EXECUTED VERSION
CERTIFICATE GUARANTY INSURANCE POLICY ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy No. AB1044BE November 29, 2006
issued to:
Deutsche Bank Trust Company Americas, as Trustee
on behalf of, and for the benefit of the Holders of,
the Residential Accredit Loans, Inc. Class A-3
Mortgage Asset-Backed Pass-Through Certificates,
Series 2006-QH1
For all purposes of this Policy, the following terms shall have the
following meanings:
"Agreement" shall mean the Series Supplement, dated as of November 1,
2006, among Residential Accredit Loans, Inc., as Depositor, Residential Funding
Company, LLC, as Master Servicer, and Deutsche Bank Trust Company Americas, as
Trustee, to the Standard Terms of Pooling and Servicing Agreement, dated as of
November 1, 2006, as such Agreement may be amended, modified or supplemented
from time to time as set forth in the Agreement.
"Deficiency Amount" shall, as applied to the Class A-3 Certificates,
mean (A) with respect to each Distribution Date prior to the Final Scheduled
Distribution Date, an amount equal to the sum of (i) any shortfall in amounts
available in the Certificate Account to pay one month's interest on the
Certificate Principal Balance of the Class A-3 Certificates at the applicable
Pass-Through Rate, net of any Relief Act Shortfalls and Prepayment Interest
Shortfalls allocated to the Class A-3 Certificates and (ii) the principal
portion of any Realized Losses allocated to the Class A-3 Certificates for such
Distribution Date; (B) with respect to the Final Scheduled Distribution Date and
the Class A-3 Certificates, an amount equal to the outstanding Certificate
Principal Balance of the Class A-3 Certificates due on such Final Scheduled
Distribution Date to the extent not paid from all sources other than this Policy
on that Distribution Date; and (C) for any date on which the acceleration of the
Certificates has been directed or consented to by the Certificateholders
pursuant to the Agreement, the amount required to pay the Certificate Principal
Balance of the Class A-3 Certificates in full, together with accrued and unpaid
interest thereon through the date of payment of the Class A-3 Certificates. Any
Deficiency Amount shall not include any Prepayment Interest Shortfalls, any
Relief Act Shortfalls or any shortfalls attributable to the Net Rate Cap or to
Net Deferred Interest. For purposes of the foregoing, amounts in the Certificate
Account available for interest distributions on any Distribution Date shall be
deemed to include all amounts in the Certificate Account for such Distribution
Date available for distribution on such Distribution Date.
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"Distribution Date" shall mean the 25th day of each month (or if such
25th day is not a Business Day, the first Business Day immediately following)
beginning with the First Distribution Date.
"Due for Payment" shall mean, with respect to any Insured Amounts, such
amount that is due and payable under the Agreement on the related Distribution
Date.
"Final Scheduled Distribution Date" shall mean, with respect to the
Class A-3 Certificates, the Distribution Date in December 2036.
"First Distribution Date" shall mean December 26, 2006.
"Holder" shall mean any person who is the registered owner or beneficial
owner of any of the Class A-3 Certificates.
"Insurance Policy" or "Policy" shall mean this Certificate Guaranty
Insurance Policy together with each and every endorsement hereto.
"Insured Amounts" (1) shall mean, with respect to any Distribution Date,
any Deficiency Amount plus any Preference Amount and (2) shall mean, with
respect to the Final Scheduled Distribution Date, the Deficiency Amount for the
Final Scheduled Distribution Date.
"Insured Obligations" shall mean the Class A-3 Certificates as issued
pursuant to the Agreement.
"Insured Payments" shall mean, with respect to any Distribution Date,
the aggregate amount actually paid by the Insurer to the Trustee in respect of
Insured Amounts for such Distribution Date.
"Insurer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Insurance Policy.
"Late Payment Rate" shall mean the lesser of (a) the greater of (i) the
per annum rate of interest publicly announced from time to time by Xxxxxxxx,
N.A. as its prime or base lending rate plus one per centum per annum (any change
in such rate of interest to be effective on the date such change is announced by
Citibank, N.A.), and (ii) the then applicable rate of interest on the Class A-3
Certificates and (b) the maximum rate permissible under applicable usury or
similar laws limiting interest rates. The Late Payment Rate shall be computed on
the basis of the actual number of days elapsed over a year of 360 days for any
Distribution Date.
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"Letter Agreement" shall mean the letter agreement, dated November 29,
2006, between the Insurer and Residential Funding Company, LLC.
"Nonpayment" shall mean, with respect to any Distribution Date, an
Insured Amount which is Due for Payment but has not and will not be paid in
respect of such Distribution Date pursuant to the Agreement.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Amount which shall be
due and owing on the applicable Distribution Date.
"Preference Amount" shall mean any amount previously distributed to a
Class A-3 Certificateholder by or on behalf of the Trust Estate that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended
from time to time, in accordance with a final nonappealable order of a court
having competent jurisdiction.
