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, 2005
[ ] 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 333-122578-01
FBR SECURITIZATION, INC.
(as Depositor under the Transfer and Servicing Agreement,
dated April 1, 2005, providing for the issuance of
First NLC Trust 2005-1)
(Exact name of registrant as specified in its charter)
Delaware 20-2028732
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1001 Nineteenth Street North, Arlington, VA 22209
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code :(212) 312-9500
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 if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
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 (229.405 of this chapter) 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. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12-b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes No [X]
Indicate by check mark whether the registrant is a shell company (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: None
PART I
Item 1. Business.
Not Applicable.
Item 1A. Risk Factors.
Not Applicable.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Not Applicable.
Item 3. Legal Proceedings.
The Registrant is not aware of any material legal proceeding with
respect to the Registrant, the Servicers, or the Trustees, in each case
if applicable, as related to the Trust.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote or consent of Holders of the Offered
Certificates during the fiscal year covered by this report.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
Currently, there is no established secondary market for the
Certificates known to the Registrant. As of December 31, 2005, the
number of holders of each class of offered certificates was 63 based
on records provided by DTC.
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.
There was no change of accountants or disagreement with accountants
on any matter of accounting principles or practices or financial
disclosure.
Item 9A. Controls and Procedures.
Not Applicable.
Item 9B. Other Information.
Not Applicable.
-2-
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 and
Related Stockholder Matters.
Not Applicable.
Item 13. Certain Relationships and Related Transactions.
No reportable transactions have occurred.
Item 14. Principal Accounting Fees and Services.
Not Applicable.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) The following documents are filed as part of this report:
(1) Financial Statements:
Not Applicable.
(2) Financial Statement Schedules:
Not Applicable.
(3) Exhibits:
Rule 13a-14(a)/15d-14(a) Certification, filed as 31.1 hereto.
JPMorgan Chase Bank N.A., as Master Servicer
Annual Independent Accountant's Servicing Report with Management
Assertion and Annual Servicer's Statement as to Compliance filed as
Exhibit 99.1 hereto.
Ocwen Federal Bank FSB, as Subservicer
Annual Independent Accountant's Servicing Report with Management
Assertion and Annual Servicer's Statement as to Compliance filed as
Exhibit 99.2 hereto.
(b) Exhibits to this report required by Item 609 of Regulation S-K (229.601) are
listed in Item (15)(a)(3)above.
(c) Not Applicable.
-3-
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.
FBR SECURITIZATION, INC.
By: /s/ Richard J. Hendrix
-----------------------------
Name: Richard J Hendrix
Title: President and Chief Operating Officer
Date: March 30, 2006
-4-
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.
The registrant has not sent an annual report or proxy material to its security
holders. The registrant will not be sending an annual report or proxy material
to its security holders subsequent to the filing of this form.
-5-
EXHIBIT INDEX
Exhibit Description
31.1 Rule 13a-14(a)/15d-14(a) Certification
99.1 JPMorgan Chase Bank, N.A., as Master Servicer
Annual Independent Accountant's Servicing Report with Management
Assertion and Annual Servicer's Statement as to Compliance
99.2 Ocwen Federal Bank FSB, as Subservicer
Annual Independent Accountant's Servicing Report with Management
Assertion and Annual Servicer's Statement as to Compliance
-6-
EXHIBIT 31.1
Annual Rule 13a-14(a)/15d-14(a) Certification
------------
I, Richard J. Hendrix, certify that:
1. I have reviewed this annual report on Form 10-K, and all 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
First NLC Trust 2005-1;
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 pooling and
servicing, or similar, 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 pooling and servicing agreement, or similar agreement, and
except as disclosed in the reports, the servicer has fulfilled its
obligations under the servicing 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 pooling and
servicing or similar 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: each Servicer and the
Trustee.
FBR SECURITIZATION, INC.
