Termination of Trust Fund.
(a) Notice of any redemption termination pursuant to the provisions of
Section 7.01, specifying the Distribution Date upon which the final distribution
shall be made or the Redemption Date of the Certificates, shall be given
promptly by the Trustee by first class mail to Certificateholders mailed in the
case of a redemption of the Certificate, no less than the first day of the month
in which the Distribution Date selected for redemption of the Certificates
occurs or upon (x) the sale of all of the property of the Trust Fund by the
Trustee or in the case of a sale of assets of the Trust Fund, or (y) upon the
final payment or other liquidation of the last Mortgage Loan or REO Property in
the Trust Fund. Such notice shall specify (A) the Redemption Date, Distribution
Date upon which final distribution on the Certificates of all amounts required
to be distributed to Certificateholders pursuant to Section 5.02 will be made
upon presentation and surrender of the Certificates at the Certificate
Registrar's Corporate Trust Office, and (B) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distribution being made
only upon presentation and surrender of the Certificates at the office or agency
of the Trustee therein specified. The Trustee shall give such notice to the
Securities Administrator, the Master Servicer and the Certificate Registrar at
the time such notice is given to Holders of the Certificates. Upon any such
termination, the duties of the Certificate Registrar with respect to the
Certificates shall terminate and the Trustee shall terminate or request the
Master Servicer to terminate, the Distribution Account and any other account or
fund maintained with respect to the Certificates, subject to the Trustee's
obligation hereunder to hold all amounts payable to Certificateholders in trust
without interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their
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Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice any Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps
to contact the remaining Certificateholders concerning surrender of such
Certificates, and the cost thereof shall be paid out of the amounts
distributable to such Holders. If within two years after the second notice any
Certificates shall not have been surrendered for cancellation, the Trustee
shall, subject to applicable state law relating to escheatment, hold all amounts
distributable to such Holders for the benefit of such Holders. No interest shall
accrue on any amount held by the Trustee and not distributed to a
Certificateholder due to such Certificateholder's failure to surrender its
Certificate(s) for payment of the final distribution thereon in accordance with
this Section.
(c) Any reasonable expenses incurred by the Trustee in connection with any
redemption or termination or liquidation of the Trust Fund shall be reimbursed
from proceeds received from the liquidation of the Trust Fund.
Section 7.03 Additional Trust Fund Termination Requirements.
(a) Any termination of the Trust Fund shall be effected in accordance with
the following additional requirements, unless the Trustee seeks (at the request
of the party exercising the option to purchase all of the Mortgage Loans
pursuant to Section 7.01(c)), and subsequently receives, an Opinion of Counsel
(at the expense of such requesting party), addressed to the Trustee to the
effect that the failure of the Trust Fund to comply with the requirements of
this Section 7.03 will not (I) result in the imposition of taxes on any REMIC
under the REMIC Provisions or (II) cause any REMIC established hereunder to fail
to qualify as a REMIC at any time that any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the final
payment on the Certificates, upon notification by the Depositor that it
intends to exercise its option to cause the termination of the Trust Fund,
the Trustee shall adopt a plan of complete liquidation of the Trust Fund
on behalf of each REMIC, meeting the requirements of a qualified
liquidation under the REMIC Provisions;
(ii) Any sale of the assets of the Trust Fund pursuant to Section
7.02 shall be a sale for cash and shall occur at or after the time of
adoption of such a plan of complete liquidation and prior to the time of
making of the final payment on the Certificates;
(iii) On the date specified for final payment of the Certificates,
the Securities Administrator shall make final distributions of principal
and interest on the Certificates in accordance with Section 5.02 and,
after payment of, or provision for any outstanding expenses, distribute or
credit, or cause to be distributed or credited, to the Holders of the
Residual Certificates all cash on hand after such final payment (other
than cash retained to meet claims), and the Trust Fund (and each REMIC)
shall terminate at that time; and
(iv) In no event may the final payment on the Certificates or the
final distribution or credit to the Holders of the Residual Certificates
be made after the 89th day from the date on which the plan of complete
liquidation is adopted.
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(b) By its acceptance of a Residual Certificate, each Holder thereof
hereby agrees to accept the plan of complete liquidation adopted by the Trustee
under this Section and to take such other action in connection therewith as may
be reasonably requested by the Securities Administrator or any Servicer.
Section 7.04 Retention of Certificates by Depositor.
If the Depositor elects to redeem the Certificates in accordance with the
provisions of Section 7.01(c) but not to liquidate the assets of the Trust Fund,
it may elect to cause the Certificates to remain outstanding, in which event, no
plan of complete liquidation shall be adopted by the Trustee and no termination
of this Agreement or the Trust Fund will occur under this Article VII. If the
Depositor so elects, the Certificates shall remain validly outstanding, subject
to the following paragraph.
The Certificate Registrar, if so directed by the Depositor in writing not
less than five (5) Business Days prior to the Redemption Date, shall
authenticate and prepare for delivery on the Redemption Date new Certificates or
Definitive Certificates (as directed by the Depositor) on the order of the
Depositor against receipt by the Trustee of immediately available funds in an
amount not less than the Redemption Price.
Notwithstanding the foregoing, no redemption of any Certificate shall be
permitted without retiring it and no sale of previously redeemed Certificates
may be made by the Depositor unless the Depositor shall have delivered to the
Trustee an Opinion of Counsel as provided in Section 7.03(a).
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01 Limitation on Rights of Holders.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or this Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
take any action or proceeding in any court for a partition or winding up of this
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them. Except as otherwise expressly provided herein, no
Certificateholder, solely by virtue of its status as a Certificateholder, shall
have any right to vote or in any manner otherwise control the Master Servicer or
the operation and management of the Trust Fund, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of 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.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or
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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 an Event of Default and of the continuance thereof, as hereinbefore provided,
and unless also the Holders of Certificates evidencing not less than 25% of the
Class Principal Amount or Class Notional Amount (or Percentage Interest) of
Certificates of each Class affected thereby 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 cost, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for sixty 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 and no direction inconsistent
with such written request has been given such Trustee during such sixty-day
period by such Certificateholders; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder, the Securities Administrator and the Trustee, that no one or
more Holders of Certificates shall have any right in any manner whatever by
virtue or by availing of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
Section 8.02 Access to List of Holders.
(a) If the Trustee is not acting as Certificate Registrar, the Certificate
Registrar will furnish or cause to be furnished to the Trustee, within fifteen
days after receipt by the Certificate Registrar of a request by the Trustee in
writing, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Certificateholders of each Class as of the most
recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter referred
to as "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Holders with respect to
their rights under this Agreement or under the Certificates and is accompanied
by a copy of the communication which such Applicants propose to transmit, then
the Trustee shall, within five Business Days after the receipt of such
application, afford such Applicants reasonable access during the normal business
hours of the Trustee to the most recent list of Certificateholders held by the
Trustee or shall, as an alternative, send, at the Applicants' expense, the
written communication proffered by the Applicants to all Certificateholders at
their addresses as they appear in the Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing Agency,
by receiving and holding a Certificate, agrees with the Depositor, the Master
Servicer, the Securities Administrator, the Certificate Registrar and the
Trustee that neither the Depositor, the Master Servicer, the Securities
Administrator, the Certificate Registrar nor the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
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Section 8.03 Acts of Holders of Certificates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders or
Certificate Owners, if the Holder is a Clearing Agency, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and the Securities
Administrator and, where expressly required herein, to the Master Servicer. Such
instrument or instruments (as the action embodies therein and evidenced thereby)
are herein sometimes referred to as an "Act" of the Holders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agents shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Securities Administrator
and the Master Servicer, if made in the manner provided in this Section. Each of
the Trustee, the Securities Administrator and the Master Servicer shall promptly
notify the others of receipt of any such instrument by it, and shall promptly
forward a copy of such instrument to the others.
(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 any notary public or other officer authorized
by law to take acknowledgments or deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the individual
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates shall
be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee, the Securities Administrator, the
Master Servicer, nor the Depositor shall be affected by any notice to the
contrary.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Certificate shall bind every future Holder
of the same 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
Master Servicer in reliance thereon, whether or not notation of such action is
made upon such Certificate.
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ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
Section 9.01 Duties of the Master Servicer; Enforcement of Servicer's and
Master Servicer's Obligations.
(a) The Master Servicer, on behalf of the Trustee, the Depositor and the
Certificateholders shall monitor the performance of the Servicers under the
Servicing Agreements, and shall use its reasonable good faith efforts to cause
the Servicers duly and punctually to perform all of their duties and obligations
thereunder. Upon the occurrence of a default of which an Authorized Officer of
the Master Servicer has actual knowledge under a Servicing Agreement, the Master
Servicer shall promptly notify the Trustee thereof, and shall specify in such
notice the action, if any, the Master Servicer is taking in respect of such
default. So long as any such default shall be continuing, the Master Servicer
may, and shall if it determines such action to be in the best interests of
Certificateholders, (i) terminate all of the rights and powers of such Servicer
pursuant to the applicable provisions of the Servicing Agreement; (ii) exercise
any rights it may have to enforce the Servicing Agreement against such Servicer;
and/or (iii) waive any such default under the Servicing Agreement or take any
other action with respect to such default as is permitted thereunder.
Notwithstanding any provision of this Agreement or any Servicing Agreement to
the contrary, the Master Servicer shall have no duty or obligation to supervise,
monitor or oversee the activities of, or to enforce the obligations of, (i) the
Servicer under its Servicing Agreement with respect to any Additional Collateral
or any Limited Purpose Surety Bond relating thereto, including, without
limitation, the collection of any amounts owing to the Trust Fund in respect
thereof (unless and until the Master Servicer shall have assumed the obligations
of such Servicer as successor servicer under the related Servicing Agreement
pursuant to this Section 9.01, in which case, as successor servicer, it shall be
bound to serve and administer the Additional Collateral and any related Limited
Purpose Surety Bond in accordance with the provisions of such Servicing
Agreement) or (ii) the Servicer under its Servicing Agreement with respect to
the servicing or administration of defaulted or delinquent Mortgage Loans and
the management and disposition of any REO Properties or for any actions of the
Trustee in connection therewith.
(b) Upon any termination by the Master Servicer of a Servicer's rights and
powers pursuant to its Servicing Agreement, the rights and powers of the
Servicer with respect to the Mortgage Loans shall vest in the Master Servicer
and the Master Servicer shall be the successor in all respects to such Servicer
in its capacity as Servicer with respect to such Mortgage Loans under the
related Servicing Agreement, unless or until the Master Servicer shall have
appointed, with the consent of the Trustee and the Rating Agencies, such consent
not to be unreasonably withheld, and in accordance with the applicable
provisions of the Servicing Agreement, a new Fannie Mae- or FHLMC-approved
Person to serve as successor to the Servicer; provided, however, that it is
understood and agreed by the parties hereto that there will be a period of
transition (not to exceed 90 days) before the actual servicing functions can be
fully transferred to a successor servicer (including the Master Servicer). With
such consent, the Master Servicer may elect to continue to serve as successor
servicer under the Servicing Agreement. Upon
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appointment of a successor servicer, as authorized under this Section 9.01(b),
unless the successor servicer shall have assumed the obligation of the
terminated Servicer under such Servicing Agreement, the Trustee and such
successor servicer shall enter into a servicing agreement in a form
substantially similar to the affected Servicing Agreement. In connection with
any such appointment, the Master Servicer may make such arrangements for the
compensation of such successor as it and such successor shall agree, but in no
event shall such compensation of any successor servicer (including the Master
Servicer) be in excess of that payable to the Servicer under the affected
Servicing Agreement.
The Master Servicer shall pay the costs of such enforcement (including the
termination of any Servicer, the appointment of a successor servicer or the
transfer and assumption of the servicing by the Master Servicer) at its own
expense and shall be reimbursed therefor initially (i) by the terminated
Servicer, (ii) from a general recovery resulting from such enforcement only to
the extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans, (iii) from a specific recovery of costs, expenses or
attorney's fees against the party against whom such enforcement is directed, or
(iv) to the extent that such amounts described in (i)-(iii) above are
insufficient to reimburse the Master Servicer for such costs of enforcement,
from the Trust Fund, as provided in Section 9.04.
If the Master Servicer assumes the servicing with respect to any of the
Mortgage Loans, it will not assume liability for the representations and
warranties of any Servicer it replaces or for the errors or omissions of such
Servicer.
(c) Upon any termination of a Servicer's rights and powers pursuant to its
Servicing Agreement, the Master Servicer shall promptly notify the Trustee and
the Rating Agencies, specifying in such notice that the Master Servicer or any
successor servicer, as the case may be, has succeeded the Servicer under the
Servicing Agreement, which notice shall also specify the name and address of any
such successor servicer.
(d) Neither the Depositor nor the Trustee shall consent to the assignment
by any Servicer of such Servicer's rights and obligations under the Servicing
Agreement without the prior written consent of the Master Servicer, which
consent shall not be unreasonably withheld.
Section 9.02 Assumption of Master Servicing by Trustee; Assumption of
Auction Administration Agreement and Swap Agreement.
(a) In the event the Master Servicer shall for any reason no longer be the
Master Servicer (including by reason of any Event of Default under this
Agreement), the Trustee shall thereupon assume all of the rights and obligations
of such Master Servicer hereunder and under each Servicing Agreement entered
into with respect to the Mortgage Loans or shall appoint a Fannie-Mae or
FHLMC-approved server as successor with servicer acceptable to the Depositor and
the Rating Agencies. The Trustee, its designee or any successor master servicer
appointed by the Trustee shall be deemed to have assumed all of the Master
Servicer's interest herein and therein to the same extent as if such Servicing
Agreement had been assigned to the assuming party, except that the Master
Servicer shall not thereby be relieved of any liability or obligations of the
Master Servicer under such Servicing Agreement accruing prior to its replacement
as Master Servicer, and shall be liable to the Trustee, and hereby agrees to
indemnify and hold harmless the
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Trustee from and against all costs, damages, expenses and liabilities (including
reasonable attorneys' fees) incurred by the Trustee as a result of such
liability or obligations of the Master Servicer and in connection with the
Trustee's assumption (but not its performance, except to the extent that costs
or liability of the Trustee are created or increased as a result of negligent or
wrongful acts or omissions of the Master Servicer prior to its replacement as
Master Servicer) of the Master Servicer's obligations, duties or
responsibilities thereunder.
(b) The Master Servicer that has been terminated shall, upon request of
the Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Servicing Agreement and the
related Mortgage Loans and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Servicing Agreement to the assuming party.
(c) In the event the Auction Administrator shall for any reason no longer
be the Auction Administrator, the Trustee shall thereupon assume all of the
rights and obligations of such Auction Administrator under the Auction
Administration Agreement and the Swap Agreement or shall appoint a successor, to
the appointment of which the Trustee has received GCD's prior written consent
(which consent shall not be unreasonably withheld). The Trustee, its designee or
any successor auction administrator appointed by the Trustee hereunder shall be
deemed to have assumed all of the Auction Administrator's interest therein to
the same extent as if such Auction Administration Agreement and Swap Agreement
had been assigned to the assuming party.
(d) The Auction Administrator that has been terminated shall, upon request
of the Trustee, deliver to the assuming party all documents and records relating
to the Auction Administration Agreement and the Swap Agreement and otherwise use
its best efforts to effect the orderly and efficient transfer of the Auction
Administration Agreement and the Swap Agreement to the assuming party.
Section 9.03 Representations and Warranties of the Master Servicer.
