WACHOVIA MORTGAGE LOAN TRUST, LLC
Depositor
▇▇▇▇▇ FARGO BANK, N.A. and NATIONAL CITY MORTGAGE CO.
Servicers
and
U.S. BANK NATIONAL ASSOCIATION
Trustee, Supplemental Interest Trust Trustee and Custodian
______________________________________
POOLING AND SERVICING AGREEMENT
Dated as of December 27, 2006
______________________________________
WACHOVIA MORTGAGE LOAN TRUST
ASSET-BACKED CERTIFICATES, SERIES 2006-ALT1
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT 1
ARTICLE I DEFINITIONS....................................................................................7
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES..................................59
SECTION 2.01. Conveyance of Mortgage Loans................................................59
SECTION 2.02. Acceptance by the Custodian of the Mortgage Loans...........................62
SECTION 2.03. Representations, Warranties and Covenants of the Depositor..................63
SECTION 2.04. Representations and Warranties of the Servicers and the
Trustee.....................................................................68
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are
not "Qualified Mortgages"...................................................71
SECTION 2.06. Authentication and Delivery of Certificates.................................71
SECTION 2.07. REMIC Elections.............................................................72
SECTION 2.08. [Reserved]..................................................................73
SECTION 2.09. Covenants of the Servicers..................................................73
SECTION 2.10. [Reserved]..................................................................73
SECTION 2.11. Permitted Activities of the Trust...........................................73
SECTION 2.12 Agreement Regarding Ability to Disclose.....................................74
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS................................................74
SECTION 3.01. Servicer to Service Mortgage Loans..........................................74
SECTION 3.02. Servicing, Subservicing and Subcontracting; Enforcement of
the Obligations of Servicer.................................................76
SECTION 3.03. Rights of the Depositor, the Custodian and the Trustee in
Respect of the Servicers....................................................77
SECTION 3.04. Trustee to Act as Servicer..................................................77
SECTION 3.05. Collection of Mortgage Loan Payments; Servicer Collection
Account; Certificate Account................................................78
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow
Accounts....................................................................82
SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans..........................................................83
SECTION 3.08. Permitted Withdrawals from the Servicer Collection Accounts
and Certificate Account.....................................................83
SECTION 3.09. Credit Reporting............................................................85
SECTION 3.10. Maintenance of Hazard Insurance.............................................85
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements...................86
ii
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of
Excess Proceeds.............................................................88
SECTION 3.13. Custodian to Cooperate; Release of Mortgage Files...........................90
SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be
Held for the Trustee........................................................91
SECTION 3.15. Servicing Compensation......................................................92
SECTION 3.16. Access to Certain Documentation.............................................92
SECTION 3.17. Special Servicing Agreements................................................93
SECTION 3.18. [Reserved]..................................................................93
SECTION 3.19. [Reserved]..................................................................93
SECTION 3.20. [Reserved]..................................................................93
SECTION 3.21. [Reserved]..................................................................93
SECTION 3.22. [Reserved]..................................................................93
SECTION 3.23. Prepayment Charge Reporting Requirements....................................93
SECTION 3.24. Statements to the Trustee...................................................93
SECTION 3.25. Indemnification.............................................................93
SECTION 3.26. Nonsolicitation.............................................................94
ARTICLE IV DISTRIBUTIONS.................................................................................95
SECTION 4.01. Advances....................................................................95
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls..............................................96
SECTION 4.03. Distributions on the REMIC Interests........................................96
SECTION 4.04. Distributions...............................................................96
SECTION 4.05. Monthly Statements to Certificateholders...................................102
SECTION 4.06. Class P Reserve Account....................................................106
ARTICLE V THE CERTIFICATES.............................................................................106
SECTION 5.01. The Certificates...........................................................106
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates............................................................107
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates..........................111
SECTION 5.04. Persons Deemed Owners......................................................111
SECTION 5.05. Access to List of Certificateholders' Names and Addresses..................111
SECTION 5.06. Book-Entry Certificates....................................................111
iii
SECTION 5.07. Notices to Depository......................................................112
SECTION 5.08. Definitive Certificates....................................................112
SECTION 5.09. Maintenance of Office or Agency............................................113
ARTICLE VI THE DEPOSITOR, THE SERVICERS AND THE CUSTODIAN...............................................113
SECTION 6.01. Respective Liabilities of the Depositor, the Servicers and
the Custodian..............................................................113
SECTION 6.02. Merger or Consolidation of the Depositor, the Servicers or
the Custodian..............................................................113
SECTION 6.03. Limitation on Liability of the Depositor, the Servicers, the
Custodian and Others.......................................................114
SECTION 6.04. Limitation on Resignation of a Servicer....................................114
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.............................115
ARTICLE VII DEFAULT; TERMINATION OF SERVICER.............................................................115
SECTION 7.01. Events of Default..........................................................115
SECTION 7.02. Trustee to Act; Appointment of Successor...................................116
SECTION 7.03. Notification to Certificateholders.........................................118
ARTICLE VIII CONCERNING THE TRUSTEE.......................................................................118
SECTION 8.01. Duties of the Trustee......................................................118
SECTION 8.02. Certain Matters Affecting the Trustee......................................119
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans......................121
SECTION 8.04. Trustee May Own Certificates...............................................122
SECTION 8.05. Trustee's Fees and Expenses................................................122
SECTION 8.06. Indemnification and Expenses of Trustee....................................122
SECTION 8.07. Eligibility Requirements for Trustee.......................................123
SECTION 8.08. Resignation and Removal of Trustee.........................................123
SECTION 8.09. Successor Trustee..........................................................124
SECTION 8.10. Merger or Consolidation of Trustee.........................................124
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee..............................124
SECTION 8.12. Tax Matters................................................................125
SECTION 8.13 X-AMB Swap Agreement.......................................................128
ARTICLE IX TERMINATION..................................................................................128
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans......................................................................128
SECTION 9.02. Final Distribution on the Certificates.....................................129
iv
SECTION 9.03. Additional Termination Requirements........................................130
ARTICLE X MISCELLANEOUS PROVISIONS.....................................................................131
SECTION 10.01. Amendment..................................................................131
SECTION 10.02. Counterparts...............................................................132
SECTION 10.03. Governing Law..............................................................133
SECTION 10.04. Intention of Parties.......................................................133
SECTION 10.05. Notices....................................................................133
SECTION 10.06. Severability of Provisions.................................................134
SECTION 10.07. Assignment.................................................................134
SECTION 10.08. Limitation on Rights of Certificateholders.................................135
SECTION 10.09. Inspection and Audit Rights................................................135
SECTION 10.10. Certificates Nonassessable and Fully Paid..................................135
SECTION 10.11 Third Party Beneficiary....................................................136
ARTICLE XI 1934 ACT REPORTING...........................................................................136
SECTION 11.01. Commission Reporting.......................................................136
SECTION 11.02. Form 10-D Reporting........................................................137
SECTION 11.03. Form 10-K Reporting........................................................137
SECTION 11.04. Form 8-K Reporting.........................................................139
SECTION 11.05. Delisting; Amendment; Late Filing of Reports...............................140
SECTION 11.06. Annual Statements of Compliance............................................140
SECTION 11.07. Annual Assessments of Compliance...........................................141
SECTION 11.08. Accountant's Attestation...................................................142
SECTION 11.09. ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification...............................................142
SECTION 11.10. Indemnification............................................................143
v
EXHIBIT A..................FORMS OF CERTIFICATES
EXHIBIT B..................MORTGAGE LOAN SCHEDULE
EXHIBIT C..................[RESERVED]
EXHIBIT D..................FORM OF CUSTODIAN CERTIFICATION
EXHIBIT E-1................FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2................FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F..................FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G..................FORM OF INVESTMENT LETTER (ACCREDITED INVESTOR)
EXHIBIT H..................FORM OF RULE 144A LETTER (QUALIFIED INSTITUTIONAL BUYER)
EXHIBIT I..................FORM OF REQUEST FOR RELEASE
EXHIBIT J..................FORM OF REGULATION S LETTER
EXHIBIT K..................[RESERVED]
EXHIBIT L..................[RESERVED]
EXHIBIT M..................FORM OF SWAP AGREEMENT
EXHIBIT N..................FORM OF 10-K CERTIFICATION
EXHIBIT O..................RELEVANT SERVICING CRITERIA
EXHIBIT P..................ADDITIONAL FORM 10-D DISCLOSURE
EXHIBIT Q..................FORM OF MONTHLY STATEMENT
EXHIBIT R..................ADDITIONAL DISCLOSURE NOTIFICATION
EXHIBIT S..................ADDITIONAL FORM 10-K DISCLOSURE
EXHIBIT T..................ADDITIONAL FORM 8-K DISCLOSURE
EXHIBIT U..................X-AMB SWAP AGREEMENT
vi
POOLING AND SERVICING AGREEMENT (the "Agreement"), dated as of December 27, 2006, among
WACHOVIA MORTGAGE LOAN TRUST, LLC, a Delaware limited liability company, as depositor (the "Depositor"),
U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the "Trustee"), supplemental
interest trust trustee (the "Supplemental Interest Trust Trustee") and custodian (the "Custodian"),
▇▇▇▇▇ FARGO BANK, N.A., a national banking association, as a servicer, and National City Mortgage Co.,
an Ohio corporation, as a servicer (together with ▇▇▇▇▇ Fargo Bank, N.A., each a "Servicer" or,
collectively, the "Servicers").
