UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 2004
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from to
Commission File Number 333-108551-13
CHEC Loan Trust 2004-2, Asset-Backed Certificates, Series 2004-2
(Exact name of registrant as specified in its charter)
New York 34-2024529, 34-2024522
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Nos.)
c/o Asset Backed Funding Corporation
214 North Tryon Street, Charlotte, North Carolina 28255
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code :(704) 386-2400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Not applicable
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes No [X]
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of
such common equity, as of the last business day of the registrant's most
recently completed second fiscal quarter.
Not applicable.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Not applicable.
Documents Incorporated by Reference
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g. Part I, Part II, etc.) into which the
document is incorporated: (1)Any annual report to security holders; (2)
Any proxy or information statement; and (3)Any prospectus filed pursuant
to Rule 424(b) or (c) under the Securities Act of 1933. The listed
documents should be clearly described for identification purposes (e.g.
annual report to security holders for fiscal year ended December 24, 1980).
Not applicable.
Introductory Note
This Annual Report on Form 10-K is prepared in reliance on the no-action
letter dated March 26, 1993 issued by the Securities and Exchange Commission
to Nomura Asset Securities Corporation.
PART I
Item 1. Business.
Not Applicable.
Item 2. Properties.
Not Applicable.
Item 3. Legal Proceedings.
The registrant knows of no material pending legal proceedings
involving the trust created under the Pooling and Servicing
Agreement (the Trust), the Trustee, the Master Servicer, the
Securities Administrator or the registrant with respect to the
Trust other than routine litigation incidental to the duties
of the respective parties.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.
There is currently no established public trading market for the
certificates issued by the Trust.
As of December 31, 2004 the total number of holders with respect to each
class of certificates is set forth below:
A-1 25
A-2 5
A-3 2
M-1 4
M-2 1
M-3 2
M-4 2
M-5 2
M-6 2
M-7 1
M-8 1
Item 6. Selected Financial Data.
Not Applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Not Applicable.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable.
Item 8. Financial Statements and Supplementary Data.
Not Applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Not Applicable.
Item 9B. Other Information.
Not Applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant.
Not Applicable.
Item 11. Executive Compensation.
Not Applicable.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Not Applicable.
Item 13. Certain Relationships and Related Transactions.
Not Applicable.
Item 14. Principal Accounting Fees and Services.
Not Applicable.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) The following is a list of documents filed as part of this report:
(4.1) Pooling and Servicing Agreement (filed as an exhibit to Form
8-K on November 12, 2004).
(31.1) Rule 13a-14(a)/15d-14(a) Certification.
(99.1) Annual Independent Public Accountant's Servicing Report concerning
servicing activities for the year ended December 31, 2004.
(99.2) Annual Statement of Compliance under the Pooling and Servicing
Agreement for the year ended December 31, 2004.
(b) The exhibits required to be filed by Registrant pursuant to Item 601
of Regulation S-K are listed above and in the Exhibit Index that
immediately follows the signature page hereof.
(c) Not Applicable.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CHEC LOAN TRUST 2004-2
ASSET-BACKED CERTIFICATES, SERIES 2004-2
By: Asset Backed Funding Corporation, as Depositor
By: /s/ Daniel B. Goodwin
-----------------------
Name: Daniel B. Goodwin
Title: President
Date: March 28, 2005
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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
(a)(i) No annual report is provided to the Certificateholders other than
with respect to aggregate principal and interest distributions.
(a)(ii) No proxy statement, form of proxy or other proxy soliciting
material has been sent to any Certificateholder with respect to any
annual or other meeting of Certificateholders.
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EXHIBIT INDEX
Exhibit Description
4.1 Pooling and Servicing Agreement (filed as an exhibit to Form 8-K
on November 12, 2004).
33.1 Rule 13a-14(a)/15d-14(a) Certification
99.1 Annual Independent Public Accountant's Servicing Report concerning
servicing activities for the year ended December 31, 2004.
99.2 Annual Statement as to Compliance under the Pooling and Servicing
Agreement for the year ended December 31, 2004.