(a) The Master Servicer hereby represents and warrants to the Depositor,
the Securities Administrator and the Trustee, for the benefit of the
Certificateholders, as of the Closing Date that:
(i) it is validly existing and in good standing under the laws of
the United States of America as a national banking association, and as
Master Servicer has full power and authority to transact any and all
business contemplated by this Agreement and to execute, deliver and comply
with its obligations under the terms of this Agreement, the execution,
delivery and performance of which have been duly authorized by all
necessary corporate action on the part of the Master Servicer;
(ii) the execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement will not (A) violate the Master Servicer's charter or bylaws,
(B) violate any law or regulation or any administrative decree or order to
which it is subject or (C) constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, agreement or other
instrument to which the
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Master Servicer is a party or by which it is bound or to which any of its
assets are subject, which violation, default or breach would materially
and adversely affect the Master Servicer's ability to perform its
obligations under this Agreement;
(iii) this Agreement constitutes, assuming due authorization,
execution and delivery hereof by the other respective parties hereto, a
legal, valid and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights in general, and
by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(iv) the Master Servicer is not in default with respect to any order
or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency to the extent that any such default would
materially and adversely affect its performance hereunder;
(v) the Master Servicer is not a party to or bound by any agreement
or instrument or subject to any charter provision, bylaw or any other
corporate restriction or any judgment, order, writ, injunction, decree,
law or regulation that may materially and adversely affect its ability as
Master Servicer to perform its obligations under this Agreement or that
requires the consent of any third person to the execution of this
Agreement or the performance by the Master Servicer of its obligations
under this Agreement;
(vi) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement;
(vii) the Master Servicer, or an affiliate thereof the primary
business of which is the servicing of conventional residential mortgage
loans, is a Fannie Mae- or FHLMC-approved seller/servicer;
(viii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of or compliance by the Master Servicer
with this Agreement or the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations and
orders (if any) as have been obtained; and
(ix) the consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master Servicer;
(b) It is understood and agreed that the representations and warranties
set forth in this Section shall survive the execution and delivery of this
Agreement. The Master Servicer shall indemnify the Depositor, the Securities
Administrator and the Trustee and hold them harmless against any loss, damages,
penalties, fines, forfeitures, legal fees and related costs, judgments, and
other costs and expenses resulting from any claim, demand, defense or assertion
based on or
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grounded upon, or resulting from, a material breach of the Master Servicer's
representations and warranties contained in Section 9.03(a). It is understood
and agreed that the enforcement of the obligation of the Master Servicer set
forth in this Section to indemnify the Depositor, the Securities Administrator
and the Trustee as provided in this Section constitutes the sole remedy (other
than as set forth in Section 6.14) of the Depositor, the Securities
Administrator and the Trustee, respecting a breach of the foregoing
representations and warranties. Such indemnification shall survive any
termination of the Master Servicer as Master Servicer hereunder, and any
termination of this Agreement.
Any cause of action against the Master Servicer relating to or arising out
of the breach of any representations and warranties made in this Section shall
accrue upon discovery of such breach by either the Depositor, the Master
Servicer or the Trustee or notice thereof by any one of such parties to the
other parties.
Section 9.04 Compensation to the Master Servicer.
The Master Servicer shall be entitled to be paid by the Trust Fund, and
either retain or withdraw from the Distribution Account, (i) its Master
Servicing Fee with respect to each Distribution Date, (ii) amounts necessary to
reimburse itself for any previously unreimbursed Advances, Servicer Advances and
Nonrecoverable Advances in accordance with the definition of "Available
Distribution Amount" and (iii) amounts representing assumption fees, late
payment charges or other ancillary income not included in the definition of
"Available Distribution Amount" and which are not required to be remitted by the
Servicers to the Securities Administrator or deposited by the Securities
Administrator into the Distribution Account. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder and shall not be entitled to reimbursement therefor except as provided
in this Agreement.
In addition, Depositor agrees, except as otherwise expressly provided
herein, to reimburse the Master Servicer, upon its request, for all reasonable
expenses, disbursements and advances incurred or made by the Master Servicer in
connection with the performance of its duties hereunder (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), to the extent not otherwise reimbursed pursuant to this Agreement,
except any such expense, disbursement or advance as may be attributable to its
willful misfeasance, bad faith or negligence.
Section 9.05 Merger or Consolidation.
Any Person into which the Master Servicer may be merged or consolidated,
or any Person resulting from any merger, conversion, other change in form or
consolidation to which the Master Servicer shall be a party, or any Person
succeeding to the business of the Master Servicer, shall be the successor to the
Master Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or resulting
Person to the Master Servicer shall be a Person that shall be qualified and
approved to service mortgage loans for Fannie Mae or FHLMC and shall have a net
worth of not less than $15,000,000.
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Section 9.06 Resignation of Master Servicer.
Except as otherwise provided in Sections 9.05 and 9.07 hereof, the Master
Servicer shall not resign from the obligations and duties hereby imposed on it
unless the Master Servicer's duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it and cannot be cured. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel that shall be Independent to such effect delivered to the
Trustee. No such resignation shall become effective until the Trustee shall have
assumed, or a successor master servicer shall have been appointed by the Trustee
and until such successor shall have assumed, the Master Servicer's
responsibilities and obligations under this Agreement. Notice of such
resignation shall be given promptly by the Master Servicer and the Depositor to
the Trustee.
If, at any time, the Master Servicer resigns under this Section 9.06, or
transfers or assigns its rights and obligations under Section 9.07, or is
removed as Master Servicer pursuant to Section 6.14, then at such time as Wells
Fargo Bank Minnesota, National Association also shall resign (and shall be
entitled to resign) as Securities Administrator, Paying Agent, Authenticating
Agent, Certificate Registrar and Auction Administrator under this Agreement
(and, in the case of the Auction Administrator, the Auction Administration
Agreement and the Swap Agreement). In such event, the obligations of each such
party shall be assumed by the Trustee or such successor master servicer
appointed by the Trustee (subject to the provisions of Section 9.02(c)).
Section 9.07 Assignment or Delegation of Duties by the Master Servicer.
Except as expressly provided herein, the Master Servicer shall not assign
or transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Master Servicer hereunder; provided, however, that the Master Servicer shall
have the right with the prior written consent of the Trustee and the Depositor
(which consent shall not be unreasonably withheld), and upon delivery to the
Trustee and the Depositor of a letter from each Rating Agency to the effect that
such action shall not result in a downgrading of the Certificates, to delegate
or assign to or subcontract with or authorize or appoint any qualified Person to
perform and carry out any duties, covenants or obligations to be performed and
carried out by the Master Servicer hereunder. Notice of such permitted
assignment shall be given promptly by the Master Servicer to the Depositor and
the Trustee. If, pursuant to any provision hereof, the duties of the Master
Servicer are transferred to a successor master servicer, the entire amount of
the Master Servicing Fees and other compensation payable to the Master Servicer
pursuant hereto shall thereafter be payable to such successor master servicer.
Such successor Master Servicer shall also pay the fees of the Trustee and the
Securities Administrator, as provided herein.
Section 9.08 Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors, officers, employees
or agents of the Master Servicer shall be under any liability to 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, or for errors in judgment;
provided, however, that this provision shall not protect the Master
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Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its obligations
and duties under this Agreement. The Master Servicer and any director, officer,
employee or agent of the Master Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Master Servicer shall be under no obligation
to appear in, prosecute or defend any legal action that is not incidental to its
duties to master service the Mortgage Loans in accordance with this Agreement
and that in its opinion may involve it in any expenses or liability; provided,
however, that the Master Servicer may in its sole discretion undertake any such
action that it may deem necessary or desirable in respect to this Agreement and
the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund and the Master Servicer shall be entitled to be
reimbursed therefor out of the Distribution Account.
The Master Servicer shall not be liable for any acts or omissions of any
Servicer except to the extent that damages or expenses are incurred as a result
of such act or omissions and such damages and expenses would not have been
incurred but for the negligence, willful misfeasance, bad faith or recklessness
of the Master Servicer in supervising, monitoring and overseeing the obligations
of the Servicers in this Agreement.
Section 9.09 Indemnification; Third-Party Claims.
The Master Servicer agrees to indemnify the Depositor, the Securities
Administrator and the Trustee, and hold them harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, liability, fees and expenses that the Depositor,
the Securities Administrator or the Trustee may sustain as a result of the
Master Servicer's willful misfeasance, bad faith or negligence in the
performance of its duties hereunder or by reason of its reckless disregard for
its obligations and duties under this Agreement. The Depositor, the Securities
Administrator and the Trustee shall immediately notify the Master Servicer if a
claim is made by a third party with respect to this Agreement or the Mortgage
Loans entitling the Depositor, the Securities Administrator or the Trustee to
indemnification under this Section 9.09, whereupon the Master Servicer shall
assume the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or them in respect of such
claim.
ARTICLE X
REMIC ADMINISTRATION
Section 10.01 REMIC Administration.
(a) REMIC elections as set forth in the Preliminary Statement shall be
made on Forms 1066 or other appropriate federal tax or information return for
the taxable year ending on the last
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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 86OG(a)(9) of the Code. The latest possible
maturity date for purposes of Treasury Regulation 1.86OG-1(a)(4) will be the
Latest Possible Maturity Date.
(c) The Securities Administrator shall represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. The Securities Administrator
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 Securities
Administrator in fulfilling its duties hereunder (including its duties as tax
return preparer). The Securities Administrator shall be entitled to
reimbursement of expenses to the extent provided in clause (i) above from the
Securities Administration Account, provided, however, the Securities
Administrator shall not be entitled to reimbursement for expenses incurred in
connection with the preparation of tax returns and other reports as required by
Section 6.20 and this Section.
(d) The Securities Administrator shall prepare, and the Trustee shall sign
and file, as instructed by the Securities Administrator, all of each REMIC's
federal and appropriate state tax and information returns as such REMIC's direct
representative. The expenses of preparing and filing such returns shall be borne
by the Securities Administrator.
(e) The Securities Administrator or its designee 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 Securities Administrator shall provide,
upon receipt of additional reasonable compensation, (i) to the Treasury or other
governmental authority such information as is necessary for the application of
any tax relating to the transfer of a Residual Certificate to any disqualified
person or organization pursuant to Treasury Regulation 1.860E-2(a)(5) and any
person designated in Section 860E(e)(3) of the Code and (ii) to the Trustee such
information as is necessary for the Trustee to provide to the Certificateholders
such information or reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Securities Administrator, the Master 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 any REMIC as a REMIC under
the REMIC Provisions and shall assist each other as necessary to create or
maintain such status. Neither the Trustee, the Securities Administrator, the
Master Servicer nor the Holder of any Residual Certificate shall knowingly take
any action, 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 any REMIC as a REMIC or
(ii) result in the imposition of a tax upon any
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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, the Securities Administrator and the Master 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 any REMIC
to take any action, which is not expressly permitted under the terms of this
Agreement, any Holder of a Residual Certificate will consult with the Trustee,
the Securities Administrator, the Master Servicer or their respective designees,
in writing, with respect to whether such action could cause an Adverse REMIC
Event to occur with respect to any REMIC, and no such Person shall take any such
action or cause any REMIC to take any such action as to which the Trustee, the
Securities Administrator or the Master Servicer has advised it in writing that
an Adverse REMIC Event could occur; provided, however, that if no Adverse REMIC
Event would occur but such action could result in the imposition of additional
taxes on the Residual Certificateholders, no such Person shall take any such
action, or cause any REMIC to take any such action without the written consent
of the Residual Certificateholders.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental authorities.
To the extent that such taxes are not paid by a Residual Certificateholder, the
Trustee or the Paying Agent shall pay any remaining REMIC taxes out of current
or future amounts otherwise distributable to the Holder of the Residual
Certificate in any such REMIC or, if no such amounts are available, out of other
amounts held in the Collection Account, and shall reduce amounts otherwise
payable to holders of regular interests in any such REMIC, as the case may be.
(h) The Securities Administrator shall, for federal income tax purposes,
maintain 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.
(j) Neither the Securities Administrator nor the Master Servicer shall
enter into any arrangement by which any REMIC will receive a fee or other
compensation for services.
(k) The Trustee and the Securities Administrator shall treat the Basis
Risk Reserve Fund as an outside reserve fund within the meaning of Treasury
Regulation Section 1.860G-2(h) that is owned by the holders of the Interest-Only
Certificate and that is not an asset of any REMIC. The Trustee and the
Securities Administrator shall treat the rights of the Holders of the LIBOR
Certificates to receive distributions from the Basis Risk Reserve Fund to cover
Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls as payments under a cap
contract written by the Holders of the Class X-1, Class X-2A, Class X-2B and
Class X-B Certificates in favor of the Holders of the LIBOR Certificates. Thus,
each Class 1A-1, Class 2A and Class B1 Certificates shall be treated as
representing not only ownership of regular interests in a REMIC, but also
ownership of an interest in an interest rate cap contract. For purposes of
determining the issue prices of the Certificates, the interest rate cap
contracts shall be assumed to have a zero value unless and until required
otherwise by an applicable taxing authority.
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(l) The Class LTR Holder shall act as "tax matters person" with respect to
the Trust Fund and the Securities Administrator shall act as its agent therefor
unless and until another party is so designated by the Class LTR Holder.
Section 10.02 Prohibited Transactions and Activities.
Neither the Depositor, the Master Servicer nor the Trustee shall sell,
dispose of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of each REMIC pursuant to Article VII 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 any such REMIC as a REMIC or of the interests therein
other than the Residual 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 any such REMIC to be
subject to any tax including a tax on prohibited transactions or prohibited
contributions pursuant to the REMIC Provisions.
Section 10.03 Indemnification with Respect to Prohibited Transactions or
Loss of REMIC Status.
In the event that a REMIC 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 Securities Administrator of its duties and
obligations set forth herein, the Securities Administrator shall indemnify the
Certificateholders of the related Residual Certificate against any and all
losses, claims, damages, liabilities or expenses ("Losses") resulting from such
negligence; provided, however, that the Securities Administrator shall not be
liable for any such Losses attributable to the action or inaction of the
Depositor, the Trustee or the Holder of the Residual Certificate, nor for any
such Losses resulting from misinformation provided by any of the foregoing
parties on which the Securities Administrator has relied. Notwithstanding the
foregoing, however, in no event shall the Securities Administrator 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 or under any Servicing Agreement or under any
Acknowledgement, (2) for any Losses other than arising out of malfeasance,
willful misconduct or negligent performance by the Service Administrator of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders of the related Residual Certificate
(in addition to payment of principal and interest on the Certificates).
Section 10.04 REO Property.
(a) Notwithstanding any other provision of this Agreement, the Master
Servicer, acting on behalf of the Trustee hereunder, shall not, except to the
extent provided in the applicable
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Servicing Agreement, knowingly permit any Servicer to, 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 applicable Servicer has
provided to the Trustee an Opinion of Counsel concluding that, under the REMIC
Provisions, such action would not adversely affect the status of any REMIC as a
REMIC and any income generated for any REMIC by the REO Property would not
result in the imposition of a tax upon such REMIC.
(b) The Depositor shall cause the applicable Servicer (to the extent
provided in its Servicing Agreement) to make reasonable efforts to sell any REO
Property for its fair market value. In any event, however, the Depositor shall,
or shall cause the applicable Servicer (to the extent provided in its Servicing
Agreement) to, dispose of any REO Property within three years of its acquisition
by the Trust Fund unless the Depositor or the applicable Servicer (on behalf of
the Trust Fund) 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, the REMIC may hold REO Property for
a longer period without adversely affecting the REMIC status of such REMIC or
causing the imposition of a Federal or state tax upon such REMIC. If such an
extension has been received, then the Depositor, acting on behalf of the Trustee
hereunder, shall, or shall cause the applicable Servicer to, continue to attempt
to sell the REO Property for its fair market value for such period longer than
three years as such extension permits (the "Extended Period"). If such an
extension has not been received and the Depositor or the applicable Servicer,
acting on behalf of the Trust Fund hereunder, is unable to sell the REO Property
within 33 months after its acquisition by the Trust Fund or if such an
extension, has been received and the Depositor or the applicable Servicer is
unable to sell the REO Property within the period ending three months before the
close of the Extended Period, the Depositor shall cause the applicable Servicer,
before the end of the three year period or the Extended Period, as applicable,
to (i) purchase such REO Property at a price equal to the REO Property's fair
market value or (ii) auction the REO Property to the highest bidder (which may
be the applicable Servicer) in an auction reasonably designed to produce a fair
price prior to the expiration of the three-year period or the Extended Period,
as the case may be.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Binding Nature of Agreement; Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Section 11.02 Entire Agreement.
This Agreement contains the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous
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agreements, understandings, inducements and conditions, express or implied, oral
or written, of any nature whatsoever with respect to the subject matter hereof.
The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof.
Section 11.03 Amendment.