PRELIMINARY STATEMENT:
The Depositor intends to sell asset-backed certificates (collectively, the "Certificates"), to
be issued hereunder in twelve Classes, which in the aggregate will evidence the entire beneficial
ownership interest in the Mortgage Loans (as defined herein) and certain other related assets.
REMIC I
As provided herein, the REMIC Administrator will make an election to treat the segregated pool
of assets consisting of the Mortgage Loans and certain other related assets (exclusive of the
Supplemental Interest Trust, the Swap Agreement and the X-AMB Swap Agreement) subject to this Agreement
as a real estate mortgage investment conduit (a "REMIC") for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC I." The Class R-I Certificates will represent
the sole Class of "residual interests" in REMIC I for purposes of the REMIC Provisions (as defined
herein) under federal income tax law. The following table irrevocably sets forth the designation,
remittance rate (the "Uncertificated REMIC I Pass Through Rate") and initial Uncertificated Principal
Balance for each of the "regular interests" in REMIC I (the "REMIC I Regular Interests"). The "latest
possible maturity date" (determined solely for purposes of satisfying Treasury regulation Section 1.860G
1(a)(4)(iii)) for each REMIC I Regular Interest shall be the Maturity Date. None of the REMIC I Regular
Interests will be certificated.
Uncertificated REMIC I Initial Uncertificated REMIC I
Designation Pass-Through Rate Principal Balance
I-1-A Variable(1) $ 5,635,821.00
I-2-A Variable(1) $ 2,849,360.50
I-3-A Variable(1) $ 5,071,655.00
I-4-A Variable(1) $ 4,803,769.00
I-5-A Variable(1) $ 7,045,355.50
I-6-A Variable(1) $ 6,796,080.00
I-7-A Variable(1) $ 6,555,619.00
I-8-A Variable(1) $ 6,323,661.00
I-9-A Variable(1) $ 6,099,906.00
I-10-A Variable(1) $ 5,884,063.50
I-11-A Variable(1) $ 5,675,854.00
I-12-A Variable(1) $ 5,475,007.50
I-13-A Variable(1) $ 5,281,264.50
I-14-A Variable(1) $ 5,094,373.50
I-15-A Variable(1) $ 4,914,091.00
I-16-A Variable(1) $ 4,740,186.00
I-17-A Variable(1) $ 4,572,430.50
I-18-A Variable(1) $ 4,410,609.00
I-19-A Variable(1) $ 4,254,510.50
I-20-A Variable(1) $ 10,345,827.00
I-21-A Variable(1) $ 3,733,714.00
I-22-A Variable(1) $ 3,601,588.50
I-23-A Variable(1) $ 3,474,136.00
I-24-A Variable(1) $ 3,351,191.00
I-25-A Variable(1) $ 3,232,594.50
I-26-A Variable(1) $ 3,118,192.00
I-27-A Variable(1) $ 3,007,836.50
I-28-A Variable(1) $ 2,901,383.50
I-29-A Variable(1) $ 2,798,696.50
I-30-A Variable(1) $ 2,699,641.50
I-31-A Variable(1) $ 4,388,260.00
I-32-A Variable(1) $ 2,447,089.50
I-33-A Variable(1) $ 2,360,482.50
I-34-A Variable(1) $ 2,276,940.00
I-35-A Variable(1) $ 2,196,352.00
I-36-A Variable(1) $ 2,118,614.50
I-37-A Variable(1) $ 1,726,657.00
I-38-A Variable(1) $ 1,971,287.50
I-39-A Variable(1) $ 1,901,510.50
I-40-A Variable(1) $ 1,834,203.00
I-41-A Variable(1) $ 1,769,276.00
I-42-A Variable(1) $ 1,706,645.50
I-43-A Variable(1) $ 1,646,231.00
I-44-A Variable(1) $ 1,587,954.00
I-45-A Variable(1) $ 1,531,738.00
I-46-A Variable(1) $ 1,477,511.50
I-47-A Variable(1) $ 1,425,203.50
I-48-A Variable(1) $ 1,374,745.50
I-49-A Variable(1) $ 1,326,073.50
I-50-A Variable(1) $ 1,279,118.50
I-51-A Variable(1) $ 1,233,847.00
I-52-A Variable(1) $ 1,190,202.00
I-53-A Variable(1) $ 1,148,057.50
I-54-A Variable(1) $ 1,107,405.00
I-55-A Variable(1) $ 1,068,190.00
I-56-A Variable(1) $ 16,552,371.50
I-57-A Variable(1) $ 422,574.50
I-58-A Variable(1) $ 407,641.50
I-59-A Variable(1) $ 393,194.00
I-60-A Variable(1) $ 379,258.00
I-61-A Variable(1) $ 365,815.50
I-62-A Variable(1) $ 352,849.00
I-63-A Variable(1) $ 340,342.00
I-64-A Variable(1) $ 328,277.50
I-65-A Variable(1) $ 316,641.00
I-66-A Variable(1) $ 305,416.50
I-67-A Variable(1) $ 294,589.50
I-68-A Variable(1) $ 284,146.00
I-69-A Variable(1) $ 274,073.00
I-70-A Variable(1) $ 264,356.00
I-71-A Variable(1) $ 254,984.00
2
I-72-A Variable(1) $ 245,943.50
I-73-A Variable(1) $ 237,224.00
I-74-A Variable(1) $ 228,812.50
I-75-A Variable(1) $ 220,700.00
I-76-A Variable(1) $ 212,865.50
I-77-A Variable(1) $ 205,318.00
I-78-A Variable(1) $ 198,037.50
I-79-A Variable(1) $ 191,015.50
I-80-A Variable(1) $ 4,736,041.00
I-1-B Variable(1) $ 5,635,821.00
I-2-B Variable(1) $ 2,849,360.50
I-3-B Variable(1) $ 5,071,655.00
I-4-B Variable(1) $ 4,803,769.00
I-5-B Variable(1) $ 7,045,355.50
I-6-B Variable(1) $ 6,796,080.00
I-7-B Variable(1) $ 6,555,619.00
I-8-B Variable(1) $ 6,323,661.00
I-9-B Variable(1) $ 6,099,906.00
I-10-B Variable(1) $ 5,884,063.50
I-11-B Variable(1) $ 5,675,854.00
I-12-B Variable(1) $ 5,475,007.50
I-13-B Variable(1) $ 5,281,264.50
I-14-B Variable(1) $ 5,094,373.50
I-15-B Variable(1) $ 4,914,091.00
I-16-B Variable(1) $ 4,740,186.00
I-17-B Variable(1) $ 4,572,430.50
I-18-B Variable(1) $ 4,410,609.00
I-19-B Variable(1) $ 4,254,510.50
I-20-B Variable(1) $ 10,345,827.00
I-21-B Variable(1) $ 3,733,714.00
I-22-B Variable(1) $ 3,601,588.50
I-23-B Variable(1) $ 3,474,136.00
I-24-B Variable(1) $ 3,351,191.00
I-25-B Variable(1) $ 3,232,594.50
I-26-B Variable(1) $ 3,118,192.00
I-27-B Variable(1) $ 3,007,836.50
I-28-B Variable(1) $ 2,901,383.50
I-29-B Variable(1) $ 2,798,696.50
I-30-B Variable(1) $ 2,699,641.50
I-31-B Variable(1) $ 4,388,260.00
I-32-B Variable(1) $ 2,447,089.50
I-33-B Variable(1) $ 2,360,482.50
I-34-B Variable(1) $ 2,276,940.00
I-35-B Variable(1) $ 2,196,352.00
I-36-B Variable(1) $ 2,118,614.50
I-37-B Variable(1) $ 1,726,657.00
I-38-B Variable(1) $ 1,971,287.50
I-39-B Variable(1) $ 1,901,510.50
I-40-B Variable(1) $ 1,834,203.00
I-41-B Variable(1) $ 1,769,276.00
I-42-B Variable(1) $ 1,706,645.50
3
I-43-B Variable(1) $ 1,646,231.00
I-44-B Variable(1) $ 1,587,954.00
I-45-B Variable(1) $ 1,531,738.00
I-46-B Variable(1) $ 1,477,511.50
I-47-B Variable(1) $ 1,425,203.50
I-48-B Variable(1) $ 1,374,745.50
I-49-B Variable(1) $ 1,326,073.50
I-50-B Variable(1) $ 1,279,118.50
I-51-B Variable(1) $ 1,233,847.00
I-52-B Variable(1) $ 1,190,202.00
I-53-B Variable(1) $ 1,148,057.50
I-54-B Variable(1) $ 1,107,405.00
I-55-B Variable(1) $ 1,068,190.00
I-56-B Variable(1) $ 16,552,371.50
I-57-B Variable(1) $ 422,574.50
I-58-B Variable(1) $ 407,641.50
I-59-B Variable(1) $ 393,194.00
I-60-B Variable(1) $ 379,258.00
I-61-B Variable(1) $ 365,815.50
I-62-B Variable(1) $ 352,849.00
I-63-B Variable(1) $ 340,342.00
I-64-B Variable(1) $ 328,277.50
I-65-B Variable(1) $ 316,641.00
I-66-B Variable(1) $ 305,416.50
I-67-B Variable(1) $ 294,589.50
I-68-B Variable(1) $ 284,146.00
I-69-B Variable(1) $ 274,073.00
I-70-B Variable(1) $ 264,356.00
I-71-B Variable(1) $ 254,984.00
I-72-B Variable(1) $ 245,943.50
I-73-B Variable(1) $ 237,224.00
I-74-B Variable(1) $ 228,812.50
I-75-B Variable(1) $ 220,700.00
I-76-B Variable(1) $ 212,865.50
I-77-B Variable(1) $ 205,318.00
I-78-B Variable(1) $ 198,037.50
I-79-B Variable(1) $ 191,015.50
I-80-B Variable(1) $ 4,736,041.00
A-I Variable(1) $ 27,992,870.24
_______________
(1) Calculated as provided in the definition of Uncertificated REMIC I Pass-Through Rate.