By: /s/ Richard J. Hendrix
-----------------------------
Name: Richard J. Hendrix
Title: President and Chief Operating Officer
Date: March 30, 2006
-7-
EXHIBIT 99.1
JPMorgan Chase Bank N.A., as Master Servicer
Annual Independent Accountant's Servicing Report with Management Assertion
Annual Servicer's Statement as to Compliance
--------------------
PricewaterhouseCoopers LLP
PricewaterhouseCoopers Center
300 Madison Avenue
New York NY 10017
Telephone (646) 471 3000
Facsimile (813) 286 6000
Report of Independent Auditors
To the Board of Directors of
JPMorgan Chase Bank, N.A.:
We have examined management's assertion about JPMorgan Chase Bank, N.A.'s (the
"Company") compliance with the minimum servicing standards as set forth in the
Mortgage Bankers Association of America's Uniform Single Attestation Program for
Mortgage Bankers ("USAP") as of and for the year ended December 31, 2005. The
Company has interpreted USAP and determined that USAP minimum servicing
standards I.1, I.2, I.3, III.1, III.5, IV.1, and VII.1 are applicable to master
servicers and are included in the accompanying management assertion (see Exhibit
I). Management is responsible for the Company's compliance with these minimum
servicing standards. Our responsibility is to express an opinion on management's
assertion, as it relates to the Company's compliance with the aforementioned
minimum servicing standards, based on our examination. The Company has
interpreted USAP and determined that USAP minimum servicing standards I.4, II.1,
II.2, II.3, II.4, III.2, III.3, III.4, III.6, V.1, V.2, V.3, V.4 and VI.1 are
not applicable to master servicers. The Company uses a subservicing organization
to perform the servicing obligations subject to servicing standards I.4, II.1,
II.2, II.3, II.4, III.2, III.3, III.4, III.6, V.1, V.2, V.3, V.4 and VI.1 of the
USAP. We did not examine the Company's compliance with the servicing standards
referred to in the previous sentence and accordingly, do not express an opinion
thereon.
Our examination was made in accordance with attestation standards established by
the American Institute of Certified Public Accountants and, accordingly,
included examining, on a test basis, evidence about the Company's compliance
with the minimum servicing standards 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 does not provide a
legal determination on the Company's compliance with the minimum servicing
standards.
In our opinion, management's assertion that the Company complied with the
aforementioned minimum servicing standards solely as they relate to standards
I.1, I.2, I.3, III.1, III.5, IV.1, and VII.1 as of and for the year ended
December 31, 2005 is fairly stated, in all material respects.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
March 29, 2006
-8-
<page>
EXHIBIT I
Management's Assertion Concerning Compliance with USAP
Minimum Servicing Standards
March 29, 2006
As of and for the year ended December 31, 2005, JPMorgan Chase Bank, N.A. (the
"Company") has complied in all material respects with the minimum servicing
standards set forth in the Mortgage Bankers Association of America's Uniform
Single Attestation Program for Mortgage Bankers ("USAP") that we have determined
are applicable to master servicers. We have interpreted USAP and determined that
minimum servicing standards I.1, I.2, I.3, III.1, III.5, IV.1, and VII.1 as set
forth in USAP are applicable to master servicers. We have also interpreted that
USAP minimum servicing standards I.4, II.1, II.2, II.3, II.4, III.2, III.3,
III.4, III.6, V.1, V.2, V.3, V.4 and VI.1 as set forth in USAP are not
applicable to master servicers; for these minimum servicing standards the
Company relies on the performance of its subservicers. This assertion relates
specifically to the Company's Master Servicing Portfolio.
It is the Company's policy to obtain and review USAP reports from the
independent auditors of its subservicers on an annual basis. Not all of these
USAP reports for the year ended December 31, 2005 are available as of March 29,
2006. As of March 29, 2006, the Company has obtained USAP reports for 36% of its
subservicers. These subservicers serviced loans comprising 92% of the unpaid
principal balance of the Company's Master Servicing Portfolio as of December 31,
2005. Instances of non-compliance noted in the USAP reports received from the
subservicers as of March 29, 2006, have been included in Exhibit II hereto.
As of and for this same period, the Company had in effect fidelity bond and
errors and omissions policies in the amounts of $250,000,000 and $25,000,000,
respectively.
/s/ William Jenkins
- -------------------------
William Jenkins
Vice President
JPMorgan Chase Bank, N.A.
/s/ Kelly A. Mathieson
- -------------------------
Kelly A. Mathieson
Managing Director
JPMorgan Chase Bank, N.A.
-9-
<page>
Exhibit II
JPMorgan Chase Bank, N.A.