(a) This Agreement may be amended from time to time by the Depositor, the
Master Servicer, the Securities Administrator, and the Trustee, without notice
to or the consent of any of the Holders, (i) to cure any ambiguity or mistake,
(ii) to cause the provisions herein to conform to or be consistent with or in
furtherance of the statements made with respect to the Certificates, the Trust
Fund or this Agreement in any Offering Document, or to correct or supplement any
provision herein which may be inconsistent with any other provisions herein or
with the provisions of any Servicing Agreement, (iii) to make any other
provisions with respect to matters or questions arising under this Agreement or
(iv) to add, delete, or amend any provisions to the extent necessary or
desirable to comply with any requirements imposed by the Code and the REMIC
Provisions. No such amendment effected pursuant to the preceding sentence shall,
as evidenced by an Opinion of Counsel, adversely affect the status of any REMIC
created pursuant to this Agreement, nor shall such amendment effected pursuant
to clause (iii) of such sentence adversely affect in any material respect the
interests of any Holder. Prior to entering into any amendment without the
consent of Holders pursuant to this paragraph, the Trustee shall be provided
with an Opinion of Counsel (at the expense of the party requesting such
amendment) to the effect that such amendment is permitted under this Section.
Any such amendment shall be deemed not to adversely affect in any material
respect any Holder, if the Trustee receives written confirmation from each
Rating Agency that such amendment will not cause such Rating Agency to reduce
the then current rating assigned to the Certificates.
(b) This Agreement may also be amended from time to time by the Depositor,
the Master Servicer, the Securities Administrator and the Trustee, with the
consent of the Holders of not less than 66-2/3% of the Class Principal Amount
(or Percentage Interest) of each Class of Certificates affected thereby 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; provided, however, that no such amendment shall be made unless the
Trustee receives an Opinion of Counsel, at the expense of the party requesting
the change, that such change will not adversely affect the status of any REMIC
as a REMIC or cause a tax to be imposed on such REMIC; and provided further,
that no such amendment may (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate, without the consent of the Holder of such
Certificate or (ii) reduce the aforesaid percentages of Class Principal Amount
or Class Notional Amount (or Percentage Interest) of Certificates of each Class,
the Holders of which are required to consent to any such amendment without the
consent of the Holders of 100% of the Class Principal Amount or Class Notional
Amount (or Percentage Interest) of each Class of Certificates affected thereby.
For purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, in the case of any Class of Book-Entry Certificates, the
related Certificate Owners.
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(c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Holder,
the Depositor and the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this
Section 11.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.
(e) Notwithstanding anything to the contrary in any Servicing Agreement,
the Trustee shall not consent to any amendment of any Servicing Agreement except
pursuant to the standards provided in this Section with respect to amendment of
this Agreement.
Section 11.04 Voting Rights.
Except to the extent that the consent of all affected Certificateholders
is required pursuant to this Agreement, with respect to any provision of this
Agreement requiring the consent of Certificateholders representing specified
percentages of aggregate outstanding Certificate Principal Amount or Class
Notional Amount (or Percentage Interest), Certificates owned by the Depositor,
the Master Servicer, the Securities Administrator, the Trustee, any Servicer or
any Affiliates thereof are not to be counted so long as such Certificates are
owned by the Depositor, the Master Servicer, the Securities Administrator, the
Trustee, any Servicer or any Affiliate thereof.
Section 11.05 Provision of Information.
(a) For so long as any of the Certificates of any Series or Class are
"restricted securities" within the meaning of Rule 144(a)(3) under the Act, each
of the Depositor, the Master Servicer and the Trustee agree to cooperate with
each other to provide to any Certificateholders and to any prospective purchaser
of Certificates designated by such holder, upon the request of such holder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act. Any reasonable, out-of-pocket expenses incurred by the Trustee,
the Master Servicer or the Securities Administrator in providing such
information shall be reimbursed by the Depositor.
(b) The Securities Administrator shall provide to any person to whom a
Prospectus was delivered, upon the request of such person specifying the
document or documents requested, (i) a copy (excluding exhibits) of any report
on Form 8-K or Form 10-K filed with the Securities and Exchange Commission
pursuant to Section 9.23(b) and (ii) a copy of any other document incorporated
by reference in the Prospectus. Any reasonable out-of-pocket expenses incurred
by the Securities Administrator in providing copies of such documents shall be
reimbursed by the Depositor.
(c) On each Distribution Date, the Securities Administrator shall deliver
or cause to be delivered by first class mail or make available on its website to
the Depositor, Attention: Contract Finance, a copy of the report delivered to
Certificateholders pursuant to Section 4.02.
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Section 11.06 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07 Notices.
All requests, demands, notices, authorizations, directions, consents,
waivers and communications hereunder shall be in writing and shall be deemed to
have been duly given when received by (a) in the case of the Depositor, Sequoia
Residential Funding, Inc., 591 Redwood Highway, Suite 3160, Mill Valley, CA
94941, Attention: Sequoia Mortgage Trust 8, (b) in the case of the Seller, RWT
Holdings, Inc., 591 Redwood Highway, Suite 3140, Mill Valley, CA 94941,
Attention: Sequoia Mortgage Trust 8 and (c) in the case of the Master Servicer,
the Securities Administrator or the Auction Administrator, Wells Fargo Bank
Minnesota, National Association, 9062 Old Annapolis Rd., Columbia, Maryland
21045, Attention: Sequoia Mortgage Trust 8, telecopy number (410) 715-2380, or
as to each party such other address as may hereafter be furnished by such party
to the other parties in writing. All demands, notices and communications to a
party hereunder shall be in writing and shall be deemed to have been duly given
when delivered to such party at the relevant address, facsimile number or
electronic mail address set forth above or at such other address, facsimile
number or electronic mail address as such party may designate from time to time
by written notice in accordance with this Section 11.07.
Section 11.08 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.09 Indulgences; No Waivers.
Neither the failure nor any delay on the part of a party to exercise any
right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
Section 11.10 Headings Not To Affect Interpretation.
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The headings contained in this Agreement are for convenience of reference
only, and they shall not be used in the interpretation hereof.
Section 11.11 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, express or implied,
shall give to any Person, other than the parties to this Agreement and their
successors hereunder and the Holders of the Certificates, any benefit or any
legal or equitable right, power, remedy or claim under this Agreement, except to
the extent specified in Section 11.15.
Section 11.12 Special Notices to the Rating Agencies.
(a) The Depositor shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has notice:
(i) any amendment to this Agreement pursuant to Section 11.03;
(ii) any Assignment by the Master Servicer of its rights hereunder
or delegation of its duties hereunder;
(iii) the occurrence of any Event of Default described in Section
6.14;
(iv) any notice of termination given to the Master Servicer pursuant
to Section 6.14 and any resignation of the Master Servicer hereunder;
(v) the appointment of any successor to any Master Servicer pursuant
to Section 6.14;
(vi) the making of a final payment pursuant to Section 7.02; and
(vii) any termination of the rights and obligations of any Servicer
under the applicable Servicing Agreement.
(b) All notices to the Rating Agencies provided for this Section shall be
in writing and sent by first class mail, telecopy or overnight courier, as
follows:
If to Moody's, to:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: Residential Mortgages
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If to S&P, to:
Standard & Poor's Ratings Service,
a Division of The McGraw-Hill
Companies, Inc.
55 Water Street
New York, New York 10041
Attention: Residential Mortgages
If to Fitch Ratings, to:
Fitch, Inc.
One State Street Plaza
New York, New York 10004
Attention: Residential Mortgages
(c) The Securities Administrator shall provide or make available to the
Rating Agencies reports prepared pursuant to Section 4.02. In addition, the
Securities Administrator shall, at the expense of the Trust Fund, make available
to each Rating Agency such information as such Rating Agency may reasonably
request regarding the Certificates or the Trust Fund, to the extent that such
information is reasonably available to the Securities Administrator.
Section 11.13 Conflicts.
To the extent that the terms of this Agreement conflict with the terms of
any Servicing Agreement, the related Servicing Agreement shall govern.
Section 11.14 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, and all of which together shall constitute
one and the same instrument.
105
Section 11.15 No Petitions.
The Trustee and the Master Servicer, by entering into this Agreement,
hereby covenant and agree that they shall not at any time institute against the
Depositor, or join in any institution against the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to this Agreement or any of the
documents entered into by the Depositor in connection with the transactions
contemplated by this Agreement.
106
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers hereunto duly authorized as of the
day and year first above written.
SEQUOIA RESIDENTIAL FUNDING, INC.,
as Depositor
By: /s/ John H. Isbrandtsen
-----------------------------------
Name: John H. Isbrandtsen
Title: Vice President
HSBC BANK USA,
as Trustee
By: /s/ Todd Niemy
-----------------------------------
Name: Todd Niemy
Title: Vice President
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Master Servicer
By: /s/ Peter J. Masterman
-----------------------------------
Name: Peter J. Masterman
Title: Vice President
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Securities Administrator
By: /s/ Stacey Wainwright
-----------------------------------
Name: Stacey Wainwright
Title: Assistant Vice President
107
Solely for purposes of Section 2.04,
accepted and agreed to by:
REDWOOD TRUST, INC.
By: /s/ John H. Isbrandtsen
-----------------------------------
Name: John H. Isbrandtsen
Title: Authorized Signatory
Solely for purposes of Section 2.04
accepted and agreed to by:
RWT HOLDINGS, INC.
By: /s/ John H. Isbrandtsen
-----------------------------------
Name: John H. Isbrandtsen
Title: Authorized Signatory
108
EXHIBIT A
FORMS OF CERTIFICATES
EXHIBIT B
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn, deposes and
says:
1. That he [she] is [title of officer] ________________________ of
[name of Purchaser] _________________________________________ (the
"Purchaser"), a _______________________ [description of type of
entity] duly organized and existing under the laws of the [State of
__________] [United States], on behalf of which he [she] makes this
affidavit.
2. That the Purchaser's Taxpayer Identification Number is [ ].
3. That the Purchaser is not a "disqualified organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986,
as amended (the "Code") and will not be a "disqualified
organization" as of [date of transfer], and that the Purchaser is
not acquiring a Residual Certificate (as defined in the Agreement)
for the account of, or as agent (including a broker, nominee, or
other middleman) for, any person or entity from which it has not
received an affidavit substantially in the form of this affidavit.
For these purposes, a "disqualified organization" means the United
States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or
instrumentality of any of the foregoing (other than an
instrumentality if all of its activities are subject to tax and a
majority of its board of directors is not selected by such
governmental entity), any cooperative organization furnishing
electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), any "electing
large partnership" within the meaning of Section 775 of the Code, or
any organization (other than a farmers' cooperative described in
Code Section 521) that is exempt from federal income tax unless such
organization is subject to the tax on unrelated business income
imposed by Code Section 511.
4. That the Purchaser either (x) is not, and on __________________
[date of transfer] will not be, 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
Code, the trustee of any such plan or a person acting on behalf of
any such plan or investing the assets of any such plan to acquire a
Residual Certificate; (y) is an insurance company that is purchasing
the Certificate with funds contained in an "insurance company
general account" as defined in Section V(e) of Prohibited
Transaction Class Exemption ("PTCE") 95-
B-1
60 and the purchase and holding of the Certificate are covered under
Section I and III of PTCE 95-60; or (z) herewith delivers to the
Trustee and the Certificate Registrar an opinion of counsel (a
"Benefit Plan Opinion") satisfactory to the Trustee and the
Certificate Registrar, and upon which the Trustee and the
Certificate Registrar shall be entitled to rely, to the effect that
the purchase or holding of such Residual Certificate by the Investor
will not result in the assets of the Trust Fund being deemed to be
plan assets and subject to the prohibited transaction provisions of
ERISA or the Code and will not subject the Trustee, the Securities
Administrator, the Master Servicer 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 Certificate Registrar.
5. That the Purchaser hereby acknowledges that under the terms of the
Pooling and Servicing Agreement dated as of July 1, 2002 (the
"Agreement"), by and among Sequoia Residential Funding, Inc., as
Depositor, Wells Fargo Bank Minnesota, National Association, as
Master Servicer and as Securities Administrator and HSBC Bank USA,
as Trustee with respect to Sequoia Mortgage Trust 8 Mortgage
Pass-Through Certificates, no transfer of the Residual Certificates
shall be permitted to be made to any person unless the Certificate
Registrar and Trustee have received a certificate from such
transferee containing the representations in paragraphs 3 and 4
hereof.
6. That the Purchaser does not hold REMIC residual securities as
nominee to facilitate the clearance and settlement of such
securities through electronic book-entry changes in accounts of
participating organizations (such entity, a "Book-Entry Nominee").
7. That the Purchaser does not have the intention to impede the
assessment or collection of any federal, state or local taxes
legally required to be paid with respect to such Residual
Certificate.
8. That the Purchaser will not transfer a Residual Certificate to any
person or entity (i) as to which the Purchaser has actual knowledge
that the requirements set forth in paragraph 3, paragraph 6 or
paragraph 10 hereof are not satisfied or that the Purchaser has
reason to believe does not satisfy the requirements set forth in
paragraph 7 hereof, and (ii) without obtaining from the prospective
Purchaser an affidavit substantially in this form and providing to
the Trustee and the Certificate Registrar a written statement
substantially in the form of Exhibit C to the Agreement.
9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of
any cash flows generated by the interest and that it intends to pay
taxes associated with holding such Residual Certificate as they
become due.
B-2
10. That the Purchaser (i) is not a Non-U.S. Person or (ii) is a
Non-U.S. Person that holds a Residual Certificate in connection with
the conduct of a trade or business within the United States and has
furnished the transferor, the Trustee and the Certificate Registrar
with an effective Internal Revenue Service Form W-8ECI (Certificate
of Foreign Person's Claim for Exemption From Withholding on Income
Effectively Connected With the Conduct of a Trade or Business in the
United States) or successor form at the time and in the manner
required by the Code or (iii) is a Non-U.S. Person that has
delivered to the transferor, the Trustee and the Certificate
Registrar an opinion of a nationally recognized tax counsel to the
effect that the transfer of such Residual Certificate to it is in
accordance with the requirements of the Code and the regulations
promulgated thereunder and that such transfer of a Residual
Certificate will not be disregarded for federal income tax purposes.
"Non-U.S. Person" means an individual, corporation, partnership or
other person other than (i) a citizen or resident of the United
States; (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any state
thereof, including for this purpose, the District of Columbia; (iii)
an estate that is subject to U.S. federal income tax regardless of
the source of its income; (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 trustees
have authority to control all substantial decisions of the trust;
and, (v) to the extent provided in Treasury regulations, certain
trusts in existence on June August 20, 1996 that are treated as
United States persons prior to such date and elect to continue to be
treated as United States persons.
11. The Purchaser will not cause income from the Residual Certificate to
be attributable to a foreign permanent establishment or fixed base
of the Purchaser or another U.S. taxpayer.
12. That the Purchaser agrees to such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the
restrictions on transfer of any Residual Certificate to such a
"disqualified organization," an agent thereof, a Book-Entry Nominee,
or a person that does not satisfy the requirements of paragraph 7
and paragraph 10 hereof.
13. That the Purchaser consents to the designation of the Class LTR
Holder as its agent to act as "tax matters person" of the Trust Fund
pursuant to the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[title of officer] this _____ day of __________, 20__.
______________________________________
[name of Purchaser]
B-3
By:___________________________________
Name:
Title:
Personally appeared before me the above-named [name of officer]
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the [title of officer] _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.
Subscribed and sworn before me this _____ day of __________ 20__.
NOTARY PUBLIC
______________________________________
COUNTY OF_____________________________
STATE OF______________________________
My commission expires the _____ day of __________ 20__.
B-4
EXHIBIT C
RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
______________________________________
Date
Re: Sequoia Mortgage Trust 8
Mortgage Pass-Through Certificates
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.
Very truly yours,
______________________________________
Name:
Title:
C-1
EXHIBIT D
FORM OF CUSTODY AGREEMENT
D-1
EXHIBIT E
LIST OF SERVICING AGREEMENTS
1. The Mortgage Loan Flow Purchase, Sale & Servicing Agreement among Redwood
Trust, Inc. ("Redwood"), Cendant Mortgage Corporation and Bishop's Gate
Residential Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust), dated June 27, 2001, and the Additional Collateral Servicing
Agreement between Redwood and Cendant Mortgage Corporation, dated July 27,
2001, each as modified by the related Acknowledgements.