4
REMIC II
As provided herein, the REMIC Administrator will make an election to treat the segregated pool
of assets consisting of the REMIC I Regular Interests as a REMIC for federal income tax purposes, and
such segregated pool of assets will be designated as "REMIC II." The Class R-II Certificates will
represent the sole Class of "residual interests" in REMIC II for purposes of the REMIC Provisions (as
defined herein) under federal income tax law. The following table irrevocably sets forth the
designation, remittance rate (the "Uncertificated REMIC II Pass-Through Rate") and initial
Uncertificated Principal Balance for each of the "regular interests" in REMIC II (the "REMIC II Regular
Interests"). The "latest possible maturity date" (determined solely for purposes of satisfying Treasury
regulation Section 1.860G 1(a)(4)(iii)) for each REMIC II Regular Interest shall be the Maturity Date.
None of the REMIC II Regular Interests will be certificated.
Uncertificated REMIC II Initial Uncertificated REMIC II
Designation Pass-Through Rate Principal Balance
_____________________________________________________________________________________
LT1 Variable(1) $ 459,627,790.73
LT2 Variable(1) $ 17,860.87
LT3 Variable(1) $ 28,109.32
LT4 Variable(1) $ 28,109.32
LT-IO Variable(1) (2)
_______________
(1) Calculated as provided in the definition of Uncertificated REMIC II Pass-Through Rate.
(2) REMIC II Regular Interest LT-IO will not have an Uncertificated Principal Balance but will accrue
interest on its uncertificated notional amount calculated in accordance with the definition of
"Uncertificated Notional Amount" herein.
5
REMIC III
As provided herein, the REMIC Administrator will elect to treat the segregated pool of assets
consisting of the REMIC II Regular Interests as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as REMIC III. The Class R-III Certificates will represent
the sole Class of "residual interests" in REMIC III for purposes of the REMIC Provisions under federal
income tax law. The following table irrevocably sets forth the designation, Pass Through Rate,
aggregate Initial Certificate Principal Balance, certain features, month of Final Scheduled Distribution
Date and initial ratings for each Class of Certificates comprising the interests representing "regular
interests" in REMIC III and REMIC III Regular Interest IO. The "latest possible maturity date"
(determined solely for purposes of satisfying Treasury Regulation Section 1.860G 1(a)(4)(iii)) for each
REMIC III Regular Interest shall be the Maturity Date.
Month of
Aggregate Final
Initial Scheduled
Pass-Through Certificate Distribution
Designation Type Rate Principal Balance Features Date Initial Ratings
S&P ▇▇▇▇▇'▇
Class A-1 Regular(1) Adjustable(2)(3) $236,585,000.00 Senior/Adjustable Rate February 2037 AAA Aaa
Class A-2 Regular(1) Adjustable(2)(3) $87,995,000.00 Senior/Adjustable Rate February 2037 AAA Aaa
Class A-3 Regular(1) Adjustable(2)(3) $109,376,000.00 Senior/Adjustable Rate February 2037 AAA Aaa
Class M-1 Regular(1) Adjustable(2)(3) $ 7,355,000.00 Mezzanine/Adjustable February 2037 AA+ Aa1
Rate
Class M-2 Regular(1) Adjustable(2)(3) $ 3,677,000.00 Mezzanine/Adjustable February 2037 AA Aa2
Rate
Class M-3 Regular(1) Adjustable(2)(3) $ 4,367,000.00 Mezzanine/Adjustable February 2037 A+ A1
Rate
Class M-4 Regular(1) Adjustable(2)(3) $ 2,068,000.00 Mezzanine/Adjustable February 2037 A+ A2
Rate
Class B-1 Regular(1) Adjustable(2)(3) $ 2,758,000.00 Subordinate/Adjustable February 2037 A- Baa1
Rate
Class B-2 Regular(1) Adjustable(2)(3) $ 2,528,000.00 Subordinate/Adjustable February 2037 BBB Baa3
Rate
Class X Regular(4) (4) $ 2,992,870.24 Economic Residual February 2037 N/R N/R
Class P (6) N/A $100 Prepayment Charges February 2037 N/R N/R
IO Regular(5) (7) (8) Interest Only February 2037 N/R N/R
___________________
___________________
(1) This Class of Certificates represents ownership of a REMIC III Regular Interest together with (i)
certain rights to payments to be made from amounts received under the Swap Agreement which will be
deemed made for federal income tax purposes outside of REMIC III and (ii) the obligation to pay the
Class IO Distribution Amount. Any amount distributed on this Class of Certificates on any
Distribution Date in excess of the amount distributable on the related REMIC III Regular Interest
on such Distribution Date shall be treated for federal income tax purposes as having been paid from
the Supplemental Interest Trust and any amount distributable on such REMIC III Regular Interest on
such Distribution Date in excess of the amount distributable on such Class of Certificates on such
Distribution Date shall be treated as having been paid to the Supplemental Interest Trust.
(2) The REMIC III Regular Interests ownership of which is represented by the Class A, Class M and Class
B Certificates, will accrue interest at a per annum rate equal to One-Month LIBOR plus the
applicable Margin, each subject to a payment cap at the Available Funds Cap and the provisions for
the payment of Available Funds Cap Carryover herein, which payments will not be part of the
entitlement of the REMIC III Regular Interests related to such Certificates.
(3) The Class A, Class M and Class B Certificates will also entitle their holders to certain payments
from the Holder of the Class X Certificates from amounts to which the related REMIC III Regular
Interest is entitled and from amounts received under the Swap Agreement, which will not be a part
of their ownership of the REMIC III Regular Interests.
(4) The Class X Certificates will accrue interest as described in the definition of Class X Current
Interest The Class X Certificates will not accrue interest on their Certificate Principal
Balance. The Class X Certificates will be comprised of two REMIC III regular interests, a
principal only regular interest designated X-PO and an interest only regular interest designated
X-IO, which will be entitled to distributions as set forth herein. The rights of the Holder of the
Class X Certificates to payments from the Swap Agreement shall be outside and apart from its rights
under the REMIC III Regular Interests X-IO and X-PO.
(5) REMIC III Regular Interest IO will be held as an asset of the Supplemental Interest Trust
established by the Supplemental Interest Trust Trustee and will be treated for federal income tax
purposes as owned by the holder of the Class X Certificate.
(6) The Class P Certificates will have an initial Certificate Principal Balance of $100 and will be
entitled to distributions of Prepayment Charges.