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<page>
EXHIBIT 31.1
Rule 13a-14(a)/15d-14(a) Certification
------------------------
CHEC LOAN TRUST 2004-2,
ASSET-BACKED CERTIFICATES, SERIES 2004-2
I, Daniel B. Goodwin, the President of Asset Backed Funding Corporation,
certify that:
1. I have reviewed this annual report on Form 10-K, and all monthly current
reports on Form 8-K containing distribution or servicing reports filed in
respect of periods included in the year covered by this annual report of
the CHEC Loan Trust 2004-2 formed pursuant to the Pooling and Servicing
Agreement, dated as of October 1, 2004 (the "Agreement"), among Asset
Backed Funding Corporation, as depositor, Centex Home Equity Company, LLC,
as servicer (the "Servicer") and JPMorgan Chase Bank, N.A., as trustee (the
"Trustee");
2. Based on my knowledge, the information in these reports, taken as a whole,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of
the last day of the period covered by this annual report;
3. Based on my knowledge, the distribution or servicing information required
to be provided to the Trustee by the Servicer under the Agreement for
inclusion in these reports is included in these reports;
4. Based on my knowledge and upon the annual compliance statement included in
the report and required to be delivered to the Trustee in accordance with
the terms of the Agreement, and except as disclosed in the reports, the
Servicer has fulfilled its obligations under the Agreement; and
5. The reports disclose all significant deficiencies relating to the
Servicer's compliance with the minimum servicing standards, based upon the
report provided by an independent public accountant after conducting a
review in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or similar procedure as set forth in the Agreement that is
included in these reports.
In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties: Centex Home Equity
Company, LLC and JPMorgan Chase Bank, N.A.
By: /s/ Daniel B. Goodwin
-----------------------
Name: Daniel B. Goodwin
Title: President
Date: March 28, 2005
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EXHIBIT 99.1
Annual Independent Public Accountant's Servicing Report
with Management Assertion
-----------------------
Ernst & Young LLP
Dallas, Texas
Report on Management's Assertion on Compliance
With Minimum Servicing Standards Set Forth in the
Uniform Single Attestation Program for Mortgage Bankers
Report of Independent Accountants
The Members of Centex Home Equity Company, LLC
and Subsidiaries and CTX Mortgage Funding, LLC
We have examined management's assertion, included in the accompanying report
titled Report of Management, that Centex Home Equity Company, LLC and
Subsidiaries and CTX Mortgage Funding, LLC (collectively, the Companies)
complied with the minimum servicing standands set forth in the Mortgage Bankers
Association of America's Uniform Single Attestation Program for Mortgage Bankers
(USAP) during the nine month period ended December 31, 2004. Management is
responsible for the Companies' compliance with those requirements. Our
responsibility is to express an opinion on management's assertions about the
Companies' compliance based on our examination.
Our examination was made in accordance with attestation standards established by
the American Institute of Certified Pubic Accountants and, accordingly, included
examining, on a test basis, evidence about the Companies' compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. We believe that our examination provides a reasonable basis
for our opinion. Our examination on the Companies' compliance with specified
requirements.
In our opinion, management's assertion that the Companies complied with the
aforementioned requirements during the nine month period ended December 31, 2004
is fairly stated, in all material respects.
This report is intended solely for the information and use of the audit
committee, management and the Companies' private investors and is not intended
to be and should not be used by anyone other than these specified parties.
Ernst & Young LLP
March 16, 2005
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Centex Home Equity Corporation
Management's Assertion on Compliance With Minimum Servicing
Standards Set Forth in the Uniform Single Attestation Program for
Mortgage Bankers
Report of Management
We, as members of management of Centex Home Equity Company, LLC and Subsidiaries
and CTX Mortgage Funding, LLC (the Companies), are responsible for complying
with the minimum servicing standards as set forth in the Mortgage Bankers
Association of America's Uniform Single Attestation Program for Mortgage Bankers
(USAP). We are also responsible for establishing and maintaining effective
internal control over compliance with these standards. We have performed an
evaluation of the Companies' compliance with the minimum servicing standards as
set forth in the USAP as of December 31, 2004 and for the nine-month period then
ended. Based on this evaluation, we assert that during the nine-month period
ended December 31, 2004, the Companies complied, in all material respects, with
the minimum servicing standards set forth in the USAP.
As of and for this same period, the Companies had in effect a fidelity bond in
the amount of $25 million and $6 million, respectively.
/s/ Jay Bray
- ------------------------
Jay Bray
Executive Vice President - Chief Financial Officer
/s/ Jerry Berrens
- ------------------------
Jerry Berrens
Vice President - Controller
March 16, 2005
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EXHIBIT 99.2
Servicer's Annual Statement as to Compliance
-----------------------
ANNUAL STATEMENT AS TO COMPLIANCE
As of and for the fiscal year ended March 31, 2005, pursuant to Section
3.19 of the Pooling and Servicing Agreement among Asset Backed Funding
Corporation ("Depositor"), Centex Home Equity Company, LLC ("Servicer") and JP
Morgan Chase Bank ("Trustee"), dated as of October 1, 2004, the undersigned, on
behalf of Centex Home Equity Company, has performed a review of the activities
of Centex Home Equity Company, LLC as Servicer during such preceding year.
To the best of my knowledge, based on such review, the Servicer has
fulfilled all obligations under the Pooling and Servicing Agreement for the
fiscal year above referenced.
/s/ Greg Oniu
- -----------------------
Greg Oniu
Senior Vice President
Centex Home Equity Company, LLC
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