2. The Master Servicing Agreement between Redwood and Morgan Stanley Dean
Witter Credit Corporation, dated August 1, 2001, as modified by the
related Acknowledgements.
3. The Mortgage Loan Flow Purchase, Sale and Servicing Agreement, dated as of
February 1, 2002, between Redwood and GreenPoint Mortgage Funding, Inc.,
as amended, and as modified by the related Acknowledgements.
E-1
EXHIBIT F
LIST OF PURCHASE AGREEMENTS
1. The Master Mortgage Loan Purchase Agreement, between Greenwich Capital
Financial Products, Inc. ("Greenwich") and Merrill Lynch Credit
Corporation ("Merrill Lynch"), dated as of May 13, 1997, as amended or
modified to the date hereof, and the Assignment, Assumption and
Recognition Agreement, dated as of May 30, 2002, among Merrill Lynch,
Greenwich, Redwood Trust, Inc. ("Redwood") and Cendant Mortgage
Corporation.
2. The Master Mortgage Loan Purchase Agreement between Redwood and Morgan
Stanley Dean Witter Credit Corporation, dated August 1, 2001, as modified
by the related Acknowledgements.
3. The Mortgage Loan Flow Purchase, Sale and Servicing Agreement, dated as of
February 1, 2002, between Redwood and GreenPoint Mortgage Funding, Inc.,
as amended, and as modified by the related Acknowledgements.
F-1
EXHIBIT G
LIST OF LIMITED PURPOSE SURETY BOND
G-1
EXHIBIT H
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Sequoia Mortgage Trust 8
Mortgage Pass-Through Certificates
Reference is hereby made to the Pooling and Servicing Agreement, dated as
of July 1, 2002 (the "Pooling and Servicing Agreement"), by and among Sequoia
Residential Funding, Inc., as Depositor, Wells Fargo Bank Minnesota, National
Association, as Master Servicer and as Securities Administrator and HSBC Bank
USA, as Trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Pooling and Servicing Agreement.
This letter relates to $__________ initial Certificate Balance of Class __
Certificates which are held in the form of Definitive Certificates registered in
the name of __________ (the "Transferor"). The Transferor has requested a
transfer of such Definitive Certificates for Definitive Certificates of such
Class registered in the name of [insert name of transferee].
In connection with such request, and in respect of such Certificates, the
Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Pooling and
Servicing Agreement and the Certificates and (ii) Rule 144A under the Securities
Act to a purchaser that the Transferor reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for its own
account or for the account of a "qualified institutional buyer," which purchaser
is aware that the sale to it is being made in reliance upon Rule 144A, in a
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Underwriters and the Depositor.
______________________________________
[Name of Transferor]
By:___________________________________
Name:
Title:
Dated: ___________, ____
H-1
EXHIBIT I
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
_______________________
Date
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of Sequoia Mortgage Trust 8 Mortgage Pass-Through Certificates (the
"Privately Offered Certificates") of Sequoia Residential Funding, Inc. (the
"Depositor"), we confirm that:
(1) We understand that the Privately Offered Certificates have not been, and
will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we should
sell any Privately Offered Certificates within two years of the later of
the date of original issuance of the Privately Offered Certificates or the
last day on which such Privately Offered Certificates are owned by the
Depositor or any affiliate of the Depositor we will do so only (A) to the
Depositor, (B) to "qualified institutional buyers" (within the meaning of
Rule 144A under the Securities Act) in accordance with Rule 144A under the
Securities Act ("QIBs"), (C) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act, or (D) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act that is not a QIB (an
"Institutional Accredited Investor") which, prior to such transfer,
delivers to the Certificate Registrar under the Pooling and Servicing
Agreement, dated as of July 1, 2002, by and among Sequoia Residential
Funding, Inc., as Depositor, Wells Fargo Bank Minnesota, National
Association, as Master Servicer and as Securities Administrator and HSBC
Bank USA, as Trustee, a signed letter in the form of this letter; and we
further agree, in the capacities stated above, to provide to any person
purchasing any of the Privately Offered Certificates from us a notice
advising such purchaser that resales of the Privately Offered Certificates
are restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited Investor, we
will be required to furnish to the Certificate Registrar a certification
from such transferee in the form hereof to confirm that the proposed sale
is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. We
further understand that the Privately Offered Certificates purchased by us
will bear a legend to the foregoing effect.
I-1
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection with,
any distribution in violation of the Securities Act. We have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Privately Offered Certificates, and we and any account for which we are
acting are each able to bear the economic risk of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or for
one or more accounts (each of which is an Institutional Accredited
Investor) as to each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to make
our investment decision.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that in
accordance with ERISA, the Code and the Exemption, no Plan and no person
acting on behalf of such a Plan may acquire such Certificate except in
accordance with Section 3.03(d) of the Pooling and Servicing Agreement.
Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement.
I-2
You are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
______________________________________
[Purchaser]
By:___________________________________
Name:
Title:
I-3
EXHIBIT J
FORM OF ERISA TRANSFER AFFIDAVIT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of ______________
(the "Investor"), a [corporation duly organized] and existing under the
laws of __________, on behalf of which he makes this affidavit.
2. The Investor either (x) is not, and on ___________ [date of
transfer] will not be, an employee benefit plan subject to Section 406 or
Section 407 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code"), the trustee of any such plan or a person acting
on behalf of any such plan or investing the assets of any such plan; (y)
if the Certificate has been the subject of an ERISA-Qualifying
Underwriting, is an insurance company that is purchasing the Certificate
with funds contained in an "insurance company general account" as defined
in Section V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60
and the purchase and holding of the Certificate are covered under Section
I and III of PTCE 95-60; or (z) herewith delivers to the Certificate
Registrar an opinion of counsel (a "Benefit Plan Opinion") satisfactory to
the Certificate Registrar, and upon which the Certificate Registrar shall
be entitled to rely, to the effect that the purchase or holding of such
Certificate by the Investor will not result in the assets of the Trust
Fund being deemed to be plan assets and subject to the prohibited
transaction provisions of ERISA or the Code and will not subject the
Trustee, the Master Servicer, the Certificate Registrar, the Securities
Administrator 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 Trust Fund, the Trustee,
the Certificate Registrar, the Securities Administrator or the Depositor.
3. The Investor hereby acknowledges that under the terms of the
Pooling and Servicing Agreement dated as of July 1, 2002 (the
"Agreement"), by and among Sequoia Residential Funding, Inc., as
Depositor, Wells Fargo Bank Minnesota, National Association, as Master
Servicer and as Securities Administrator and HSBC Bank USA, as Trustee, no
transfer of the ERISA-Restricted Certificates shall be permitted to be
made to any person unless the Certificate Registrar has received a
certificate from such transferee in the form hereof.
J-1
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to proper authority, by its duly authorized officer,
duly attested, this ____ day of _______________ 20___.
______________________________________
[Investor]
By:__________________________________
Name:
Title:
ATTEST:
______________________________________
STATE OF )
) ss.:
COUNTY OF )
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 Investor, and
acknowledged that he executed the same as his free act and deed and the
free act and deed of the Investor.
Subscribed and sworn before me this _____ day of _________ 20___.
______________________________________
NOTARY PUBLIC
My commission expires the
_____day of __________, 20___.
J-2
EXHIBIT K
FORM OF LETTER OF REPRESENTATIONS
WITH THE DEPOSITORY TRUST COMPANY
K-1
SCHEDULE A
MORTGAGE LOAN SCHEDULE
SCHEDULE B-1
MORTGAGE LOAN REPRESENTATIONS
AND WARRANTIES OF THE INITIAL SELLER
PLEDGED MORTGAGE REPRESENTATIONS AND WARRANTIES
I. WITH RESPECT TO MORTGAGE LOANS PURCHASED UNDER THE MASTER MORTGAGE LOAN
PURCHASE AGREEMENT, BETWEEN GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
("GREENWICH") AND MERRILL LYNCH CREDIT CORPORATION ("MERRILL LYNCH"),
DATED AS OF MAY 13, 1997, AS AMENDED OR MODIFIED TO THE DATE HEREOF (THE
"MASTER MORTGAGE LOAN PURCHASE AGREEMENT"), AND THE ASSIGNMENT, ASSUMPTION
AND RECOGNITION AGREEMENT, DATED AS OF MAY 30, 2002, AMONG GREENWICH, AS
ASSIGNOR, MERRILL LYNCH, REDWOOD TRUST, INC. AS ASSIGNEE ("REDWOOD"), AND
CENDANT MORTGAGE CORPORATION (THE "ASSIGNMENT," AND TOGETHER WITH THE
MASTER MORTGAGE LOAN PURCHASE AGREEMENT, THE "MASTER PURCHASE AGREEMENT").
With respect to each Mortgage Loan, Redwood Trust hereby makes the
following representations and warranties. Such representations and warranties
speak as of respective purchase dates set forth in Exhibit I to the Assignment,
Assumption and Recognition Agreement dated July 30, 2002, between Redwood, RWT
Holdings, Inc. and Merrill Lynch (collectively, the "Purchase Date") with
respect to Pledged Mortgages (as such capitalized terms are defined in the
Pooling and Servicing Agreement), unless otherwise indicated. Capitalized terms
are as defined in this Schedule B-1 or in the Master Purchase Agreement.
(i) The information set forth in the Master Mortgage Loan Purchase
Agreement and the Mortgage Loan Schedule is true and correct in all material
respects, and does not omit any material fact necessary to make the statements
contained therein not misleading;
(ii) As of the Purchase Date, the Mortgage Loan is not delinquent in
payment more than 29 days and the Mortgage Loan nor the Additional Collateral
has not been dishonored; the Mortgage Loan has never been delinquent in payment
for more than 59 days and has not more than once during the twelve months
preceding the Cut-Off Date been delinquent in payment for more than 30 days;
there are no material defaults under the terms of the Mortgage Loan; Redwood has
not advanced funds, or induced, solicited or knowingly received any advance of
funds from a party other than the owner of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the payment of any amount required by the
Mortgage Loan;
(iii) To the best of Redwood's knowledge, there are no delinquent taxes or
other outstanding charges affecting the related Mortgaged Property which would
permit a taxing authority to initiate foreclosure proceedings against the
Mortgaged Property;
(iv) The terms of the Mortgage Note, the Mortgage, and the Additional
Collateral have not been impaired, waived, altered or modified in any respect,
except by written instruments contained in the Mortgage File, the substance of
which waiver, alteration or modification is reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement which assumption agreement is part of
the Mortgage File and the terms of which are reflected in the Mortgage Loan
Schedule;
(v) The Mortgagor has not asserted that the Mortgage Note, the Mortgage,
or the Additional Collateral are 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 and the Mortgage, or the exercise of
any right thereunder, render 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 to the best of Redwood's knowledge, no such right of
rescission, set-off, counterclaim or defense has been asserted by any Person
other than the obligor with respect thereto;
(vi) All buildings upon the Mortgaged Property are to be insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customarily included in extended coverage in the
area where the Mortgaged Property is located, pursuant to standard hazard
insurance policies in an amount which is equal to the lesser of (A) the
replacement cost of the improvements securing such Mortgage Loan or (B) the
principal balance owing on such Mortgage Loan. To the best knowledge of Redwood,
all such hazard insurance policies are in effect. On the date of origination,
such standard hazard policies contained a standard mortgagee clause naming
Redwood or the originator of the Mortgage Loan and their respective successors
in interest as mortgagee and, to the best knowledge of Redwood, such clause is
till in effect and, to the best of Redwood's knowledge, all premiums due thereon
have been paid. If the Mortgaged Property is located in an area identified by
the Federal Emergency Management Agency as having special flood hazards under
the National Flood Insurance Act of 1994, as amended, such Mortgaged Property is
covered by flood insurance. The mortgage obligates the Mortgagor thereunder to
maintain all such insurance at 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;
(vii) At the time of origination of such Mortgage Loan and thereafter, all
requirements of any federal, state or local law including, without limitation,
usury, truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws required to be complied
with by Redwood as the originator of the Mortgage Loan and applicable to the
Mortgage Loan and the Additional Collateral have been complied with in all
material respects;
(viii) The Mortgage has not been satisfied as of the Purchase Date,
canceled or subordinated, in whole, or rescinded, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part (except for
a release that does not materially impair the security of the Mortgage Loan or a
release the effect of which is reflected in the Loan-to-Value Ratio for the
Mortgage Loan as set forth in the Mortgage Loan Schedule), nor to the best of
Redwood's knowledge has any instrument been executed that would effect any such
release, cancellation, subordination or rescission;
(ix) Ownership of the Mortgaged Property is held in fee simple (except for
Mortgage Loans as to which the related land is held in a leasehold which extends
at least five years beyond the maturity date of the Mortgage Loan). Except as
permitted by the fourth sentence of this paragraph (ix), the Mortgage is a
valid, subsisting and enforceable first lien on the Mortgaged Property,
including all buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems affixed
to such buildings, and all
B-1-2
additions, alterations and replacements made at any time with respect to the
foregoing securing the Mortgage Note's original principal balance. The Mortgage
and the Mortgage Note do not contain any evidence on their face of any security
interest or other interest or right thereto. Such lien is free and clear of all
adverse claims, liens and encumbrances having priority over the first lien of
the Mortgage subject only to (1) the lien of non-delinquent current real
property taxes and assessments not yet due and payable, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording which are acceptable to mortgage
lending institutions generally, or which are specifically referred to in the
lender's title insurance policy delivered to the originator of the Mortgage Loan
and either (A) which are referred to or otherwise considered in the appraisal
made for the originator of the Mortgage Loan, or (B) which do not in the
aggregate adversely affect the appraised value of the Mortgaged Property as set
forth in such appraisal, and (3) other matters to which like properties are
commonly subject which do not in the aggregate 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,
subsisting and enforceable first lien and first priority security interest on
the property described therein;
(x) The Mortgage Note is not subject to a third party's security interest
or other rights or interest therein;
(xi) The Mortgage Note and the related Mortgage are genuine and are the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms subject to bankruptcy, insolvency and other laws of
general application affecting the rights of creditors. 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. The Mortgage
Note and the Mortgage have been duly and properly executed by other such related
parties. No fraud was committed in the origination of the Mortgage Loan, and to
the best of Redwood's knowledge of the documents, instruments and agreements
submitted for loan underwriting contain no untrue statement of material fact or
omit to state a material fact required to be stated or necessary to make the
information and statements therein not misleading. The proceeds of the Mortgage
Loan have been fully disbursed and there is no requirement for future advances
thereunder, and any and all requirements as to completion of any on-site
improvements and as to disbursements of any escrow funds therefor have been
complied with;
(xii) Immediately prior to the Purchase Date, Redwood had good title to
and was the sole owner thereof and had full right to transfer and sell the
Mortgage Loan free and clear of any encumbrance, equity, lien, pledge, charge,
claim or security interest, including, to the best knowledge of Redwood, any
lien, claim or other interest arising by operation of law;
(xiii) Each Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy or insurance acceptable to
FNMA or FHLMC, issued by a title insurer acceptable to FNMA or FHLMC and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring Redwood (subject to the exceptions contained in paragraph
(ix)(1), (2) and (3) above), its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan. Redwood is the sole insured of
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such lender's title insurance policy, such title insurance policy has been duly
and validly endorsed to the Purchaser or the assignment to the Purchaser of
Redwood's interest therein does not require the consent of or notification to
the insurer 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 the Master Mortgage Loan Purchase Agreement. To the best of
Redwood's knowledge, no claims have been made under such lender's title
insurance policy, and no 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;
(xiv) There is no default, breach, violation or event of acceleration
existing under the Mortgage, the related Mortgage Note, or the Additional
Collateral 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 permitting acceleration, except for any Mortgage Loan payment
which is not late by more than 30 days, and Redwood has not waived any default,
breach, violation or event permitting acceleration;
(xv) As of the date of origination or purchase by Redwood there were no
mechanics' or similar liens or claims which had been filed for work, labor or
material (and, to the best of Redwood's knowledge, 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;
(xvi) All improvements subject to the Mortgage lay wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) and no improvements on
adjoining properties encroach upon the Mortgaged Property unless acceptable to
FNMA pursuant to the FNMA Seller's Guide or those which are insured against by
the title insurance policy referred to in paragraph (xiii) above and to the best
of Redwood's knowledge all improvements on the property comply with all
applicable zoning and subdivision laws and ordinances;
(xvii) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company, or
a similar institution which at the time of origination was supervised by a
federal or state authority or was a mortgage approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act. Each Mortgage Loan was underwritten in accordance with the
Underwriting Guide as in effect at the time of origination, except to the extent
the Assignor believed at such time that a variance from such Underwriting Guide
was warranted by compensating factors with respect to such Mortgage Loan. The
Mortgage contains the usual and customary provision of the Assignor at the time
of origination for the acceleration of the payment of the unpaid principal
balance of the Mortgage Loan if the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder;
(xviii) The Mortgaged Property at origination or acquisition was and, to
the best of Redwood's knowledge, currently is free from material damage and
waste and at origination there was, and currently is, no proceeding pending for
the total or partial condemnation thereof;
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(xix) The related Mortgage contains 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, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale or judicial foreclosure, and (2) otherwise by
judicial foreclosure. Redwood has no knowledge of any homestead or other
exemption available to the Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(xx) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act 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 to the trustee under the deed of trust,
except in connection with a trustee's sale or attempted sale after default by
the Mortgagor;
(xxi) With respect to each Mortgage Loan, there is an appraisal on a
FNMA-approved form (or a narrative residential appraisal) of the related
Mortgage Property signed prior to the approval of such Mortgage Loan application
by a qualified appraiser, appointed by Redwood or the originator of such
Mortgage Loan, as appropriate, who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both satisfy the requirements of FNMA or
FHLMC as in effect on the date the Mortgage Loan was originated;
(xxii) No Mortgage Loan contains "subsidized buydown" or "graduated
payment" features;
(xxiii) The Mortgaged Property is a single-family (one- to four-unit)
dwelling residence erected thereon, or an individual condominium unit in a
condominium, a cooperative, or an individual unit in a planned unit development
or in a de minimis planned unit development. No such residence is a mobile home
or a manufactured dwelling which is not permanently attached to the land. With
respect to any Mortgage Property which is a unit in a co-operative, Redwood
shall have provided Purchaser with additional representations and warranties
concerning co-operatives which are mutually acceptable to the parties;
(xxiv) The Mortgage Loans were selected from among the outstanding
adjustable rate one-to four-unit family mortgage loans in Redwood's portfolio
and such selection was not made in a manner so as to affect adversely the
interests of the Purchaser;
(xxv) The Mortgage is not in default and all taxes, government
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid,
or with respect to those Mortgage Loans with Escrow Accounts, an escrow of funds
has been established in an amount sufficient to pay for every such item which
has been assessed but is not yet due and payable. Redwood has not advanced
funds, or induced, or solicited 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, except for interest accruing from the date of the Mortgage
Note of date or disbursement of the Mortgage Loan
B-1-5
proceeds, whichever is greater, to the day which precedes by one month the date
the first installment of principal and interest were due and payable under the
Mortgage Note;
(xvi) Redwood has no knowledge of any circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor, or the
Mortgagor's credit standing that can reasonably be expected to cause private
institutional investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan;
(xvii) The Mortgagor has not notified Redwood, and Redwood has no
knowledge of any relief requested or allowed to the Mortgagor under the
Soldiers' and Sailors' Civil Relief Act;
(xviii) Redwood has no knowledge of any toxic or hazardous substances
affecting the Mortgaged Property or any violation of any local, state, or
federal environmental law, rule, or regulation. Redwood has no knowledge of any
pending action or proceeding directly involving any Mortgaged Property in which
compliance with any environmental law, rule, or regulation is an issue;
(xix) The origination, collection and other servicing practices used by
Assignor with respect to the Mortgage Loan have been in all material respects in
compliance with Assignor's procedures, accepted servicing practices, applicable
laws and regulations. All Mortgage Interest Rate adjustments have been made in
strict compliance with applicable state and federal law and the terms of the
related Mortgage Note; and
(xxi) With respect to those Mortgage Loans with Escrow Accounts, all
Escrow Payments have been collected in full compliance with applicable state and
federal law. An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due Redwood have been capitalized
under the Mortgage or the Mortgage Note. Any interest required to be paid
pursuant to applicable state, federal and local law has been properly paid and
credited.