(7) For federal income tax purposes, REMIC III Regular Interest IO will not have a Pass-Through Rate,
but will be entitled to 100% of the amounts distributed on REMIC II Regular Interest LT-IO.
(8) For federal income tax purposes, REMIC III Regular Interest IO will not have an Uncertificated
Principal Balance, but will have a notional amount equal to the Uncertificated Notional Amount of
REMIC II Regular Interest LT-IO.
6
In consideration of the mutual agreements herein contained, the Depositor, the Servicers, the
Custodian and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
Accepted Servicing Practices: The applicable Servicer's normal servicing practices, which will
conform to the mortgage servicing practices of prudent mortgage lending institutions that service for
their own account mortgage loans of the same type as the Mortgages Loans in the jurisdictions in which
the related Mortgaged Properties (or Underlying Mortgaged Properties in the case of Co-op Loans) are
located.
Accountant's Attestation: The attestation required from an accountant pursuant to Section 11.08.
Accrual Period: With respect to each Class of Certificates and any Distribution Date, the
period commencing on the immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding such Distribution
Date. All calculations of interest on each Class of Certificates will be made on the basis of the
actual number of days elapsed in the related Accrual Period and a 360 day year.
Additional Disclosure Notification: As defined in Section 11.02.
Additional Form 10-D Disclosure: As defined in Section 11.02.
Additional Form 10-K Disclosure: As defined in Section 11.03.
Additional Servicer: Each Affiliate of each Servicer that Services any of the Mortgage Loans
and each Person who is not an Affiliate of any Servicer who Services 10% or more of the Mortgage Loans
(measured by aggregate Stated Principal Balance of the Mortgage Loans, annually at the commencement of
the calendar year prior to the year in which an Item 1123 Certificate is required to be delivered). For
clarification purposes, the Trustee is an Additional Servicer.
Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan Schedule as
having a Mortgage Rate which is adjustable.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on which the related
Mortgage Rate is subject to adjustment, as provided in the related Mortgage Note.
Advance: The aggregate of the advances required to be made by each Servicer with respect to
any Distribution Date pursuant to Section 4.01, the amount of any such advances being equal to the sum
of the aggregate amount of all scheduled payments of principal and interest (net of the Servicing Fee
and the Lender Paid Mortgage Insurance Premium) on the Mortgage Loans that were due during the
applicable Due Period and not received as of the close of business on the related Determination Date
(other than the principal portion of any Balloon Amount), less the aggregate amount of any such
Delinquent payments that each Servicer has determined would constitute a Non-Recoverable Advance were an
advance to be made with respect thereto; provided, however, that with respect to any Mortgage Loan that
7
has been converted to an REO Property, the obligation to make advances shall be limited to payments of
interest.
Affiliate: With respect to any specified Person, any other Person controlling, controlled by
or under common control with such Person. For the purposes of this definition, "control" means the
power to direct the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: For any date of determination, the sum of the Class
A-1 Certificate Principal Balance, the Class A-2 Certificate Principal Balance, the Class A-3
Certificate Principal Balance, the Class M-1 Certificate Principal Balance, the Class M-2 Certificate
Principal Balance, the Class M-3 Certificate Principal Balance, the Class M-4 Certificate Principal
Balance, the Class B-1 Certificate Principal Balance and the Class B-2 Certificate Principal Balance, in
each case as of such date of determination.
Agreement: This Pooling and Servicing Agreement and any and all amendments or supplements
hereto made in accordance with the terms herein.
Applied Realized Loss Amount: With respect to any Distribution Date, the amount, if any, by
which, the sum of (i) the Aggregate Certificate Principal Balance and (ii) the Class X Certificate
Principal Balance after distributions of principal on such Distribution Date exceeds the aggregate
Stated Principal Balance of the Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which were used to purchase
the related Mortgaged Property (or the related residential dwelling unit in the Underlying Mortgaged
Property in the case of a Co-op Loan), the "Appraised Value" of a Mortgaged Property (or the related
residential dwelling unit in the Underlying Mortgaged Property in the case of a Co-op Loan) is the
lesser of (1) the appraised value based on an appraisal made for the applicable Seller by an independent
fee appraiser at the time of the origination of the related Mortgage Loan, and (2) the sales price of
such Mortgaged Property (or the related residential dwelling unit in the Underlying Mortgaged Property
in the case of a Co-op Loan) at such time of origination. With respect to a Mortgage Loan the proceeds
of which were used to refinance an existing mortgage loan, the "Appraised Value" is the appraised value
of the Mortgaged Property (or the related residential dwelling unit in the Underlying Mortgaged Property
in the case of a Co-op Loan) based upon the appraisal obtained at the time of refinancing.
Assessment of Compliance: As defined in Section 11.07.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer (or UCC-3 assignment
(or equivalent instrument) with respect to each Co-op Loan) or equivalent instrument, in recordable form
(except in the case of a Co-op Loan) (except for the name of the assignee if such Mortgage Loan is
endorsed in blank), sufficient under the laws of the jurisdiction where the related Mortgaged Property
(or Underlying Mortgaged Property, in the case of a Co-op Loan) is located to reflect of record the sale
and assignment of the Mortgage Loan to the Trustee, which assignment, notice of transfer or equivalent
instrument may, if permitted by law, be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county.
Available Funds Cap: With respect to a Distribution Date, the percentage equivalent of a
fraction, the numerator of which is equal to the excess of (a) interest due on the Mortgage Loans, over
(b) the sum of (i) the Servicing Fee, (ii) the Trustee Fee, (iii) the Lender Paid Mortgage Insurance
Premium, (iv) Net Swap Payments owed by the Supplemental Interest Trust to the Swap Counterparty, if
8
any, and (v) any Swap Termination Payment (other than Defaulted Swap Termination Payments), in each case
with respect to such Distribution Date, and the denominator of which is equal to the product of (1) the
actual number of days in the related Accrual Period divided by 360 and (2) the Aggregate Certificate
Principal Balance.
Available Funds Cap Carryover: With respect to a Distribution Date, in the event that the
Pass-Through Rate for a class of Offered Certificates is based upon the Available Funds Cap, the excess
of (1) the amount of interest that such class would have been entitled to receive on such Distribution
Date had the Pass-Through Rate for that class not been calculated based on the Available Funds Cap over
(2) the amount of interest such class was entitled to receive on such Distribution Date based on the
Available Funds Cap together with (A) the unpaid portion of any such excess from prior Distribution
Dates (and interest accrued thereon at the then applicable Pass-Through Rate for such class, without
giving effect to the Available Funds Cap) and (B) any amount previously distributed with respect to
Available Funds Cap Carryover for such class that is recovered as a voidable preference by a trustee in
bankruptcy.
Balloon Loan: A Mortgage Loan having an original term to stated maturity of approximately 15
years which provides for level monthly payments of principal and interest based on a 30-year
amortization schedule, with a balloon payment of the remaining outstanding principal balance due on such
Mortgage Loan at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be registered in the name of the
Depository or its nominee, the ownership of which is reflected on the books of the Depository or on the
books of a Person maintaining an account with the Depository (directly, as a "Depository Participant",
or indirectly, as an indirect participant in accordance with the rules of the Depository and as
described in Section 5.06). As of the Closing Date, each Class of the Class A Certificates, Class M
Certificates and Class B Certificates constitutes a Class of Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or Sunday or (ii) a day on which banking
institutions in the State of Minnesota, State of North Carolina or the City of New York, New York are
authorized or obligated by law or executive order to be closed.
Certificate: Any one of the certificates of any Class executed by the Trustee and
authenticated by the Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The separate Eligible Account created and maintained by the Trustee
pursuant to Section 3.05(e) in the name of the Trustee for the benefit of the Certificateholders and
designated "U.S. Bank National Association, in trust for registered holders of Wachovia Mortgage Loan
Trust, Asset-Backed Certificates, Series 2006-ALT1." Funds in the Certificate Account shall be held in
trust for the Certificateholders for the uses and purposes set forth in this Agreement.