"Premium" shall mean the premium amount payable to the Insurer on each
Distribution Date as specified in this Policy.
"Premium Percentage" shall have the meaning set forth in the Letter
Agreement.
"Reimbursement Amount" shall mean, as of any Distribution Date, the sum
of (x) (i) all Insured Payments paid by the Insurer, but for which the Insurer
has not been reimbursed prior to such Distribution Date pursuant to Section 4.02
of the Agreement, plus (ii) interest accrued thereon, calculated at the Late
Payment Rate from the date the Trustee received the related Insured Payments,
and (y) (i) any other amounts then due and owing to the Insurer under this
Policy but for which the Insurer has not been reimbursed prior to such
Distribution Date pursuant to Section 4.02 of the Agreement plus (ii) interest
on such amounts at the Late Payment Rate.
"Term of the Policy" shall mean the period from and including the date
of issuance of the Policy to and including the date on which (i) the Certificate
Principal Balance of the Class A-3 Certificates is reduced to zero, (ii) any
period during which any payment of the Class A-3 Certificates could have been
avoided in whole or in part as a preference payment under applicable bankruptcy,
insolvency, receivership or similar law has expired, and (iii) if any
proceedings requisite to avoidance as a preference payment have been commenced
prior to the occurrence of (i) and (ii), a final and nonappealable order in
resolution of each such proceeding has been entered.
"Trustee" shall mean Deutsche Bank Trust Company Americas, or any
successor thereto under the Agreement.
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Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement.
The Insurer hereby agrees that if, as of any Distribution Date, it has
become subrogated to the rights of Holders by virtue of a previous payment under
this Policy, no recovery of such payment will occur unless the full amount of
the Holders' allocable distributions for such Distribution Date can be made. In
so doing, the Insurer does not waive its rights to seek full payment of all
Reimbursement Amounts owed to it under the Agreement and this Policy.
As provided by the Policy, the Insurer will pay any amount payable
hereunder, other than Preference Amounts, no later than 12:00 noon, New York
City time, on the later of the Distribution Date on which the related Deficiency
Amount is due or the Business Day following actual receipt in New York, New York
on a Business Day by the Insurer of a Notice; provided that, if such Notice is
received after 12:00 noon, New York City time, on such Business Day, it shall be
deemed to be received on the following Business Day. If any such Notice is not
in proper form or is otherwise insufficient for the purpose of making a claim
under the Policy, it shall be deemed not to have been received for purposes of
this paragraph, and the Insurer shall promptly so advise the Trustee and the
Trustee may submit an amended or corrected Notice.
The Insurer shall pay any Preference Amount when due to be paid pursuant
to the Order referred to below, but in any event no earlier than the third
Business Day following receipt by the Insurer of (i) a certified copy of a
final, non-appealable order of a court or other body exercising jurisdiction in
such insolvency proceeding to the effect that the Trustee or the Holder is
required to return such Preference Amount paid during the term of this Policy
because such payments were avoided as a preferential transfer or otherwise
rescinded or required to be restored by the Trustee or the Holder (the "Order"),
(ii) a certificate by or on behalf of the Trustee that the Order has been
entered and is not subject to any stay, (iii) an assignment, in form and
substance satisfactory to the Insurer, duly executed and delivered by the
Trustee or the Holder, as applicable, irrevocably assigning to the Insurer all
rights and claims of the Trustee or the Holder, as applicable, relating to or
arising under the Agreement against the estate of the Trustee or otherwise with
respect to such Preference Amount and (iv) a Notice of Nonpayment (attached
hereto as Exhibit A) appropriately completed and executed by the Trustee. Such
payment shall be disbursed to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the Order, and not to the Trustee or the Holder,
as applicable, directly, unless the Trustee or the Holder, as applicable, has
made a payment of the Preference Amount to the court or such receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order,
in which case the Insurer will pay the Trustee on behalf of the Holder, subject
to the delivery of (a) the items referred to in clauses (i), (ii), (iii) and
(iv) above to the Insurer and (b) evidence satisfactory to the Insurer that
payment has been made to such court or receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order.
Notwithstanding the foregoing two sentences, the Insurer shall not be obligated
to pay any Preference Amount in respect of principal (other than principal paid
in connection with Realized Losses) except on the Final Scheduled Distribution
Date or earlier termination of the Trust Fund pursuant to the terms of the
Agreement.
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The terms and provisions of the Agreement constitute the instrument of
assignment referred to in the second paragraph of the face of the Policy.
A Premium will be payable on this Policy on each Distribution Date as
provided in Section 4.02 of the Agreement and the Letter Agreement, beginning
with the First Distribution Date, in an amount equal to 1/12th of the product of
(i) the Premium Percentage applicable to the Class A-3 Certificates and (ii) the
aggregate Certificate Principal Balance of the Class A-3 Certificates on the
prior Distribution Date (after giving effect to any distributions of principal
made on such Distribution Date); provided that on the First Distribution Date,
the Premium will be in an amount equal to 1/12th of the product of (i) the
Premium Percentage applicable to the Class A-3 Certificates and (ii) the
aggregate Certificate Principal Balance of the Class A-3 Certificates on the
Closing Date.