B-1-6
II. MORTGAGE LOANS PURCHASED UNDER THE MASTER MORTGAGE LOAN PURCHASE AGREEMENT
DATED AS OF AUGUST 1, 2001 BETWEEN REDWOOD TRUST, INC. ("REDWOOD TRUST")
AND MORGAN STANLEY DEAN WITTER CREDIT CORPORATION (THE "SELLER/SERVICER")
(THE "MORGAN AGREEMENT").
With respect to each Mortgage Loan, Redwood Trust hereby makes the
following representations and warranties. Such representations and warranties
speak as of the respective purchase dates set forth in Exhibit I to the
Assignment, Assumption and Recognition Agreement dated July 30, 2002, between
Redwood, RWT Holdings, Inc. and Morgan Stanley Dean Witter Credit Corporation
(collectively, the "Purchase Date") with respect to Pledged Mortgages (as such
capitalized terms are defined in the Pooling and Servicing Agreement), unless
otherwise indicated. Capitalized terms are as defined in this Schedule B-1 or in
the Morgan Agreement.
(i) The information set forth in the Mortgage Loan Schedule is true and
correct in all material respects;
(ii) As of the Purchase Date, the Mortgage Loan is not delinquent more
than 29 days, the Mortgage Loan has never been delinquent for more than 59 days
and the Mortgage Loan has not been dishonored. To Redwood Trust's knowledge,
there are no material defaults under the terms of the Mortgage Loan. The
Seller/Servicer has not advanced funds, or induced or, solicited any advance of
funds from a party other than the owner of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the payment of any amount required by the
Mortgage Loan;
(iii) With respect to those Mortgage Loans which are required to deposit
funds into an escrow account for payment of taxes, assessments, insurance
premiums and similar items as they become due, all escrow deposits have been
collected, are under the control of the Seller/Servicer, and have been applied
by the Seller/Servicer to the payment of such items in a timely fashion, in
accordance with such Mortgage. There exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
met. With respect to those Mortgage Loans for which escrow deposits are not
required, to Redwood Trust's knowledge, there are no delinquent taxes or other
outstanding charges affecting the related Mortgaged Property which constitute a
lien on the related Mortgaged Property;
(iv) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments contained in the Trustee Mortgage File, approved, if necessary, by
the insurer under any Primary Mortgage Insurance Policy and recorded in all
places necessary to maintain the first priority of the lien, the substance of
which waiver, alteration or modification is reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except by
operation of law or in connection with an assumption agreement which assumption
agreement is part of the Trustee Mortgage File and the terms of which are
reflected in the Mortgage Loan Schedule;
(v) Neither the Mortgage Note nor the Mortgage is 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 and the
Mortgage, or the exercise of any right thereunder, render 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, to Redwood
Trust's knowledge, no
B-1-7
such right of recission, set-off, counterclaim or defense has been asserted by
any Person with respect thereto;
(vi) All buildings upon the Mortgaged Property are required to be insured
by a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customarily included in extended coverage
in the area where the Mortgaged Property is located, pursuant to standard
property insurance policies in compliance with the Seller/Servicer's policies as
from time to time in effect. On the date of origination, all such property
policies were in effect, and contained a standard mortgage clause naming the
Seller/Servicer or the originator of the Mortgage Loan and their respective
successors in interest as mortgagee; to the knowledge of Redwood Trust, such
policy and clause or a replacement is in effect and, to Redwood Trust's
knowledge, all premiums due thereon have been paid. If the Mortgaged Property is
located in an area identified by the Federal Emergency Management Agency as
having special flood hazards under the National Flood Insurance Act of 1994, as
amended, such Mortgaged Property is covered by flood insurance in the amount
required under the National Flood Insurance Act of 1994. The Mortgage obligates
the Mortgagor to maintain such insurance and authorizes the holder of the
Mortgage to maintain such insurance at Mortgagor's cost and expense should the
Mortgagor fail to do so and to seek reimbursement therefor from the Mortgagor;
(vii) At the time of origination of such Mortgage Loan and thereafter, all
requirements of any federal or state law, including usury, truth-in-lending,
real estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws required to be complied with by the
Seller/Servicer as the originator of the Mortgage Loan and applicable to the
Mortgage Loan have been complied with in all material respects;
(viii) The Mortgage has not been satisfied as of the Purchase Date,
canceled or subordinated, in whole, or rescinded, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part (except for
a release that does not materially impair the security of the Mortgage Loan or a
release the effect of which is reflected in the Loan-to-Value Ratio for the
Mortgage Loan as set forth in the Mortgage Loan Schedule);
(ix) Ownership of the Mortgaged Property is held in fee simple or
leasehold estate. With respect to Mortgage Loans that are secured by a leasehold
estate: (i) the lease is valid, in full force and effect, and conforms to all of
Fannie Mae's requirements for leasehold estates; (ii) all rents and other
payments due under the lease have been paid; (iii) the lessee is not in default
under any provision of the lease; (iv) the term of the lease exceeds the
maturity date of the related Mortgage Loan by at least five (5) years; and (v)
the terms of the lease provide a Mortgagee with an opportunity to cure any
defaults. Except as permitted by the fourth sentence of this paragraph (ix), the
Mortgage is a valid, subsisting and enforceable first lien on the Mortgaged
Property securing the Mortgage Note's original principal balance. Such lien is
free and clear of all adverse claims, liens and encumbrances having priority
over the first lien of the Mortgage, subject only to (1) the lien of
non-delinquent current real property taxes and assessments not yet due and
payable, (2) liens, covenants, conditions and restrictions, rights of way,
easements and other matters reflected in the public record as of the date of
recording which are acceptable to mortgage lending institutions generally, or
which are referred to (specifically or generally) in the lender's title
insurance policy delivered to the originator of the Mortgage Loan and either (A)
which are referred to or otherwise considered in such title insurance policy or
the
B-1-8
appraisal made for the originator of the Mortgage Loan, or (B) which do not in
the aggregate adversely affect the appraised value of the Mortgaged Property as
set forth in such appraisal, and (3) other matters to which like properties are
commonly subject which do not in the aggregate 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. With
respect to each Cooperative Loan, the security instruments create a valid,
enforceable and subsisting first priority security interest in the Cooperative
Apartment securing the related Mortgage Note subject only to (a) the lien of the
related cooperative for unpaid assessments representing the Mortgagor's pro rata
share of payments for a blanket mortgage, if any, current and future real
property taxes, insurance premiums, maintenance fees and other assessments, and
(b) other matters to which the collateral is commonly subject which do not
materially interfere with the benefits of the security intended to be provided;
provided, however, that the related proprietary lease for the Cooperative
Apartment may be subordinated or otherwise subject to the lien of a Mortgage on
the cooperative building;
(x) The Mortgage Note and the related Mortgage are genuine and are in
proper form to constitute a legal, valid and binding obligation of the maker
thereof in all material respects, enforceable in accordance with its terms,
subject to bankruptcy, insolvency and other laws of general application
affecting the rights of creditors, and general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law), and assuming that the maker thereof had the legal capacity to enter into
the Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage.
The Mortgage Note and the Mortgage have been duly and properly executed by such
parties. An obligor of the debt evidenced by the Mortgage Note is a natural
person. The proceeds of the Mortgage Loan have been fully disbursed and there is
no requirement for future advances thereunder, and any and all requirements in
the Mortgage as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with;
(xi) Redwood Trust has good title to, and the full right to transfer and
sell, the Mortgage Loan and the Mortgage Note free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest including, to the
knowledge of Redwood Trust, any lien, claim or other interest arising by
operation of law;
(xii) The Mortgage Loan is covered by either an ALTA lender's title
insurance policy or other generally acceptable form of policy or insurance
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 paragraph (ix) (1), (2) and (3) above) to the Seller/Servicer, its successors
and assigns, the first priority lien of the Mortgage in the original principal
amount of the Mortgage Loan. The Seller/Servicer is the sole insured of such
lender's title insurance policy, such title insurance policy has been duly and
validly endorsed to the Trustee (as defined in the Pooling and Servicing
Agreement) or the assignment to such Trustee of the Seller/Servicer's interest
does not require the consent of or notification to the insurer 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 the Morgan
Agreement. To Redwood Trust's knowledge, no claims have been made under such
lender's title insurance policy, and no 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;
B-1-9
(xiii) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and, to Redwood Trust's
knowledge, 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 permitting acceleration, except for any Mortgage Loan Payment
which is not late by more than 30 days, and the Seller/Servicer has not waived
any default, breach, violation or event permitting acceleration;
(xiv) To Redwood Trust's knowledge, all material improvements subject to
the Mortgage, lie wholly within the boundaries and building restrictions lines
of the Mortgaged Property (and wholly within the project with respect to a
condominium unit) and no improvements on adjoining properties materially
encroach upon the Mortgaged Property, except those which are insured against by
the title insurance policy referred to in paragraph (xii) above and all
improvements on the property comply with all applicable zoning and subdivision
laws and ordinances;
(xv) The Mortgage Loan (unless designated as originated by others on any
Mortgage Loan Schedule) was originated by the Seller/Servicer (or the corporate
predecessor of the Seller/Servicer), and at the time of each such origination of
such Mortgage Loan the Seller/Servicer was (unless designated as "originated
prior to HUD approval" on any Mortgage Loan Schedule) a mortgagee approved by
the Secretary of Housing and Urban Development (the "Secretary") pursuant to
Sections 203 and 211 of the National Housing Act. Each such Mortgage Loan was
underwritten in accordance with the Underwriting Guide as in effect at the time
of origination, except to the extent the Seller/Servicer believed as such time
that a variance from such Underwriting Guide was warranted by compensating
factors. The Mortgage contains the usual and customary provision of the
Seller/Servicer, if any, in the applicable jurisdiction at the time of
origination for the acceleration of the payment of the unpaid principal balance
of the Mortgage Loan if the related Mortgaged Property is sold without the prior
consent of the Mortgagee thereunder;
(xvi) The Mortgaged Property at origination or acquisition was and, to
Redwood Trust's knowledge, is free of material damage and waste and at
origination there was, and to Redwood Trust's knowledge there is, no proceeding
pending for the total or partial condemnation thereof;
(xvii) The related Mortgage contains 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;
(xviii) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act as such, has been properly
designated and currently so serves as named in the Mortgage, and no fees or
expenses are or will become payable to the trustee under the deed of trust,
except in connection with a trustee's sale or attempted sale after default by
the Mortgagor;
(xix) With respect to the Mortgage Loan, there is an appraisal on a Fannie
Mae-approved form (or a narrative residential appraisal) of the related
Mortgaged Property that conforms to the applicable requirements of the Financial
Institutions Reform Recovery and Enforcement Act of 1989 and that was signed
prior to the approval of such Mortgage Loan application by a qualified
appraiser, appointed by the Seller/Servicer or the originator of such
B-1-10
Mortgage Loan, as appropriate, who has no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of such Mortgage
Loan;
(xx) The Mortgage Loan contains no "subsidized buydown" or graduated
payment features;
(xxi) The Mortgaged Property has a single-family (one to four-unit)
dwelling residence erected thereon, or is an individual condominium unit in a
condominium, or a Cooperative Apartment or an individual unit in a planned unit
development or in a de minimis planned unit development as defined by Fannie
Mae. No such residence is a mobile home or a manufactured dwelling which is not
permanently attached to the land;
(xxii) Except as set forth on the Mortgage Loan Schedule the Mortgage Loan
is not a Converted Mortgage Loan. The Mortgage Loan does not provide for
negative amortization;
(xxiii) The Mortgage Loan does not have an original term in excess of
thirty (30) years and one month;
(xxiv) If the Mortgage Loan is a Cooperative Loan, (a) there is no
provision in any proprietary lease which requires the Mortgagor to offer for
sale the cooperative shares owned by such Mortgagor first to the cooperative,
(b) there is no prohibition in the proprietary lease against pledging the
cooperative shares or assigning the proprietary lease, (c) to Redwood Trust's
knowledge, the Cooperative Apartment is lawfully occupied under applicable law,
and (d) to Redwood Trust's knowledge, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Cooperative Apartment and the related project have been made or obtained from
the appropriate authorities;
(xxv) There has been no fraud, material misrepresentation or deceit on the
part of any Mortgagor or any third party in connection with the Mortgage Loan
(including the application, processing, appraisal and origination) which would
cause a material economic loss to the owner of the Mortgage Loan, including, but
not limited to, material misrepresentation of such Mortgagor's income, funds on
deposit or employment;
(xxvi) The origination, collection and other servicing practices used by
the Seller/Servicer with respect to the Mortgage Loans are in compliance with
all material requirements of applicable laws and regulations;
(xxvii) The Seller/Servicer shall cause to be maintained for each Mortgage
Loan primary hazard insurance with extended coverage on the related mortgage
property in an amount equal to the lessor of (i) full replacement value of
improvements and (ii) the outstanding principal balance;
(xxviii) Redwood Trust has no knowledge of any homestead or other
exemption available to the mortgagor which would interfere with the right to
sell the mortgage property at trustee's sale or the right to foreclose the
mortgage;
(xxix) At the time of origination of such Mortgage Loan, and thereafter,
all material requirements of any federal, state or local law including usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws required to be complied with by the
Seller/Servicer as the originator of the Mortgage Loan have been complied with
in all material respects; and
B-1-11
(xxx) The Additional Collateral Mortgage Loans are insured under the terms
and provisions of the Surety Bond subject to the limitations set forth therein.