Certificate Owner: With respect to a Book-Entry Certificate, the Person that is the beneficial
owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any class of Offered Certificate and the Class X
Certificates and as of any Distribution Date, the Initial Certificate Principal Balance of such
Certificate less the sum of (1) all amounts distributed with respect to such Certificate in reduction of
the Certificate Principal Balance thereof on previous Distribution Dates pursuant to Section 4.04, and
(2) any Applied Realized Loss Amounts allocated to such Certificate on previous Distribution Dates
pursuant to Section 4.04(i). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class X Interest Carry Forward Amount in an amount equal to the
excess of the Overcollateralization Amount on such Distribution Date over the Overcollateralization
9
Amount as of the preceding Distribution Date (or, in the case of the first Distribution Date, the
initial Overcollateralization Amount (based on the Stated Principal Balance of the Mortgage Loans as of
the Cut-Off Date)) will be added to the aggregate Certificate Principal Balance of the Class X
Certificates (on a pro rata basis). Notwithstanding the foregoing on any Distribution Date relating to a
Due Period in which a Subsequent Recovery has been received by each Servicer, the Certificate Principal
Balance of any Class of Certificates then outstanding for which any Applied Realized Loss Amount has
been allocated will be increased, in order of seniority, by an amount equal to the lesser of (i) the
Unpaid Realized Loss Amount for such Class of Certificates and (ii) the total of any Subsequent Recovery
distributed on such date to the Certificateholders (reduced by the amount of the increase in the
Certificate Principal Balance of any more senior Class of Certificates pursuant to this sentence on such
Distribution Date).
Certificate Register: The register maintained pursuant to Section 5.02 hereof.
Certificateholder or Holder: The Person in whose name a Certificate is registered in the
Certificate Register, initially, Cede & Co., as nominee for the Depository, in the case of any Class of
Regular Certificates, or Wachovia Bank, National Association, in the case of the Class R Certificate,
except that solely for the purpose of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Depositor or any Affiliate of the Depositor shall be deemed not to be
Outstanding and the Percentage Interest evidenced thereby shall not be taken into account in determining
whether the requisite amount of Percentage Interests necessary to effect such consent has been obtained;
provided, however, that if any such Person (including the Depositor) owns 100% of the Percentage
Interests evidenced by a Class of Certificates, such Certificates shall be deemed to be Outstanding for
purposes of any provision hereof that requires the consent of the Holders of Certificates of a
particular Class as a condition to the taking of any action hereunder; provided that the Trustee shall
not be responsible for knowing that any Certificate is registered in the name of such an affiliate
unless one of its Responsible Officers has actual knowledge.
Certification Parties: As defined in Section 11.09.
Certifying Person: As defined in Section 11.09.
Class: All Certificates bearing the same Class designation as set forth in Section 5.01 hereof.
Class A Certificate Principal Balance: For any date of determination, the sum of the Class A-1
Certificate Principal Balance, the Class A-2 Certificate Principal Balance and the Class A-3 Certificate
Principal Balance.
Class A Certificates: Any of the Class A-1 Certificates, the Class A-2 Certificates and the
Class A-3 Certificates.
Class A Principal Distribution Amount: With respect to any Distribution Date (1) prior to the
Stepdown Date or any Distribution Date on which a Stepdown Trigger Event exists, 100% of the Principal
Distribution Amount for such Distribution Date and (2) on or after the Stepdown Date where a Stepdown
Trigger Event does not exist, the excess of (A) the Class A Certificate Principal Balance immediately
prior to such Distribution Date over (B) the lesser of (i) 88.80% of the Stated Principal Balance of the
Mortgage Loans as of the end of the immediately preceding Due Period and (ii) the excess of the Stated
Principal Balance of the Mortgage Loans as of the end of the immediately preceding Due Period over the
Overcollateralization Floor; provided, however, that in no event will the Class A Principal Distribution
Amount with respect to any Distribution Date exceed the aggregate Certificate Principal Balance of the
Class A Certificates.
10
Class A-1 Certificate: Any Certificate designated as a "Class A-1 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class A-1 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class A-1 Certificates.
Class A-1 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class A-1 Pass-Through Rate on the Class A-1 Certificate Principal Balance
as of such Distribution Date, less any Non-Supported Interest Shortfall allocated on such Distribution
Date to the Class A-1 Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class A-1 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class A-1 Current Interest with respect to prior Distribution Dates over (B) the
amount actually distributed to the Class A-1 Certificates with respect to interest on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by applicable law) at the
Class A-1 Pass-Through Rate for the related Accrual Period.
Class A-1 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 0.0800% per annum, and, as of any Distribution Date after the Optional
Termination Date, 0.1600% per annum.
Class A-1 Pass-Through Rate: For the first Distribution Date, 5.430% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class A-1 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class A-2 Certificate: Any Certificate designated as a "Class A-2 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class A-2 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class A-2 Certificates.
Class A-2 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class A-2 Pass-Through Rate on the Class A-2 Certificate Principal Balance
as of such Distribution Date, less any Non-Supported Interest Shortfall allocated on such Distribution
Date to the Class A-2 Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class A-2 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class A-2 Current Interest with respect to prior Distribution Dates over (B) the
amount actually distributed to the Class A-2 Certificates with respect to interest on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by applicable law) at the
Class A-2 Pass-Through Rate for the related Accrual Period.
Class A-2 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 0.1800% per annum, and, as of any Distribution Date after the Optional
Termination Date, 0.3600% per annum.
11
Class A-2 Pass-Through Rate: For the first Distribution Date, 5.530% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class A-2 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class A-3 Certificate: Any Certificate designated as a "Class A-3 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class A-3 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class A-3 Certificates.
Class A-3 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class A-3 Pass-Through Rate on the Class A-3 Certificate Principal Balance
as of such Distribution Date, less any Non-Supported Interest Shortfall allocated on such Distribution
Date to the Class A-3 Certificates. For purposes of calculating interest, principal distributions on a
Distribution Date will be deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class A-3 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class A-3 Current Interest with respect to prior Distribution Dates over (B) the amount
actually distributed to the Class A-3 Certificates with respect to interest on such prior Distribution
Dates and (2) interest on such excess (to the extent permitted by applicable law) at the Class A-3
Pass-Through Rate for the related Accrual Period.
Class A-3 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 0.2300% per annum, and, as of any Distribution Date after the Optional
Termination Date, 0.4600% per annum.
Class A-3 Pass-Through Rate: For the first Distribution Date, 5.580% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class A-3 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class B-1 Applied Realized Loss Amount: As of any Distribution Date, the sum of all Applied
Realized Loss Amounts with respect to the Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class B-1 Certificates.
Class B-1 Certificate: Any Certificate designated as a "Class B-1 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class B-1 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class B-1 Certificates.
Class B-1 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class B-1 Pass-Through Rate on the Class B-1 Certificate Principal Balance
as of such Distribution Date reduced by any Non-Supported Interest Shortfalls allocated to the Class B-1
Certificates on such Distribution Date. For purposes of calculating interest, principal distributions on
a Distribution Date will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.
Class B-1 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class B-1 Current Interest with respect to prior Distribution Dates over (B) the
amount actually distributed to the Class B-1 Certificates with respect to interest on such prior
12
Distribution Dates and (2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1 Pass-Through Rate for the related Accrual Period.
Class B-1 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 0.8500% per annum and, as of any Distribution Date after the Optional
Termination Date, 1.2750% per annum.
Class B-1 Pass-Through Rate: For the first Distribution Date, 6.200% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class B-1 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class B-1 Principal Distribution Amount: With respect to any Distribution Date on or after the
Stepdown Date, 100% of the Principal Distribution Amount for such Distribution Date if the Class A
Certificate Principal Balance, Class M-1 Certificate Principal Balance, Class M-2 Certificate Principal
Balance, Class M-3 Certificate Principal Balance and Class M-4 Certificate Principal Balance have been
reduced to zero and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not
exist, the excess of (1) the sum of (A) the Class A Certificate Principal Balance (after taking into
account distributions of the Class A Principal Distribution Amount on such Distribution Date), (B) the
Class M-1 Certificate Principal Balance (after taking into account distributions of the Class M-1
Principal Distribution Amount on such Distribution Date), (C) the Class M-2 Certificate Principal
Balance (after taking into account distributions of the Class M-2 Principal Distribution Amount on such
Distribution Date), (D) the Class M-3 Certificate Principal Balance (after taking into account
distributions of the Class M-3 Principal Distribution Amount on such Distribution Date), (E) the Class
M-4 Certificate Principal Balance (after taking into account distributions of the Class M-4 Principal
Distribution Amount on such Distribution Date), (F) the Class B-1 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 97.60% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of the end of the immediately preceding Due
Period over the Overcollateralization Floor. Notwithstanding the foregoing, in no event will the Class
B-1 Principal Distribution Amount with respect to any Distribution Date exceed the Class B-1 Certificate
Principal Balance.
Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the excess of (1) the
Class B-1 Applied Realized Loss Amount over (2) the sum of (x) all distributions in reduction of the
Class B-1 Unpaid Realized Loss Amounts on all previous Distribution Dates and (y) all increases in the
Certificate Principal Balance of such Class B-1 Certificates pursuant to the last sentence of the
definition of "Certificate Principal Balance."