Subservicers' USAP Report Exceptions
It is the policy of JPMorgan Chase Bank, N.A. (the "Company") to obtain Uniform
Single Attestation Program for Mortgage Bankers ("USAP") reports from the
independent auditors of its subservicers as of and for the year ended December
31, 2005. As of March 29, 2006, the Company has obtained and reviewed USAP
reports for 36% of its subservicers. These subservicers serviced loans
comprising 92% of the unpaid principal balance of the Company's Master Servicing
Portfolio as of December 31, 2005. The Company noted instances of noncompliance
included in the USAP reports received as of March 29, 2006, which are summarized
below.
Servicer Exception
---------- -----------
Ocwen Loan Servicing, LLC The Company did not comply with the requirement
to prepare custodial bank account
reconciliations and to resolve reconciling
items within 90 calendar days of their
original identification as specified by their
minimum servicing standards.
Certain ARM loans serviced by the Company were
transferred in with an incorrect look back
date due to errors in prior servicer records.
These certain loans had ARM adjustments
shortly after servicing transfer, but prior to
the Company receiving the related mortgage
documents from the prior servicer. When the
Company received the mortgage documents and
these errors were identified, the Company did
not adjust the principal and interest payment
amount. The Company has subsequently made
adjustments to their procedures when they
identify an error in prior servicer data to
analyze the effect on the customer's account
and make the appropriate adjustment.
North Fork Bancorporation, Inc. The Company did not comply with the requirement
to prepare custodial bank account
reconciliations within 45 calendar days after
the cutoff date and the requirement to resolve
reconciling items within 90 calendar days of
their original identification as specified by
their minimum servicing standards. For the
month ended December 31, 2005, all custodial
bank reconciliations had been completed and
reviewed on a timely basis.
PHH Mortgage Corporation The Company completed all custodial bank
account reconciliations within 60 days of the
cutoff date, however did not complete all
reconciliations within 45 days of the cutoff as
specified by the minimum servicing standards.
As such, the Company has determined that it was
materially non-compliant with the requirement
to prepare custodial bank account
reconciliations within 45 days after the cutoff
date.
During the year ended December 31, 2005, the
Company determined it was materially
non-compliant with the requirement to resolve
reconciling items resulting from custodial bank
account reconciliations within 90 calendar days
as specified by the minimum servicing
standards.
-10-
<page>
FRB Securitization, Inc.
1001 Nineteenth Street North
Arlington, Virginia 22202
Attention: Michael Warden
Friedman, Billings, Ramsey & Co., Inc.
1001 Nineteenth Street North
Arlington, Virginia 22202
Attention: FBR Chief Legal Counsel
First NLC Trust 2005-1
(i) a review of the activities of the Master Servicer during the preceding
fiscal year and of its performance under this Agreement has been made under
such officer's supervision, and
(ii) to the best of such officer's knowledge, based on such review, the Master
Servicer has fulfilled all of its obligations under this Agreement
throughout such fiscal year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof and the action being taken
by the Master Servicer to cure such default.
JPMorgan Chase Bank, N.A.
By: /s/ William Jenkins March 15, 2006
-------------------
William Jenkins
Vice President
-11-
<page>
EXHIBIT 99.2
Ocwen Federal Bank FSB, as Subservicer
Annual Independent Accountant's Servicing Report with Management Assertion
Annual Servicer's Statement as to Compliance
--------------------
PricewaterhouseCoopers LLP
222 Lakeview Avenue
Suite 360
West Palm Beach, FL 33401
Telephone (561) 832-0038
Facsimile (561) 805-8181
Report of Independent Certified Public Accountants
To the Board of Directors of
Ocwen Loan Servicing, LLC
We have examined management's assertion that Ocwen Loan Servicing, LLC ("OLS"),
as successor to Ocwen Federal Bank FSB (the "Bank"), has complied with the
minimum servicing standards identified in the Mortgage Bankers Association of
America's ("MBA's") Uniform Single Attestation Program for Mortgage Bankers
("USAP") as of and for the year ended December 31, 2005 included in the
accompanying Management Assertion on Compliance with USAP. Management is
responsible for OLS's compliance with those minimum servicing standards. Our
responsibility is to express an opinion on management's assertion about OLS's
compliance based on our examination.