The Seller/Servicer will deliver to the Surety Bond issuer an "Assignment and
Notice of Transfer" in the form of Attachment to the Surety Bond, or any other
similar instrument required to be delivered under the Surety Bond, executed by
the Seller/Servicer and Redwood Trust, and that all other requirements for
transferring coverage under the Surety Bond in respect of such Additional
Collateral Mortgage Loans to the Trustee (as defined in the Pooling and
Servicing Agreement) shall be complied with.
B-1-12
III. WITH RESPECT TO MORTGAGE LOANS PURCHASED UNDER THE MORTGAGE LOAN FLOW
PURCHASE, SALE AND SERVICING AGREEMENT, DATED AS OF FEBRUARY 1, 2002,
BETWEEN REDWOOD TRUST AND GREENPOINT MORTGAGE FUNDING, INC. (THE "SELLER")
(THE "GREENPOINT AGREEMENT")
With respect to each Mortgage Loan, Redwood Trust hereby makes the
following representations and warranties. Such representations and warranties
speak as of the respective purchase dates set forth in Exhibit I to the
Assignment, Assumption and Recognition Agreement dated July 30, 2002, between
Redwood, RWT Holdings, Inc. and GreenPoint Mortgage Funding, Inc. (collectively,
the "Purchase Date") with respect to Pledged Mortgages (as such capitalized
terms are defined in the Pooling and Servicing Agreement), unless otherwise
indicated. Capitalized terms are as defined in this Schedule B-1 or in the
GreenPoint Agreement.
(i) The information set forth in the Mortgage Loan Schedule is true,
complete and correct in all material respects as of the Cut-Off Date;
(ii) The Mortgage creates a first lien or a first priority ownership
interest in an estate in fee simple in real property securing the related
Mortgage Note, free and clear of all adverse claims, liens and encumbrances
having priority over the first lien of the Mortgage subject only to (1) the lien
of non-delinquent current real property taxes and assessments not yet due and
payable, (2) covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording which are
acceptable to mortgage lending institutions generally and, with respect to any
Mortgage Loan for which an appraisal was made prior to the Cut-Off Date, either
(A) which are referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan, or (B) which do not adversely affect the
appraised value of the Mortgaged Property as set forth in such appraisal, and
(C) 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, subsisting and enforceable first lien and first
priority security interest on the property described therein;
(iii) The Mortgage Loan has not been delinquent thirty (30) days or more
at any time during the twelve (12) month period prior to the Cut-off Date for
such Mortgage Loan. To Redwood Trust's knowledge, there are no defaults under
the terms of the Mortgage Loan; and the Seller has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party other
than the owner of the Mortgaged Property subject to the Mortgage, directly or
indirectly, for the payment of any amount required by the Mortgage Loan;
(iv) To Redwood Trust's knowledge, there are no delinquent taxes which are
due and payable, ground rents, assessments or other outstanding charges
affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note of the related Mortgagor and the
Mortgage have not been impaired, waived, altered or modified in any respect,
except by written instruments which have been recorded to the extent any such
recordation is required by applicable law or is necessary
B-1-13
to protect the interests of the Purchaser, and which have been approved by the
title insurer and the primary mortgage insurer, as applicable, and copies of
which written instruments are included in the Mortgage File. No other instrument
of waiver, alteration or modification has been executed, and no Mortgagor has
been released, in whole or in part, from the terms thereof except in connection
with an assumption agreement, which assumption agreement is part of the Mortgage
File and the terms of which are reflected on the Mortgage Loan Schedule;
(vi) 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 and the
Mortgage, or the exercise of any right thereunder, render the Mortgage Note or
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, to Redwood Trust's knowledge, no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(vii) All buildings upon the Mortgaged Property are insured by a generally
acceptable insurer pursuant to standard hazard policies conforming to the
requirements of Fannie Mae and Freddie Mac. All such standard hazard policies
are in effect and on the date of origination contained a standard mortgagee
clause naming the Seller and its successors in interest as loss payee and such
clause is still in effect and, to Redwood Trust's knowledge, all premiums due
thereon have been paid. If the Mortgaged Property is located in an area
identified by the Federal Emergency Management Agency as having special flood
hazards under the Flood Disaster Protection Act of 1973, as amended, such
Mortgaged Property is covered by flood insurance by a generally acceptable
insurer in an amount not less than the requirements of Fannie Mae and 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 the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(viii) 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, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;
(ix) The Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, 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, release, cancellation,
subordination or rescission;
(x) The Mortgage Note and the related Mortgage are original and genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors, and the Seller has taken all action necessary to transfer such rights
of enforceability to the Purchaser. All parties to the Mortgage Note and the
Mortgage had the legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note and the Mortgage. The Mortgage Note and the
Mortgage have been duly and properly executed by such
B-1-14
parties. The proceeds of the Mortgage Note have been fully disbursed and there
is no requirement for future advances 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;
(xi) Immediately prior to the transfer and assignment to the Purchaser,
the Mortgage Note and the Mortgage were not subject to an assignment or pledge,
and the Seller had good and marketable title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;
(xii) The Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy of insurance, with all
necessary endorsements, issued by a title insurer qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring (subject to
the exceptions contained in clause (b) (1), (2) and (3) 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. Such 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, such title insurance policy has been
duly and validly endorsed to the Purchaser or the assignment to the Purchaser of
the Seller's interest therein does not require the consent of or notification to
the insurer 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 the GreenPoint Agreement. To Redwood Trust's knowledge, no
claims have been made under such lender's title insurance policy, and no 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;
(xiii) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and, to Redwood Trust's
knowledge, 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 permitting acceleration; and neither the Seller nor any prior
mortgagee has waived any default, breach, violation or event permitting
acceleration;
(xiv) To the best of Redwood Trust's knowledge, there are no mechanics, or
similar liens or claims which have been filed for work, labor or material
affecting the related Mortgaged Property which are or may be liens prior to or
equal to the lien of the related Mortgage;
(xv) To Redwood Trust's knowledge, all improvements subject to the
Mortgage lie wholly within the boundaries and building restriction lines of the
Mortgaged Property (and wholly within the project with respect to a condominium
unit) and no improvements on adjoining properties encroach upon the Mortgaged
Property except those which are insured against by the title insurance policy
referred to in clause (xii) above and all improvements on the property comply
with all applicable zoning and subdivision laws and ordinances;
(xvi) The Mortgage Loan was originated by the Seller or by an eligible
correspondent of the Seller. The Mortgage Loan complies in all material respects
with all the terms, conditions and requirements of the Seller's underwriting
standards attached to the GreenPoint Agreement as
B-1-15
Exhibit G. The Mortgage Notes and Mortgages are on forms acceptable to Fannie
Mae or Freddie Mac;
(xvii) The Mortgage Loan contains the usual and enforceable provisions of
the originator at the time of origination for the acceleration of the payment of
the unpaid principal amount if the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder. The Mortgage Loan has an original
term to maturity of not more than 30 years, with interest payable in arrears on
the first day of each month. Except as otherwise set forth on the Mortgage Loan
Schedule, the Mortgage Loan does not contain terms or provisions which would
result in negative amortization nor contain "graduated payment" features;
(xviii) The Mortgaged Property at origination of the Mortgage Loan was
and, to Redwood Trust's knowledge, currently is free of damage and waste and at
origination of the Mortgage Loan there was, and, to Redwood Trust's knowledge,
there currently is, no proceeding pending for the total or partial condemnation
thereof;
(xix) The related Mortgage contains 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, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure;
(xx) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act 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 trustees sale or attempted sale after
default by the Mortgagor;
(xxi) If required by the applicable processing style, the Mortgage File
contains an appraisal of the related Mortgaged Property made and signed prior to
the final approval of the mortgage loan application by a qualified appraiser
satisfying the requirements of Title XI of The Financial Institutions Reform,
and Enforcement Act of 1989, as amended, and the regulations promulgated
thereunder, that is acceptable to Fannie Mae or Freddie Mac and approved by the
Seller. The appraisal, if applicable, is in a form generally acceptable to
Fannie Mae or Freddie Mac;
(xxii) All parties which have had any interest in the Mortgage, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in which
they held and disposed of such interest, were) (A) in substantial compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (B) (1) organized under the laws
of such state, or (2) qualified to do business in such state, or (3) federal
savings and loan associations, national banks, a Federal Home Loan Bank or the
Federal Reserve Bank, or (4) not doing business in such state;
(xxiii) To the best of Redwood Trust's knowledge, there does not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that could reasonably
be expected to cause private institutional
B-1-16
investors to regard the Mortgage Loan as an unacceptable investment, to cause
the Mortgage Loan to become delinquent, or to materially adversely affect the
value or marketability of the Mortgage Loan;
(xxiv) Each of the Mortgaged Properties consists of a single parcel of
real property with a detached single-family residence erected thereon, or a two-
to four-family dwelling, or a townhouse, or an individual condominium unit in a
condominium project or an individual unit in a planned unit development. Any
condominium unit or planned unit development either conforms with applicable
Fannie Mae or Freddie Mac requirements regarding such dwellings or is covered by
a waiver confirming that such condominium unit or planned unit development is
acceptable to Fannie Mae or Freddie Mac or is otherwise "warrantable" with
respect thereto. No such residence is a mobile home or manufactured dwelling;
(xxv) The ratio of the original outstanding principal amount of the
Mortgage Loan to the lesser of the appraised value (or stated value if an
appraisal was not a requirement of the applicable processing style) of the
Mortgaged Property at origination or the purchase price of the Mortgaged
Property securing each Mortgage Loan (the "Loan-to-Value Ratio") is not in
excess of 95.00%. The original Loan-to-Value Ratio of each Mortgage Loan either
was not more than 95.00% or the excess over 80.00% is insured as to payment
defaults by a Primary Mortgage Insurance Policy issued by a primary mortgage
insurer acceptable to Fannie Mae or Freddie Mac;
(xxvi) The Seller is either, and each Mortgage Loan was originated by, a
savings and loan association, savings bank, commercial bank, credit union,
insurance company or similar institution which is supervised and examined by a
federal or State authority, or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Section 203 and 211 of the National
Housing Act;
(xxvii) The origination, collection and servicing practices with respect
to each Mortgage Note and Mortgage have been legal in all material respects.
With respect to escrow deposits and payments that the Seller collects, 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. No escrow deposits or
other charges or payments due under the Mortgage Note have been capitalized
under any Mortgage or the related Mortgage Note;
(xxviii) No fraud or misrepresentation of a material fact with respect to
the origination of a Mortgage Loan has taken place on the part of the Seller;
and
No Mortgage Loan contains a provision whereby the related Mortgagor can convert
the related Mortgage Loan to a fixed rate instrument.
B-1-17
SCHEDULE B-2
MORTGAGE LOAN REPRESENTATIONS AND
WARRANTIES OF THE SELLER
PLEDGED MORTGAGE REPRESENTATIONS AND WARRANTIES
I. WITH RESPECT TO MORTGAGE LOANS PURCHASED UNDER THE MASTER MORTGAGE LOAN
PURCHASE AGREEMENT, BETWEEN GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
("GREENWICH") AND MERRILL LYNCH CREDIT CORPORATION ("MERRILL LYNCH"),
DATED AS OF MAY 13, 1997, AS AMENDED OR MODIFIED TO THE DATE HEREOF (THE
"MASTER MORTGAGE LOAN PURCHASE AGREEMENT"), AND THE ASSIGNMENT, ASSUMPTION
AND RECOGNITION AGREEMENT, DATED AS OF MAY 30, 2002, AMONG GREENWICH, AS
ASSIGNOR, MERRILL LYNCH, REDWOOD TRUST, INC. AS ASSIGNEE ("REDWOOD"), AND
CENDANT MORTGAGE CORPORATION (THE "ASSIGNMENT," AND TOGETHER WITH THE
MASTER MORTGAGE LOAN PURCHASE AGREEMENT, THE "MASTER PURCHASE AGREEMENT").
With respect to each Mortgage Loan, RWT Holdings, Inc., as Seller under
the Pooling and Servicing Agreement ("RWT Holdings"), hereby makes the following
representations and warranties. Such representations and warranties speak as of
the Closing Date with respect to Pledged Mortgages (as such capitalized terms
are defined in the Pooling and Servicing Agreement), unless otherwise indicated.
Capitalized terms are as defined in this Schedule B-2 or in the Master Purchase
Agreement.