Payments due under the Policy with respect to the Class A-3 Certificates
may not, except with the consent of the Insurer, be accelerated by the
Depositor, the Trustee or any paying agent for the Class A-3 Certificates.
The Policy to which this Endorsement is attached and of which it forms a
part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Insurer. The Policy does not cover shortfalls, if any, attributable to the
liability of the Trust Fund, any REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such liability). The
Policy does not provide any coverage with respect to Prepayment Interest
Shortfalls, Relief Act Shortfalls or any shortfalls attributable to the Net Rate
Cap or to Net Deferred Interest.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated. Notwithstanding the foregoing
sentence, if there is any conflict or inconsistency between the Policy and this
Endorsement, the terms of this Endorsement shall control.
No waiver of any rights or powers of the Insurer, the Holders or the
Trustee or consent by any of them shall be valid unless signed by an authorized
officer or agent thereof.
On and after the completion of the Term of the Policy, the Policy shall
be void and of no force and effect whatsoever.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of New York (without giving effect to the conflict
of laws provisions thereof).
For your protection California law requires the following to appear on
this form:
ANY PERSON WHO KNOWINGLY PRESENTS A FALSE OR FRAUDULENT CLAIM FOR THE
PAYMENT OF A LOSS IS GUILTY OF A CRIME AND MAY BE SUBJECT TO FINES AND
CONFINEMENT IN STATE PRISON.
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IN THE EVENT AMBAC ASSURANCE CORPORATION WERE TO BECOME INSOLVENT, ANY
CLAIMS ARISING UNDER THE POLICY WOULD BE EXCLUDED FROM COVERAGE BY THE
CALIFORNIA INSURANCE GUARANTY ASSOCIATION.
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IN WITNESS WHEREOF, the Insurer has caused this Endorsement to the
Policy to be signed by its duly authorized officers.
Managing Director Assistant Secretary
___________________________________ ___________________________________
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EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
Policy No. AB1044BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
AMBAC ASSURANCE CORPORATION
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No. AB1044BE
(the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Series Supplement, dated as of November 1, 2006, among Residential
Accredit Loans, Inc., as Depositor, Residential Funding Company, LLC, as Master
Servicer, and Deutsche Bank Trust Company Americas, as Trustee, to the Standard
Terms of Pooling and Servicing Agreement, dated as of November 1, 2006, (as such
Agreement may be amended, modified or supplemented from time to time as set
forth in the Agreement) (the "Agreement"), as the case may be, unless the
context otherwise requires.
The Trustee hereby certifies as follows:
1. The Trustee is the Trustee under the Agreement for the
Certificateholders.
2. The relevant Distribution Date or Final Scheduled Distribution
Date is [date].
3. Payment on the Class A-3 Certificates in respect of the
Distribution Date is due to be received on
____________________________ under the Agreement, in an amount
equal to $_____________________.
[3. The amount to be received on ____________________ from the sale,
liquidation or other disposition of the assets of the Trust Fund is
$__________.]
[3. The amount to be paid to the Holders of the Class A-3 Certificates
on the Final Scheduled Distribution Date is $__________.]
4. There is a Deficiency Amount and/or a Preference Amount of
$______________ due in respect of the Class A-3 Certificates, which
amount is an Insured Amount pursuant to the terms of the Agreement.
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5. The sum of $__________________ is the Insured Amount that is Due
For Payment.
6. The Trustee has not heretofore made a demand for the Insured Amount
in respect of the Distribution Date.
7. The Trustee hereby requests the payment of the Insured Amount that
is Due for Payment be made by Ambac under the Policy and directs
that payment under the Policy be made to the following account by
bank wire transfer of federal or other immediately available funds
in accordance with the terms of the Policy to:
____________________________________ Trustee's account number.
8. The Trustee hereby agrees that, following receipt of the Insured
Amount from Ambac, it shall (a) hold such amounts in trust and
apply the same directly to the distribution of payment on the Class
A-3 Certificates when due; (b) not apply such funds for any other
purpose; (c) deposit such funds to the Certificate Account and not
commingle such funds with other funds held by the Trustee and (d)
maintain an accurate record of such payments with respect to the
Class A-3 Certificates and the corresponding claim on the Policy
and proceeds thereof.
For your protection California law requires the following to appear on
this form:
ANY PERSON WHO KNOWINGLY PRESENTS A FALSE OR FRAUDULENT CLAIM FOR THE
PAYMENT OF A LOSS IS GUILTY OF A CRIME AND MAY BE SUBJECT TO FINES AND
CONFINEMENT IN STATE PRISON.
Trustee
By:_________________________________________
Title:______________________________________
(Officer)
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