Class B-2 Applied Realized Loss Amount: As of any Distribution Date, the sum of all Applied
Realized Loss Amounts with respect to the Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class B-2 Certificates.
Class B-2 Certificate: Any Certificate designated as a "Class B-2 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class B-2 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class B-2 Certificates.
Class B-2 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class B-2 Pass-Through Rate on the Class B-2 Certificate Principal Balance
as of such Distribution Date reduced by any Non-Supported Interest Shortfalls allocated to the Class B-2
Certificates on such Distribution Date. For purposes of calculating interest, principal distributions
13
on a Distribution Date will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.
Class B-2 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class B-2 Current Interest with respect to prior Distribution Dates over (B) the
amount actually distributed to the Class B-2 Certificates with respect to interest on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2 Pass-Through Rate for the related Accrual Period.
Class B-2 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 1.5000% per annum and, as of any Distribution Date after the Optional
Termination Date, 2.2500% per annum.
Class B-2 Pass-Through Rate: For the first Distribution Date, 6.850% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class B-2 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class B-2 Principal Distribution Amount: With respect to any Distribution Date on or after the
Stepdown Date, 100% of the Principal Distribution Amount for such Distribution Date if the Class A
Certificate Principal Balance, Class M-1 Certificate Principal Balance, Class M-2 Certificate Principal
Balance, Class M-3 Certificate Principal Balance, Class M-4 Certificate Principal Balance and Class B-1
Certificate Principal Balance have been reduced to zero and a Stepdown Trigger Event exists, or as long
as a Stepdown Trigger Event does not exist, the excess of (1) the sum of (A) the Class A Certificate
Principal Balance (after taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance (after taking into account
distributions of the Class M-1 Principal Distribution Amount on such Distribution Date), (C) the Class
M-2 Certificate Principal Balance (after taking into account distributions of the Class M-2 Principal
Distribution Amount on such Distribution Date), (D) the Class M-3 Certificate Principal Balance (after
taking into account distributions of the Class M-3 Principal Distribution Amount on such Distribution
Date), (E) the Class M-4 Certificate Principal Balance (after taking into account distributions of the
Class M-4 Principal Distribution Amount on such Distribution Date), (F) the Class B-1 Certificate
Principal Balance (after taking into account distributions of the Class B-1 Principal Distribution
Amount on such Distribution Date), and (G) the Class B-2 Certificate Principal Balance immediately prior
to such Distribution Date over (2) the lesser of (A) 98.70% of the Stated Principal Balances of the
Mortgage Loans as of the end of the immediately preceding Due Period and (B) the excess of the Stated
Principal Balances for the Mortgage Loans as of the end of the immediately preceding Due Period over the
Overcollateralization Floor. Notwithstanding the foregoing, in no event will the Class B-2 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-2 Certificate Principal
Balance.
Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the excess of (1) the
Class B-2 Applied Realized Loss Amount over (2) the sum of (x) all distributions in reduction of the
Class B-2 Unpaid Realized Loss Amounts on all previous Distribution Dates and (y) all increases in the
Certificate Principal Balance of such Class B-2 Certificates pursuant to the last sentence of the
definition of "Certificate Principal Balance."
Class IO Distribution Amount: On any Distribution Date, for each Class of the Offered
Certificates, the excess, if any, of (1) the amount payable on such Distribution Date on the REMIC III
Regular Interest corresponding to such Class of Offered Certificates over (ii) the amount payable on
such Class of Offered Certificates on such Distribution Date.
14
Class M Certificates: Any of the Class M-1, Class M-2, Class M-3 and Class M-4 Certificates.
Class M-1 Applied Realized Loss Amount: As of any Distribution Date, the sum of all Applied
Realized Loss Amounts with respect to the Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class M-1 Certificates.
Class M-1 Certificate: Any Certificate designated as a "Class M-1 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class M-1 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class M-1 Certificates.
Class M-1 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class M-1 Pass-Through Rate on the Class M-1 Certificate Principal Balance
as of such Distribution Date reduced by any Non-Supported Interest Shortfalls allocated to the Class M-1
Certificates on such Distribution Date. For purposes of calculating interest, principal distributions on
a Distribution Date will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.
Class M-1 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class M-1 Current Interest with respect to prior Distribution Dates over (B) the
amount actually distributed to the Class M-1 Certificates with respect to interest on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by applicable law) at the
Class M-1 Pass-Through Rate for the related Accrual Period.
Class M-1 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 0.2800% per annum, and, as of any Distribution Date after the Optional
Termination Date, 0.4200% per annum.
Class M-1 Pass-Through Rate: For the first Distribution Date, 5.630% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class M-1 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class M-1 Principal Distribution Amount: With respect to any Distribution Date on or after the
Stepdown Date, 100% of the Principal Distribution Amount for such Distribution Date if the Class A
Certificate Principal Balance has been reduced to zero and a Stepdown Trigger Event exists, or as long
as a Stepdown Trigger Event does not exist, the excess of (1) the sum of (A) the Class A Certificate
Principal Balance (after taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date) and (B) the Class M-1 Certificate Principal Balance immediately prior to such
Distribution Date over (2) the lesser of (A) 92.00% of the Stated Principal Balances of the Mortgage
Loans as of the end of the immediately preceding Due Period and (B) the excess of the Stated Principal
Balances for the Mortgage Loans as of the end of the immediately preceding Due Period over the
Overcollateralization Floor. Notwithstanding the foregoing, in no event will the Class M-1 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-1 Certificate Principal
Balance.
Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the excess of (1) the
Class M-1 Applied Realized Loss Amount over (2) the sum of (x) all distributions in reduction of the
Class M-1 Unpaid Realized Loss Amounts on all previous Distribution Dates and (y) all increases in the
Certificate Principal Balance of such Class M-1 Certificates pursuant to the last sentence of the
definition of "Certificate Principal Balance."
15
Class M-2 Applied Realized Loss Amount: As of any Distribution Date, the sum of all Applied
Realized Loss Amounts with respect to the Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class M-2 Certificates.
Class M-2 Certificate: Any Certificate designated as a "Class M-2 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class M-2 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class M-2 Certificates.
Class M-2 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class M-2 Pass-Through Rate on the Class M-2 Certificate Principal Balance
as of such Distribution Date reduced by any Non-Supported Interest Shortfalls allocated to the Class M-2
Certificates on such Distribution Date. For purposes of calculating interest, principal distributions on
a Distribution Date will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.
Class M-2 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class M-2 Current Interest with respect to prior Distribution Dates over (B) the
amount actually distributed to the Class M-2 Certificates with respect to interest on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by applicable law) at the
Class M-2 Pass-Through Rate for the related Accrual Period.
Class M-2 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 0.3000% per annum and, as of any Distribution Date after the Optional
Termination Date, 0.4500% per annum.
Class M-2 Pass-Through Rate: For the first Distribution Date, 5.650% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class M-2 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class M-2 Principal Distribution Amount: With respect to any Distribution Date on or after the
Stepdown Date, 100% of the Principal Distribution Amount for such Distribution Date if the Class A
Certificate Principal Balance and the Class M-1 Certificate Principal Balance have been reduced to zero
and a Stepdown Trigger Event exists, or as long as a Stepdown Trigger Event does not exist, the excess
of (1) the sum of (A) the Class A Certificate Principal Balance (after taking into account distributions
of the Class A Principal Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal Balance (after taking into account distributions of the Class M-1 Principal Distribution
Amount on such Distribution Date) and (C) the Class M-2 Certificate Principal Balance immediately prior
to such Distribution Date over (2) the lesser of (A) 93.60% of the Stated Principal Balances of the
Mortgage Loans as of the end of the immediately preceding Due Period and (B) the excess of the Stated
Principal Balances of the Mortgage Loans as of the end of the immediately preceding Due Period over the
Overcollateralization Floor. Notwithstanding the foregoing, in no event will the Class M-2 Principal
Distribution Amount with respect to any Distribution Date exceed the Class M-2 Certificate Principal
Balance.
Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the excess of (1) the
Class M-2 Applied Realized Loss Amount over (2) the sum of (x) all distributions in reduction of the
Class M-2 Unpaid Realized Loss Amounts on all previous Distribution Dates and (y) all increases in the
Certificate Principal Balance of such Class M-2 Certificates pursuant to the last sentence of the
definition of "Certificate Principal Balance."
16
Class M-3 Applied Realized Loss Amount: As of any Distribution Date, the sum of all Applied
Realized Loss Amounts with respect to the Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class M-3 Certificates.
Class M-3 Certificate: Any Certificate designated as a "Class M-3 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class M-3 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class M-3 Certificates.