(i) The information set forth in the Master Mortgage Loan Purchase
Agreement and the Mortgage Loan Schedule is true and correct in all material
respects, and does not omit any material fact necessary to make the statements
contained therein not misleading;
(ii) As of the Closing Date, the Mortgage Loan is not delinquent in
payment more than 29 days and the Mortgage Loan nor the Additional Collateral
has not been dishonored; the Mortgage Loan has never been delinquent in payment
for more than 59 days and has not more than once during the twelve months
preceding the Cut-Off Date been delinquent in payment for more than 30 days;
there are no material defaults under the terms of the Mortgage Loan; RWT
Holdings has not advanced funds, or induced, solicited or knowingly received any
advance of funds from a party other than the owner of the Mortgaged Property
subject to the Mortgage, directly or indirectly, for the payment of any amount
required by the Mortgage Loan;
(iii) To the best of RWT Holdings' knowledge, there are no delinquent
taxes or other outstanding charges affecting the related Mortgaged Property
which would permit a taxing authority to initiate foreclosure proceedings
against the Mortgaged Property;
(iv) The terms of the Mortgage Note, the Mortgage, and the Additional
Collateral have not been impaired, waived, altered or modified in any respect,
except by written instruments contained in the Mortgage File, the substance of
which waiver, alteration or modification is reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement which assumption agreement is part of
the Mortgage File and the terms of which are reflected in the Mortgage Loan
Schedule;
(v) The Mortgagor has not asserted that the Mortgage Note, the Mortgage,
or the Additional Collateral are 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 and the Mortgage, or the exercise of
any right thereunder, render 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 to the best of RWT Holdings' knowledge, no such right
of rescission, set-off, counterclaim or defense has been asserted by any Person
other than the obligor with respect thereto;
(vi) All buildings upon the Mortgaged Property are to be insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customarily included in extended coverage in the
area where the Mortgaged Property is located, pursuant to standard hazard
insurance policies in an amount which is equal to the lesser of (A) the
replacement cost of the improvements securing such Mortgage Loan or (B) the
principal balance owing on such Mortgage Loan. To the best knowledge of RWT
Holdings, all such hazard insurance policies are in effect. On the date of
origination, such standard hazard policies contained a standard mortgagee clause
naming RWT Holdings or the originator of the Mortgage Loan and their respective
successors in interest as mortgagee and, to the best knowledge of RWT Holdings,
such clause is till in effect and, to the best of RWT Holdings' knowledge, all
premiums due thereon have been paid. If the Mortgaged Property is located in an
area identified by the Federal Emergency Management Agency as having special
flood hazards under the National Flood Insurance Act of 1994, as amended, such
Mortgaged Property is covered by flood insurance. The mortgage obligates the
Mortgagor thereunder to maintain all such insurance at 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;
(vii) At the time of origination of such Mortgage Loan and thereafter, all
requirements of any federal, state or local law including, without limitation,
usury, truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws required to be complied
with by RWT Holdings as the originator of the Mortgage Loan and applicable to
the Mortgage Loan and the Additional Collateral have been complied with in all
material respects;
(viii) The Mortgage has not been satisfied as of the Closing Date,
canceled or subordinated, in whole, or rescinded, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part (except for
a release that does not materially impair the security of the Mortgage Loan or a
release the effect of which is reflected in the Loan-to-Value Ratio for the
Mortgage Loan as set forth in the Mortgage Loan Schedule), nor to the best of
RWT Holdings' knowledge has any instrument been executed that would effect any
such release, cancellation, subordination or rescission;
(ix) Ownership of the Mortgaged Property is held in fee simple (except for
Mortgage Loans as to which the related land is held in a leasehold which extends
at least five years beyond the maturity date of the Mortgage Loan). Except as
permitted by the fourth sentence of this paragraph (ix), the Mortgage is a
valid, subsisting and enforceable first lien on the Mortgaged
B-2-2
Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems affixed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing securing the
Mortgage Note's original principal balance. The Mortgage and the Mortgage Note
do not contain any evidence on their face of any security interest or other
interest or right thereto. Such lien is free and clear of all adverse claims,
liens and encumbrances having priority over the first lien of the Mortgage
subject only to (1) the lien of non-delinquent current real property taxes and
assessments not yet due and payable, (2) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording which are acceptable to mortgage lending institutions generally, or
which are specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and either (A) which are
referred to or otherwise considered in the appraisal made for the originator of
the Mortgage Loan, or (B) which do not in the aggregate adversely affect the
appraised value of the Mortgaged Property as set forth in such appraisal, and
(3) other matters to which like properties are commonly subject which do not in
the aggregate 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, subsisting and enforceable first lien and
first priority security interest on the property described therein;
(x) The Mortgage Note is not subject to a third party's security interest
or other rights or interest therein;
(xi) The Mortgage Note and the related are genuine and is the legal, valid
and binding obligation of the maker thereof enforceable in accordance with its
terms subject to bankruptcy, insolvency and other laws of general application
affecting the rights of creditors. 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. The Mortgage Note and the Mortgage
have been duly and properly executed by other such related parties. No fraud was
committed in the origination of the Mortgage Loan, and to the best of RWT
Holdings' knowledge of the documents, instruments and agreements submitted for
loan underwriting contain no untrue statement of material fact or omit to state
a material fact required to be stated or necessary to make the information and
statements therein not misleading. The proceeds of the Mortgage Loan have been
fully disbursed and there is no requirement for future advances thereunder, and
any and all requirements as to completion of any on-site improvements and as to
disbursements of any escrow funds therefor have been complied with;
(xii) Immediately prior to the Closing Date, RWT Holdings had good title
to and was the sole owner thereof and had full right to transfer and sell the
Mortgage Loan free and clear of any encumbrance, equity, lien, pledge, charge,
claim or security interest, including, to the best knowledge of RWT Holdings,
any lien, claim or other interest arising by operation of law;
(xiii) Each Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy or insurance acceptable to
FNMA or FHLMC, issued by a title insurer acceptable to FNMA or FHLMC and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring RWT Holdings (subject to the exceptions contained in
B-2-3
paragraph (ix)(1), (2) and (3) above), its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan. RWT Holdings is the sole insured of such lender's title insurance
policy, such title insurance policy has been duly and validly endorsed to the
Purchaser or the assignment to the Purchaser of RWT Holdings' interest therein
does not require the consent of or notification to the insurer 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 the Master
Mortgage Loan Purchase Agreement. To the best of RWT Holdings' knowledge, no
claims have been made under such lender's title insurance policy, and no 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;
(xiv) There is no default, breach, violation or event of acceleration
existing under the Mortgage, the related Mortgage Note, or the Additional
Collateral 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 permitting acceleration, except for any Mortgage Loan payment
which is not late by more than 30 days, and RWT Holdings has not waived any
default, breach, violation or event permitting acceleration;
(xv) As of the date of origination or purchase by RWT Holdings there were
no mechanics' or similar liens or claims which had been filed for work, labor or
material (and, to the best of RWT Holdings' knowledge, 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;
(xvi) All improvements subject to the Mortgage lay wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) and no improvements on
adjoining properties encroach upon the Mortgaged Property unless acceptable to
FNMA pursuant to the FNMA Seller's Guide or those which are insured against by
the title insurance policy referred to in paragraph (xiii) above and to the best
of RWT Holdings' knowledge all improvements on the property comply with all
applicable zoning and subdivision laws and ordinances;
(xvii) Each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company, or
a similar institution which at the time of origination was supervised by a
federal or state authority or was a mortgage approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act. Each Mortgage Loan was underwritten in accordance with the
Underwriting Guide as in effect at the time of origination, except to the extent
the Assignor believed at such time that a variance from such Underwriting Guide
was warranted by compensating factors with respect to such Mortgage Loan. The
Mortgage contains the usual and customary provision of the Assignor at the time
of origination for the acceleration of the payment of the unpaid principal
balance of the Mortgage Loan if the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder;
B-2-4
(xviii) The Mortgaged Property at origination or acquisition was and, to
the best of RWT Holdings' knowledge, currently is free from material damage and
waste and at origination there was, and currently is, no proceeding pending for
the total or partial condemnation thereof;
(xix) The related Mortgage contains 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, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale or judicial foreclosure, and (2) otherwise by
judicial foreclosure. RWT Holdings has no knowledge of any homestead or other
exemption available to the Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(xx) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act 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 to the trustee under the deed of trust,
except in connection with a trustee's sale or attempted sale after default by
the Mortgagor;
(xxi) With respect to each Mortgage Loan, there is an appraisal on a
FNMA-approved form (or a narrative residential appraisal) of the related
Mortgage Property signed prior to the approval of such Mortgage Loan application
by a qualified appraiser, appointed by RWT Holdings or the originator of such
Mortgage Loan, as appropriate, who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both satisfy the requirements of FNMA or
FHLMC as in effect on the date the Mortgage Loan was originated;
(xxii) No Mortgage Loan contains "subsidized buydown" or "graduated
payment" features;
(xxiii) The Mortgaged Property is a single-family (one- to four-unit)
dwelling residence erected thereon, or an individual condominium unit in a
condominium, a cooperative, or an individual unit in a planned unit development
or in a de minimis planned unit development. No such residence is a mobile home
or a manufactured dwelling which is not permanently attached to the land. With
respect to any Mortgage Property which is a unit in a co-operative, RWT Holdings
shall have provided Purchaser with additional representations and warranties
concerning co-operatives which are mutually acceptable to the parties;
(xxiv) The Mortgage Loans were selected from among the outstanding
adjustable rate one-to four-unit family mortgage loans in RWT Holdings'
portfolio and such selection was not made in a manner so as to affect adversely
the interests of the Purchaser;
(xxv) The Mortgage is not in default and all taxes, government
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid,
or with respect to those Mortgage Loans with Escrow Accounts, an escrow of funds
has been established in an amount sufficient to pay for every such item which
has been assessed but is not yet due and payable. RWT Holdings has not
B-2-5
advanced funds, or induced, or solicited 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, except for interest accruing from the date of
the Mortgage Note of date or disbursement of the Mortgage Loan proceeds,
whichever is greater, to the day which precedes by one month the date the first
installment of principal and interest were due and payable under the Mortgage
Note;
(xvi) RWT Holdings has no knowledge of any circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, or the
Mortgagor's credit standing that can reasonably be expected to cause private
institutional investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan;
(xvii) The Mortgagor has not notified RWT Holdings, and RWT Holdings has
no knowledge of any relief requested or allowed to the Mortgagor under the
Soldiers' and Sailors' Civil Relief Act;
(xxviii) RWT Holdings has no knowledge of any toxic or hazardous
substances affecting the Mortgaged Property or any violation of any local,
state, or federal environmental law, rule, or regulation. RWT Holdings has no
knowledge of any pending action or proceeding directly involving any Mortgaged
Property in which compliance with any environmental law, rule, or regulation is
an issue;
(xxix) The origination, collection and other servicing practices used by
Assignor with respect to the Mortgage Loan have been in all material respects in
compliance with Assignor's procedures, accepted servicing practices, applicable
laws and regulations. All Mortgage Interest Rate adjustments have been made in
strict compliance with applicable state and federal law and the terms of the
related Mortgage Note; and
(xxx) With respect to those Mortgage Loans with Escrow Accounts, all
Escrow Payments have been collected in full compliance with applicable state and
federal law. An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due RWT Holdings have been
capitalized under the Mortgage or the Mortgage Note. Any interest required to be
paid pursuant to applicable state, federal and local law has been properly paid
and credited.
B-2-6
II. MORTGAGE LOANS PURCHASED UNDER THE MASTER MORTGAGE LOAN PURCHASE AGREEMENT
DATED AS OF AUGUST 1, 2001 BETWEEN REDWOOD TRUST, INC. ("REDWOOD TRUST")
AND MORGAN STANLEY DEAN WITTER CREDIT CORPORATION (THE "SELLER/SERVICER")
(THE "MORGAN AGREEMENT").
With respect to each Mortgage Loan, RWT Holdings hereby makes the
following representations and warranties. Such representations and warranties
speak as of the Closing Date with respect to Pledged Mortgages (as such
capitalized terms are defined in the Pooling and Servicing Agreement), unless
otherwise indicated. Capitalized terms are as defined in this Schedule B-2 or in
the Morgan Agreement.
(i) The information set forth in the Mortgage Loan Schedule is true and
correct in all material respects;
(ii) As of the Closing Date, the Mortgage Loan is not delinquent more than
29 days, the Mortgage Loan has never been delinquent for more than 59 days and
the Mortgage Loan has not been dishonored. To RWT Holdings' knowledge, there are
no material defaults under the terms of the Mortgage Loan. The Seller/Servicer
has not advanced funds, or induced or, solicited any advance of funds from a
party other than the owner of the Mortgaged Property subject to the Mortgage,
directly or indirectly, for the payment of any amount required by the Mortgage
Loan;
(iii) With respect to those Mortgage Loans which are required to deposit
funds into an escrow account for payment of taxes, assessments, insurance
premiums and similar items as they become due, all escrow deposits have been
collected, are under the control of the Seller/Servicer, and have been applied
by the Seller/Servicer to the payment of such items in a timely fashion, in
accordance with such Mortgage. There exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
met. With respect to those Mortgage Loans for which escrow deposits are not
required, to RWT Holdings' knowledge, there are no delinquent taxes or other
outstanding charges affecting the related Mortgaged Property which constitute a
lien on the related Mortgaged Property;
(iv) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments contained in the Trustee Mortgage File, approved, if necessary, by
the insurer under any Primary Mortgage Insurance Policy and recorded in all
places necessary to maintain the first priority of the lien, the substance of
which waiver, alteration or modification is reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except by
operation of law or in connection with an assumption agreement which assumption
agreement is part of the Trustee Mortgage File and the terms of which are
reflected in the Mortgage Loan Schedule;
(v) Neither the Mortgage Note nor the Mortgage is 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 and the
Mortgage, or the exercise of any right thereunder, render 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, to RWT
Holdings' knowledge, no such right of recission, set-off, counterclaim or
defense has been asserted by any Person with respect thereto;
B-2-7
(vi) All buildings upon the Mortgaged Property are required to be insured
by a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customarily included in extended coverage
in the area where the Mortgaged Property is located, pursuant to standard
property insurance policies in compliance with the Seller/Servicer's policies as
from time to time in effect. On the date of origination, all such property
policies were in effect, and contained a standard mortgage clause naming the
Seller/Servicer or the originator of the Mortgage Loan and their respective
successors in interest as mortgagee; to the knowledge of RWT Holdings, such
policy and clause or a replacement is in effect and, to RWT Holdings' knowledge,
all premiums due thereon have been paid. If the Mortgaged Property is located in
an area identified by the Federal Emergency Management Agency as having special
flood hazards under the National Flood Insurance Act of 1994, as amended, such
Mortgaged Property is covered by flood insurance in the amount required under
the National Flood Insurance Act of 1994. The Mortgage obligates the Mortgagor
to maintain such insurance and authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense should the Mortgagor fail to do
so and to seek reimbursement therefor from the Mortgagor;
(vii) At the time of origination of such Mortgage Loan and thereafter, all
requirements of any federal or state law, including usury, truth-in-lending,
real estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws required to be complied with by the
Seller/Servicer as the originator of the Mortgage Loan and applicable to the
Mortgage Loan have been complied with in all material respects;
(viii) The Mortgage has not been satisfied as of the Closing Date,
canceled or subordinated, in whole, or rescinded, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part (except for
a release that does not materially impair the security of the Mortgage Loan or a
release the effect of which is reflected in the Loan-to-Value Ratio for the
Mortgage Loan as set forth in the Mortgage Loan Schedule);
(ix) Ownership of the Mortgaged Property is held in fee simple or
leasehold estate. With respect to Mortgage Loans that are secured by a leasehold
estate: (i) the lease is valid, in full force and effect, and conforms to all of
Fannie Mae's requirements for leasehold estates; (ii) all rents and other
payments due under the lease have been paid; (iii) the lessee is not in default
under any provision of the lease; (iv) the term of the lease exceeds the
maturity date of the related Mortgage Loan by at least five (5) years; and (v)
the terms of the lease provide a Mortgagee with an opportunity to cure any
defaults. Except as permitted by the fourth sentence of this paragraph (ix), the
Mortgage is a valid, subsisting and enforceable first lien on the Mortgaged
Property securing the Mortgage Note's original principal balance. Such lien is
free and clear of all adverse claims, liens and encumbrances having priority
over the first lien of the Mortgage, subject only to (1) the lien of
non-delinquent current real property taxes and assessments not yet due and
payable, (2) liens, covenants, conditions and restrictions, rights of way,
easements and other matters reflected in the public record as of the date of
recording which are acceptable to mortgage lending institutions generally, or
which are referred to (specifically or generally) in the lender's title
insurance policy delivered to the originator of the Mortgage Loan and either (A)
which are referred to or otherwise considered in such title insurance policy or
the appraisal made for the originator of the Mortgage Loan, or (B) which do not
in the aggregate
B-2-8
adversely affect the appraised value of the Mortgaged Property as set forth in
such appraisal, and (3) other matters to which like properties are commonly
subject which do not in the aggregate 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. With respect to each
Cooperative Loan, the security instruments create a valid, enforceable and
subsisting first priority security interest in the Cooperative Apartment
securing the related Mortgage Note subject only to (a) the lien of the related
cooperative for unpaid assessments representing the Mortgagor's pro rata share
of payments for a blanket mortgage, if any, current and future real property
taxes, insurance premiums, maintenance fees and other assessments, and (b) other
matters to which the collateral is commonly subject which do not materially
interfere with the benefits of the security intended to be provided; provided,
however, that the related proprietary lease for the Cooperative Apartment may be
subordinated or otherwise subject to the lien of a Mortgage on the cooperative
building;
(x) The Mortgage Note and the related Mortgage are genuine and are in
proper form to constitute a legal, valid and binding obligation of the maker
thereof in all material respects, enforceable in accordance with its terms,
subject to bankruptcy, insolvency and other laws of general application
affecting the rights of creditors, and general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law), and assuming that the maker thereof had the legal capacity to enter into
the Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage.