Our examination was made in accordance with attestation standards established by
the American Institute of Certified Public Accountants and, accordingly,
included examining, on a test basis, evidence about OLS's compliance with the
minimum servicing standards 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 does not provide a
legal determination on OLS's compliance with the minimum servicing standards.
Our examination disclosed noncompliance with minimum servicing standards related
to custodial account reconciliations and adjustments on adjustable rate
mortgages applicable to OLS during the year ended December 31, 2005 which is
described in the accompanying Management Assertion on Compliance with USAP.
In our opinion, management's assertion that OLS complied with the aforementioned
minimum servicing standards, except for noncompliance as described in the
accompanying Management Assertion on Compliance with USAP, as of and for the
year ended December 31, 2005 is fairly stated, in all material respects.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
February 27, 2006
OCWEN
MANAGEMENT ASSERTION ON COMPLIANCE WITH USAP
February 27, 2006
As of and for the year ended December 31, 2005, Ocwen Loan Servicing, LLC
("OLS"), as successor to Ocwen Federal Bank FSB (the "Bank"), except as
specifically noted below, has complied in all material respects with the minimum
servicing standards set forth in the Mortgage Bankers Association of America's
("MBA's") Uniform Single Attestation Program for Mortgage Bankers ("USAP").
. Standard: Reconciliations shall be prepared on a monthly basis for all
custodial bank accounts and related bank clearing accounts. These
reconciliations shall be mathematically accurate, be prepared within
forty five (45) calendar days of the cutoff date; be reviewed and
approved by someone other than the person who prepared the
reconciliation; and document explanations for reconciling items. These
reconciling items shall be resolved within ninety (90) calendar days
of their original identification.
We have complied with all aspects of this standard with the exception of certain
reconciling items which arose during the year ended December 31, 2005 were not
cleared within 90 days of their original identification. All items identified
were subsequently cleared within 6 months. As of December 31, 2005, there was
exactly 1 reconciling item totaling $431.07 that had not cleared within 90 days
of identification.
. Standard: Adjustments on ARM loans shall be computed based on the
related mortgage note and any ARM rider.
Certain ARM loans serviced by OLS were transferred in with an incorrect look
back date due to errors in prior servicer records. These certain loans had ARM
adjustments shortly after servicing transfer, but prior to OLS receiving the
related mortgage documents from the prior servicer. When OLS received the
mortgage documents and these errors were identified, OLS did not adjust the
principal and interest payment amount. OLS has subsequently made adjustments to
their procedures when they identify an error in prior servicer data to analyze
the affect on the customer's account and make the appropriate adjustment.
As of and for this same period, OLS had in effect a fidelity bond in the amount
of $20,000,000 and an errors and omissions policy in the amount of $5,000,000.
By: /s/ Ronald M. Faris By: /s/ Scott W. Anderson
- -------------------------- -------------------------
Ronald M. Faris Scott W. Anderson
President Senior Vice President of
Residential Assets
By: /s/ Brian J. LaForest By: /s/ Thomas Vickers
- -------------------------- -------------------------
Brian J. LaForest Thomas Vickers
Director of Investor Reporting Director and Servicing Controller
-12-
<page>
OCWEN
Ocwen Loan Servicing, LLC
successor in interest to
Ocwen Federal Bank FSB
Compliance Certification Year Ended December 31, 2005
First NLC 2005-1
The undersigned Officer of Ocwen Loan Servicing, LLC successor in interest to
Ocwen Federal Bank FSB (the "Servicer") confirms that a review of the activities
of the Subservicer during the preceding fiscal year and of the performance of
the Subservicer under the Transfer and Servicing Agreement dated as of April 1,
2005 for First NLC Trust 2005-1 (the "Servicing Agreement") has been made under
his supervision. To the best of the undersigned Officer's knowledge, based on
such review, the Subservicer has fulfilled all of its obligations as set forth
in the Servicing Agreement throughout such fiscal year.
By: /s/ Scott W. Anderson Dated: March 15, 2006
- ---------------------------------------
Scott W. Anderson, Senior Vice President
Ocwen Loan Servicing LLC
1661 Worthington Road Suite 100
Centrepark West
West Palm Beach, FL 33409
-13-