Class M-3 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class M-3 Pass-Through Rate on the Class M-3 Certificate Principal Balance
as of such Distribution Date reduced by any Non-Supported Interest Shortfalls allocated to the Class M-3
Certificates on such Distribution Date. For purposes of calculating interest, principal distributions on
a Distribution Date will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.
Class M-3 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class M-3 Current Interest with respect to prior Distribution Dates over (B) the
amount actually distributed to the Class M-3 Certificates with respect to interest on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by applicable law) at the
Class M-3 Pass-Through Rate for the related Accrual Period.
Class M-3 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 0.3800% per annum and, as of any Distribution Date after the Optional
Termination Date, 0.5700% per annum.
Class M-3 Pass-Through Rate: For the first Distribution Date, 5.730% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class M-3 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class M-3 Principal Distribution Amount: With respect to any Distribution Date on or after the
Stepdown Date, 100% of the Principal Distribution Amount for such Distribution Date if the Class A
Certificate Principal Balance, Class M-1 Certificate Principal Balance and Class M-2 Certificate
Principal Balance have been reduced to zero and a Stepdown Trigger Event exists, or as long as a
Stepdown Trigger Event does not exist, the excess of (1) the sum of (A) the Class A Certificate
Principal Balance (after taking into account distributions of the Class A Principal Distribution Amount
on such Distribution Date), (B) the Class M-1 Certificate Principal Balance (after taking into account
distributions of the Class M-1 Principal Distribution Amount on such Distribution Date), (C) the Class
M-2 Certificate Principal Balance (after taking into account distributions of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (D) the Class M-3 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 95.50% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of the end of the immediately preceding Due
Period over the Overcollateralization Floor. Notwithstanding the foregoing, in no event will the Class
M-3 Principal Distribution Amount with respect to any Distribution Date exceed the Class M-3 Certificate
Principal Balance.
Class M-3 Unpaid Realized Loss Amount: As of any Distribution Date, the excess of (1) the
Class M-3 Applied Realized Loss Amount over (2) the sum of (x) all distributions in reduction of the
Class M-3 Unpaid Realized Loss Amounts on all previous Distribution Dates and (y) all increases in the
Certificate Principal Balance of such Class M-3 Certificates pursuant to the last sentence of the
definition of "Certificate Principal Balance."
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Class M-4 Applied Realized Loss Amount: As of any Distribution Date, the sum of all Applied
Realized Loss Amounts with respect to the Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class M-4 Certificates.
Class M-4 Certificate: Any Certificate designated as a "Class M-4 Certificate" on the face
thereof, in the form of Exhibit A hereto, representing the right to distributions as set forth herein.
Class M-4 Certificate Principal Balance: As of any date of determination, the aggregate
Certificate Principal Balance of the Class M-4 Certificates.
Class M-4 Current Interest: As of any Distribution Date, the interest accrued during the
related Accrual Period at the Class M-4 Pass-Through Rate on the Class M-4 Certificate Principal Balance
as of such Distribution Date reduced by any Non-Supported Interest Shortfalls allocated to the Class M-4
Certificates on such Distribution Date. For purposes of calculating interest, principal distributions on
a Distribution Date will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.
Class M-4 Interest Carry Forward Amount: As of any Distribution Date, the sum of (1) the
excess of (A) the Class M-4 Current Interest with respect to prior Distribution Dates over (B) the
amount actually distributed to the Class M-4 Certificates with respect to interest on such prior
Distribution Dates and (2) interest on such excess (to the extent permitted by applicable law) at the
Class M-4 Pass-Through Rate for the related Accrual Period.
Class M-4 Margin: As of any Distribution Date up to and including the Optional Termination
Date for the Certificates, 0.4000% per annum and, as of any Distribution Date after the Optional
Termination Date, 0.6000% per annum.
Class M-4 Pass-Through Rate: For the first Distribution Date, 5.750% per annum. As of any
Distribution Date thereafter, the lesser of (1) One-Month LIBOR plus the Class M-4 Margin and (2) the
Available Funds Cap for such Distribution Date.
Class M-4 Principal Distribution Amount: With respect to any Distribution Date on or after the
Stepdown Date, 100% of the Principal Distribution Amount for such Distribution Date if the Class A
Certificate Principal Balance, Class M-1 Certificate Principal Balance, Class M-2 Certificate Principal
Balance and Class M-3 Certificate Principal Balance have been reduced to zero and a Stepdown Trigger
Event exists, or as long as a Stepdown Trigger Event does not exist, the excess of (1) the sum of (A)
the Class A Certificate Principal Balance (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate Principal
Balance (after taking into account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after taking into account
distributions of the Class M-2 Principal Distribution Amount on such Distribution Date), (D) the Class
M-3 Certificate Principal Balance (after taking into account distributions of the Class M-3 Principal
Distribution Amount on such Distribution Date) and (E) the Class M-4 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 96.40% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due Period and (B) the excess
of the Stated Principal Balances for the Mortgage Loans as of the end of the immediately preceding Due
Period over the Overcollateralization Floor. Notwithstanding the foregoing, in no event will the Class
18
M-4 Principal Distribution Amount with respect to any Distribution Date exceed the Class M-4 Certificate
Principal Balance.
Class M-4 Unpaid Realized Loss Amount: As of any Distribution Date, the excess of (1) the
Class M-4 Applied Realized Loss Amount over (2) the sum of (x) all distributions in reduction of the
Class M-4 Unpaid Realized Loss Amounts on all previous Distribution Dates and (y) all increases in the
Certificate Principal Balance of such Class M-4 Certificates pursuant to the last sentence of the
definition of "Certificate Principal Balance."
Class P Certificate: Any Certificate designated as a Class P Certificate on the face thereof,
executed by the Trustee and authenticated by the Trustee in substantially the form set forth in Exhibit
A, representing the right to distributions as set forth herein.
Class P Reserve Account: The account established and maintained by the Trustee pursuant to
Section 4.06 hereof.
Class P Reserve Amount: $100.
Class R Certificate: Any one of the Class R Certificates executed by the Trustee and
authenticated by the Trustee substantially in the form annexed hereto as Exhibit A and evidencing an
interest designated as a "residual interest" in the REMICs for purposes of the REMIC Provisions. The
Class R-I Certificates is designated as the sole class of "residual interest" in REMIC I, the Class R-II
Certificates is designated as the sole class of "residual interest" in REMIC II and the Class R-III
Certificates is designated as the sole class of "residual interest" in REMIC III.
Class R Certificate Principal Balance: Not applicable.
Class R Current Interest: Not applicable.
Class R Interest Carry Forward Amount: Not applicable.
Class R Margin: Not applicable.
Class R Pass-Through Rate: Not applicable.
Class X Applied Realized Loss Amount: As of any Distribution Date, the sum of all Applied
Realized Loss Amounts with respect to the Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class X Certificates.
Class X Certificate: Any one of the Class X Certificates executed and authenticated by the
Trustee substantially in the form annexed hereto as Exhibit A, subordinate to the Class A Certificates,
the Class M Certificates and the Class B Certificates with respect to distributions and the allocation
of Realized Losses as set forth in Section 4.04.
Class X Certificate Principal Balance: With respect to any Class X Certificate, on any date of
determination, an amount equal to the Percentage Interest evidenced by such Certificate, multiplied by
an amount equal to (i) the excess, if any, of (A) the then aggregate Stated Principal Balance of the
Mortgage Loans over (B) the then aggregate Certificate Principal Balance of the Class A Certificates,
Class M Certificates and Class B Certificates then outstanding, which represents the sum of (i) the
Initial Principal Balance of the REMIC III Regular Interest X-PO, as reduced by Realized Losses
19
allocated thereto and payments deemed made thereon, and (ii) accrued and unpaid interest on the
REMIC III Regular Interest X-IO, as reduced by Realized Losses allocated thereto..
Class X Current Interest: As of any Distribution Date, the interest accrued during the related
Accrual Period at the Class X Distributable Interest Rate on the Uncertificated Notional Amount, less
any Non-Supported Interest Shortfall allocated on such Distribution Date to the Class X Certificates and
less the sum of (A) the amount of any Excess Interest Entitlement of the Offered Certificates for such
Distribution Date and (B) amounts due to the Swap Counterparty under the Swap Agreement for such
Distribution Date.