The Mortgage Note and the Mortgage have been duly and properly executed by such
parties. An obligor of the debt evidenced by the Mortgage Note is a natural
person. The proceeds of the Mortgage Loan have been fully disbursed and there is
no requirement for future advances thereunder, and any and all requirements in
the Mortgage as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with;
(xi) RWT Holdings has good title to, and the full right to transfer and
sell, the Mortgage Loan and the Mortgage Note free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest including, to the
knowledge of RWT Holdings, any lien, claim or other interest arising by
operation of law;
(xii) The Mortgage Loan is covered by either an ALTA lender's title
insurance policy or other generally acceptable form of policy or insurance
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 paragraph (ix) (1), (2) and (3) above) to the Seller/Servicer, its successors
and assigns, the first priority lien of the Mortgage in the original principal
amount of the Mortgage Loan. The Seller/Servicer is the sole insured of such
lender's title insurance policy, such title insurance policy has been duly and
validly endorsed to the Trustee (as defined in the Pooling and Servicing
Agreement) or the assignment to such Trustee of the Seller/Servicer's interest
does not require the consent of or notification to the insurer 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 the Morgan
Agreement. To RWT Holdings' knowledge, no claims have been made under such
lender's title insurance policy, and
B-2-9
no 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;
(xiii) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and, to RWT Holdings'
knowledge, 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 permitting acceleration, except for any Mortgage Loan Payment
which is not late by more than 30 days, and the Seller/Servicer has not waived
any default, breach, violation or event permitting acceleration;
(xiv) To RWT Holdings' knowledge, all material improvements subject to the
Mortgage, lie wholly within the boundaries and building restrictions lines of
the Mortgaged Property (and wholly within the project with respect to a
condominium unit) and no improvements on adjoining properties materially
encroach upon the Mortgaged Property, except those which are insured against by
the title insurance policy referred to in paragraph (xii) above and all
improvements on the property comply with all applicable zoning and subdivision
laws and ordinances;
(xv) The Mortgage Loan (unless designated as originated by others on any
Mortgage Loan Schedule) was originated by the Seller/Servicer (or the corporate
predecessor of the Seller/Servicer), and at the time of each such origination of
such Mortgage Loan the Seller/Servicer was (unless designated as "originated
prior to HUD approval" on any Mortgage Loan Schedule) a mortgagee approved by
the Secretary of Housing and Urban Development (the "Secretary") pursuant to
Sections 203 and 211 of the National Housing Act. Each such Mortgage Loan was
underwritten in accordance with the Underwriting Guide as in effect at the time
of origination, except to the extent the Seller/Servicer believed as such time
that a variance from such Underwriting Guide was warranted by compensating
factors. The Mortgage contains the usual and customary provision of the
Seller/Servicer, if any, in the applicable jurisdiction at the time of
origination for the acceleration of the payment of the unpaid principal balance
of the Mortgage Loan if the related Mortgaged Property is sold without the prior
consent of the Mortgagee thereunder;
(xvi) The Mortgaged Property at origination or acquisition was and, to RWT
Holdings' knowledge, is free of material damage and waste and at origination
there was, and to RWT Holdings' knowledge there is, no proceeding pending for
the total or partial condemnation thereof;
(xvii) The related Mortgage contains 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;
(xviii) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act as such, has been properly
designated and currently so serves as named in the Mortgage, and no fees or
expenses are or will become payable to the trustee under the deed of trust,
except in connection with a trustee's sale or attempted sale after default by
the Mortgagor;
B-2-10
(xix) With respect to the Mortgage Loan, there is an appraisal on a Fannie
Mae-approved form (or a narrative residential appraisal) of the related
Mortgaged Property that conforms to the applicable requirements of the Financial
Institutions Reform Recovery and Enforcement Act of 1989 and that was signed
prior to the approval of such Mortgage Loan application by a qualified
appraiser, appointed by the Seller/Servicer or the originator of such Mortgage
Loan, as appropriate, who has no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of such Mortgage Loan;
(xx) The Mortgage Loan contains no "subsidized buydown" or graduated
payment features;
(xxi) The Mortgaged Property has a single-family (one to four-unit)
dwelling residence erected thereon, or is an individual condominium unit in a
condominium, or a Cooperative Apartment or an individual unit in a planned unit
development or in a de minimis planned unit development as defined by Fannie
Mae. No such residence is a mobile home or a manufactured dwelling which is not
permanently attached to the land;
(xxii) Except as set forth on the Mortgage Loan Schedule the Mortgage Loan
is not a Converted Mortgage Loan. The Mortgage Loan does not provide for
negative amortization;
(xxiii) The Mortgage Loan does not have an original term in excess of
thirty (30) years and one month;
(xxiv) If the Mortgage Loan is a Cooperative Loan, (a) there is no
provision in any proprietary lease which requires the Mortgagor to offer for
sale the cooperative shares owned by such Mortgagor first to the cooperative,
(b) there is no prohibition in the proprietary lease against pledging the
cooperative shares or assigning the proprietary lease, (c) to RWT Holdings'
knowledge, the Cooperative Apartment is lawfully occupied under applicable law,
and (d) to RWT Holdings' knowledge, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Cooperative Apartment and the related project have been made or obtained from
the appropriate authorities;
(xxviii) There has been no fraud, material misrepresentation or deceit on
the part of any Mortgagor or any third party in connection with the Mortgage
Loan (including the application, processing, appraisal and origination) which
would cause a material economic loss to the owner of the Mortgage Loan,
including, but not limited to, material misrepresentation of such Mortgagor's
income, funds on deposit or employment;
(xxix) The origination, collection and other servicing practices used by
the Seller/Servicer with respect to the Mortgage Loans are in compliance with
all material requirements of applicable laws and regulations;
(xxx) The Seller/Servicer shall cause to be maintained for each Mortgage
Loan primary hazard insurance with extended coverage on the related mortgage
property in an amount equal to the lessor of (i) full replacement value of
improvements and (ii) the outstanding principal balance;
B-2-11
(xxviii) RWT Holdings has no knowledge of any homestead or other exemption
available to the mortgagor which would interfere with the right to sell the
mortgage property at trustee's sale or the right to foreclose the mortgage;
(xxix) At the time of origination of such Mortgage Loan, and thereafter,
all material requirements of any federal, state or local law including usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws required to be complied with by the
Seller/Servicer as the originator of the Mortgage Loan have been complied with
in all material respects; and
(xxx) The Additional Collateral Mortgage Loans are insured under the terms
and provisions of the Surety Bond subject to the limitations set forth therein.
The Seller/Servicer will deliver to the Surety Bond issuer an "Assignment and
Notice of Transfer" in the form of Attachment to the Surety Bond, or any other
similar instrument required to be delivered under the Surety Bond, executed by
the Seller/Servicer and RWT Holdings, and that all other requirements for
transferring coverage under the Surety Bond in respect of such Additional
Collateral Mortgage Loans to the Trustee (as defined in the Pooling and
Servicing Agreement) shall be complied with.
B-2-12
III. WITH RESPECT TO MORTGAGE LOANS PURCHASED UNDER THE MORTGAGE LOAN FLOW
PURCHASE, SALE AND SERVICING AGREEMENT, DATED AS OF FEBRUARY 1, 2002,
BETWEEN REDWOOD TRUST AND GREENPOINT MORTGAGE FUNDING, INC. (THE "SELLER")
(THE "GREENPOINT AGREEMENT")
With respect to each Mortgage Loan, RWT Holdings hereby makes the
following representations and warranties. Such representations and warranties
speak as of the Closing Date with respect to Pledged Mortgages (as such
capitalized terms are defined in the Pooling and Servicing Agreement), unless
otherwise indicated. Capitalized terms are as defined in this Schedule B-2 or in
the GreenPoint Agreement.
(i) The information set forth in the Mortgage Loan Schedule is true,
complete and correct in all material respects as of the Cut-Off Date;
(ii) The Mortgage creates a first lien or a first priority ownership
interest in an estate in fee simple in real property securing the related
Mortgage Note, free and clear of all adverse claims, liens and encumbrances
having priority over the first lien of the Mortgage subject only to (1) the lien
of non-delinquent current real property taxes and assessments not yet due and
payable, (2) covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording which are
acceptable to mortgage lending institutions generally and, with respect to any
Mortgage Loan for which an appraisal was made prior to the Cut-Off Date, either
(A) which are referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan, or (B) which do not adversely affect the
appraised value of the Mortgaged Property as set forth in such appraisal, and
(C) 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, subsisting and enforceable first lien and first
priority security interest on the property described therein;
(iii) The Mortgage Loan has not been delinquent thirty (30) days or more
at any time during the twelve (12) month period prior to the Cut-off Date for
such Mortgage Loan. To RWT Holdings' knowledge, there are no defaults under the
terms of the Mortgage Loan; and the Seller has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than the
owner of the Mortgaged Property subject to the Mortgage, directly or indirectly,
for the payment of any amount required by the Mortgage Loan;
(iv) To RWT Holdings' knowledge, there are no delinquent taxes which are
due and payable, ground rents, assessments or other outstanding charges
affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note of the related Mortgagor and the
Mortgage have not been impaired, waived, altered or modified in any respect,
except by written instruments which have been recorded to the extent any such
recordation is required by applicable law or is necessary to protect the
interests of the Purchaser, and which have been approved by the title insurer
and the
B-2-13
primary mortgage insurer, as applicable, and copies of which written instruments
are included in the Mortgage File. No other instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been released, in whole or
in part, from the terms thereof except in connection with an assumption
agreement, which assumption agreement is part of the Mortgage File and the terms
of which are reflected on the Mortgage Loan Schedule;
(vi) 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 and the
Mortgage, or the exercise of any right thereunder, render the Mortgage Note or
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, to RWT Holdings' knowledge, no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(vii) All buildings upon the Mortgaged Property are insured by a generally
acceptable insurer pursuant to standard hazard policies conforming to the
requirements of Fannie Mae and Freddie Mac. All such standard hazard policies
are in effect and on the date of origination contained a standard mortgagee
clause naming the Seller and its successors in interest as loss payee and such
clause is still in effect and, to RWT Holdings' knowledge, all premiums due
thereon have been paid. If the Mortgaged Property is located in an area
identified by the Federal Emergency Management Agency as having special flood
hazards under the Flood Disaster Protection Act of 1973, as amended, such
Mortgaged Property is covered by flood insurance by a generally acceptable
insurer in an amount not less than the requirements of Fannie Mae and 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 the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(viii) 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, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;
(ix) The Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, 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, release, cancellation,
subordination or rescission;
(x) The Mortgage Note and the related Mortgage are original and genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors, and the Seller has taken all action necessary to transfer such rights
of enforceability to the Purchaser. All parties to the Mortgage Note and the
Mortgage had the legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note and the Mortgage. The Mortgage Note and the
Mortgage have been duly and properly executed by such parties. The proceeds of
the Mortgage Note have been fully disbursed and there is no requirement
B-2-14
for future advances 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;
(xi) Immediately prior to the transfer and assignment to the Purchaser,
the Mortgage Note and the Mortgage were not subject to an assignment or pledge,
and the Seller had good and marketable title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;
(xii) The Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy of insurance, with all
necessary endorsements, issued by a title insurer qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring (subject to
the exceptions contained in clause (b) (1), (2) and (3) 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. Such 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, such title insurance policy has been
duly and validly endorsed to the Purchaser or the assignment to the Purchaser of
the Seller's interest therein does not require the consent of or notification to
the insurer 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 the GreenPoint Agreement. To RWT Holdings' knowledge, no claims
have been made under such lender's title insurance policy, and no 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;
(xiii) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and, to RWT Holdings'
knowledge, 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 permitting acceleration; and neither the Seller nor any prior
mortgagee has waived any default, breach, violation or event permitting
acceleration;
(xiv) To the best of RWT Holdings' knowledge, there are no mechanics, or
similar liens or claims which have been filed for work, labor or material
affecting the related Mortgaged Property which are or may be liens prior to or
equal to the lien of the related Mortgage;
(xv) To RWT Holdings' knowledge, all improvements subject to the Mortgage
lie wholly within the boundaries and building restriction lines of the Mortgaged
Property (and wholly within the project with respect to a condominium unit) and
no improvements on adjoining properties encroach upon the Mortgaged Property
except those which are insured against by the title insurance policy referred to
in clause (xii) above and all improvements on the property comply with all
applicable zoning and subdivision laws and ordinances;
(xvi) The Mortgage Loan was originated by the Seller or by an eligible
correspondent of the Seller. The Mortgage Loan complies in all material respects
with all the terms, conditions and requirements of the Seller's underwriting
standards attached to the GreenPoint Agreement as
B-2-15
Exhibit G. The Mortgage Notes and Mortgages are on forms acceptable to Fannie
Mae or Freddie Mac;
(xvii) The Mortgage Loan contains the usual and enforceable provisions of
the originator at the time of origination for the acceleration of the payment of
the unpaid principal amount if the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder. The Mortgage Loan has an original
term to maturity of not more than 30 years, with interest payable in arrears on
the first day of each month. Except as otherwise set forth on the Mortgage Loan
Schedule, the Mortgage Loan does not contain terms or provisions which would
result in negative amortization nor contain "graduated payment" features;
(xviii) The Mortgaged Property at origination of the Mortgage Loan was
and, to RWT Holdings' knowledge, currently is free of damage and waste and at
origination of the Mortgage Loan there was, and, to RWT Holdings' knowledge,
there currently is, no proceeding pending for the total or partial condemnation
thereof;
(xix) The related Mortgage contains 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, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure;
(xx) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act 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 trustees sale or attempted sale after
default by the Mortgagor;
(xxi) If required by the applicable processing style, the Mortgage File
contains an appraisal of the related Mortgaged Property made and signed prior to
the final approval of the mortgage loan application by a qualified appraiser
satisfying the requirements of Title XI of The Financial Institutions Reform,
and Enforcement Act of 1989, as amended, and the regulations promulgated
thereunder, that is acceptable to Fannie Mae or Freddie Mac and approved by the
Seller. The appraisal, if applicable, is in a form generally acceptable to
Fannie Mae or Freddie Mac;
(xxii) All parties which have had any interest in the Mortgage, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in which
they held and disposed of such interest, were) (A) in substantial compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (B) (1) organized under the laws
of such state, or (2) qualified to do business in such state, or (3) federal
savings and loan associations, national banks, a Federal Home Loan Bank or the
Federal Reserve Bank, or (4) not doing business in such state;
(xxiii) To the best of RWT Holdings' knowledge, there does not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that could reasonably
be expected to cause private institutional
B-2-16
investors to regard the Mortgage Loan as an unacceptable investment, to cause
the Mortgage Loan to become delinquent, or to materially adversely affect the
value or marketability of the Mortgage Loan;
(xxiv) Each of the Mortgaged Properties consists of a single parcel of
real property with a detached single-family residence erected thereon, or a two-
to four-family dwelling, or a townhouse, or an individual condominium unit in a
condominium project or an individual unit in a planned unit development. Any
condominium unit or planned unit development either conforms with applicable
Fannie Mae or Freddie Mac requirements regarding such dwellings or is covered by
a waiver confirming that such condominium unit or planned unit development is
acceptable to Fannie Mae or Freddie Mac or is otherwise "warrantable" with
respect thereto. No such residence is a mobile home or manufactured dwelling;
(xxv) The ratio of the original outstanding principal amount of the
Mortgage Loan to the lesser of the appraised value (or stated value if an
appraisal was not a requirement of the applicable processing style) of the
Mortgaged Property at origination or the purchase price of the Mortgaged
Property securing each Mortgage Loan (the "Loan-to-Value Ratio") is not in
excess of 95.00%. The original Loan-to-Value Ratio of each Mortgage Loan either
was not more than 95.00% or the excess over 80.00% is insured as to payment
defaults by a Primary Mortgage Insurance Policy issued by a primary mortgage
insurer acceptable to Fannie Mae or Freddie Mac;
(xxvi) The Seller is either, and each Mortgage Loan was originated by, a
savings and loan association, savings bank, commercial bank, credit union,
insurance company or similar institution which is supervised and examined by a
federal or State authority, or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Section 203 and 211 of the National
Housing Act;
(xxvii) The origination, collection and servicing practices with respect
to each Mortgage Note and Mortgage have been legal in all material respects.
With respect to escrow deposits and payments that the Seller collects, 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. No escrow deposits or
other charges or payments due under the Mortgage Note have been capitalized
under any Mortgage or the related Mortgage Note;
(xxviii) No fraud or misrepresentation of a material fact with respect to
the origination of a Mortgage Loan has taken place on the part of the Seller;
and
No Mortgage Loan contains a provision whereby the related Mortgagor can convert
the related Mortgage Loan to a fixed rate instrument.
B-2-17