Class X Distributable Interest Rate: With respect to the Class X Certificates or REMIC III
Regular Interest X-IO and any Distribution Date, a per annum rate equal to the percentage equivalent of
a fraction, the numerator of which is the sum of the amounts calculated pursuant to clauses (i) through
(iii) below, and the denominator of which is the aggregate principal balance of the REMIC II Regular
Interests. For purposes of calculating the Class X Distributable Interest Rate for the Class X
Certificates or REMIC III Regular Interest X-IO, the numerator is equal to the sum of the following
components:
(i)......the Uncertificated Pass-Through Rate for REMIC II Regular Interest LT1 minus
the Marker Rate, applied to a notional amount equal to the Uncertificated Principal Balance of REMIC II
Regular Interest LT1;
(ii).....the Uncertificated Pass-Through Rate for REMIC II Regular Interest LT2 minus
the Marker Rate, applied to a notional amount equal to the Uncertificated Principal Balance of REMIC II
Regular Interest LT2; and
(iii)....the Uncertificated Pass-Through Rate for REMIC II Regular Interest LT4 minus
twice the Marker Rate, applied to a notional amount equal to the Uncertificated Principal Balance of
REMIC II Regular Interest LT4.
Class X Interest Carry Forward Amount: As of any Distribution Date, the excess of (A) the
Class X Current Interest with respect to prior Distribution Dates over (B) the amount actually
distributed to the Class X Certificates with respect to interest on such prior Distribution Dates or
added to the aggregate Certificate Principal Balance of the Class X Certificates.
Class X Unpaid Realized Loss Amount: As of any Distribution Date, the excess of (1) the Class
X Applied Realized Loss Amount over (2) the sum of (x) all distributions in reduction of the Class X
Unpaid Realized Loss Amounts on all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class X Certificates pursuant to the last sentence of the definition of
"Certificate Principal Balance."
Closing Date: December 27, 2006.
Code: The Internal Revenue Code of 1986, including any successor or amendatory provisions.
Commission: The United States Securities and Exchange Commission.
Compensating Interest: For any Distribution Date and any Principal Prepayment in respect of a
Mortgage Loan that is received during the period from the first day of the related Prepayment Period for
the related Servicer and such Distribution Date through the last day of the calendar month preceding
such Distribution Date, a payment made by the applicable Servicer to the extent funds are available from
the total Servicing Fee payable to such Servicer for such Distribution Date, equal to the amount of
interest at the Net Mortgage Rate payable for that Mortgage Loan from the date on which the Servicer
20
applied such Principal Prepayment to reduce the Stated Principal Balance of such Mortgage Loan through
the last day of such preceding calendar month. There shall be no Compensating Interest paid with
respect to Principal Prepayments on the ▇▇▇▇▇ Fargo Mortgage Loans that occur during the period from the
Cut-off Date through December 14, 2006.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan), whether permanent or temporary, partial or
entire, by exercise of the power of eminent domain or condemnation, to the extent not required to be
released either to a Mortgagor in accordance with the terms of the related mortgage loan documents or to
the holder of a senior lien on the Mortgaged Property (or Underlying Mortgaged Property, in the case of
a Co-op Loan).
Co-op Lease: With respect to a Co-op Loan, the lease with respect to a dwelling unit occupied
by the Mortgagor and relating to the stock allocated to the related dwelling unit.
Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to a dwelling unit in a
residential cooperative housing corporation and a collateral assignment of the related Co-op Lease.
Corporate Trust Office: With respect to the Trustee, the principal office of the Trustee at
which at any particular time its certificate transfer services are conducted, which office at the date
of the execution of this instrument is located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Structured Finance/WMLT 2006-ALT1.
Credit Support Annex Account: The separate Eligible Account created and maintained by the
Supplemental Interest Trust Trustee pursuant to Section 4.04(o).
Current Interest: Any of the Class A-1 Current Interest, the Class A-2 Current Interest, the
Class A-3 Current Interest, the Class M-1 Current Interest, the Class M-2 Current Interest, the Class
M-3 Current Interest, the Class M-4 Current Interest, the Class B-1 Current Interest and the Class B-2
Current Interest.
Custodial Agreement: The Custodial Agreement, dated as of December 27, 2006, among the
Depositor, the Custodian, the Servicers and the Trustee, as the same may be amended or modified from
time to time in accordance with the terms thereof.
Custodian: U.S. Bank National Association, a national banking association, or any successor in
interest.
Cut-off Date: December 1, 2006.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid principal balance thereof
as of the close of business on the calendar day immediately preceding the Cut-off Date after application
of all payments of principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving effect to any installments
of principal received in respect of Due Dates after the Cut-off Date.
Defaulted Swap Termination Payment: Any payment required to be made by the Supplemental Interest
Trust to the Swap Counterparty pursuant to the Swap Agreement as a result of an event of default under the Swap Agreement
with respect to which the Swap Counterparty is the defaulting party or a termination event under that
agreement (other than illegality or a tax event) with respect to which the Swap Counterparty is the sole
Affected Party (as defined in the Swap Agreement) or with respect to a termination resulting from a
21
failure of the Swap Counterparty to comply with the ratings downgrade provisions in the Swap Agreement.
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a Replacement Mortgage
Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is not made pursuant to
the terms of such Mortgage Loan by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days delinquent" if such payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the month in which such payment
was due, or, if there is no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month), then on the last day of such immediately
succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on the face thereof as
the "Initial Principal Balance of this Certificate."
Depositor: Wachovia Mortgage Loan Trust, LLC, a Delaware limited liability company, or any
successor in interest.
Depository: The initial Depository shall be The Depository Trust Company ("DTC"), the nominee
of which is Cede & Co., or any other organization registered as a "clearing agency" pursuant to Section
17A of the Securities Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to Classes of Book-Entry Certificates, the agreement
between the Trustee and the initial Depository.
Depository Participant: A broker, dealer, bank or other financial institution or other Person
for whom from time to time a Depository effects book-entry transfers and pledges of securities deposited
with the Depository.
Designated Transaction: A transaction in which the assets underlying the Certificates consist
of single-family residential, multi-family residential, home equity, manufactured housing and/or
commercial mortgage obligations that are secured by single-family residential, multi-family residential,
commercial real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day of the month of such
Distribution Date or, if such 15th day is not a Business Day, the immediately preceding Business Day.
Distribution Date: The 25th day of each calendar month, or if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in January 2007.
Due Date: With respect to any Distribution Date and any Mortgage Loan, the day during the
related Due Period on which a Scheduled Payment is due.
22
Due Period: With respect to any Distribution Date, the period beginning on the second day of
the calendar month preceding the calendar month in which such Distribution Date occurs and ending on the
first day of the month in which such Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a depository institution the
long-term unsecured debt obligations of which are rated by each Rating Agency in one of its two highest
rating categories, or (ii) maintained with the corporate trust department of a bank which (A) has a
rating of at least Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at least A-1 by S&P or F1 by
Fitch, or (iii) an account or accounts the deposits in which are fully insured by the FDIC, or (iv) an
account or accounts, acceptable to each Rating Agency without reduction or withdrawal of the rating of
any Class of Certificates, as evidenced in writing, by a depository institution in which such accounts
are insured by the FDIC (to the limit established by the FDIC), the uninsured deposits in which accounts
are otherwise secured such that, as evidenced by an Opinion of Counsel delivered to and acceptable to
the Trustee and each Rating Agency, the Certificateholders have a claim with respect to the funds in
such account and a perfected first 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 with which such account is maintained, or (v) maintained at an
eligible institution whose commercial paper, short-term debt or other short-term deposits are rated at
least A-1+ by S&P and F-1+ by Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable limits and the short-term
unsecured debt obligations of which (or, in the case of a depository institution that is a subsidiary of
a holding company, the short-term unsecured debt obligations of such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time any deposits are held on deposit therein, or (vii) otherwise
acceptable to each Rating Agency, as evidenced by a letter from each Rating Agency to the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, including any successor or
amendatory provisions.
ERISA-Qualifying Underwriting: A best efforts or firm commitment underwriting or private
placement that would satisfy the requirements of Prohibited Transaction Exemption 90-29, Exemption
Application No. D-8012, 55 Fed. Reg. 21459 (1990), as amended, granted to the Underwriter by the United
States Department of Labor (or any other applicable underwriter's exemption granted by the United States
Department of Labor), except, in relevant part, for the requirement that the certificates have received
a rating at the time of acquisition that is in one of the three (or four, in the case of a "designated
transaction") highest generic rating categories by at least one of the Rating Agencies.
ERISA Restricted Certificates: The Class X, Class P Certificates and Class R Certificate and
any other Certificate, unless the acquisition and holding of such other Certificate is covered by and
exempt under the Underwriter's exemption.
Event of Default: As defined in Section 7.01 hereof.
Excess Interest Entitlement: On any Distribution Date, for each Class of the Offered
Certificates, the excess, if any, of (1) the amount of interest such Class of Certificates is entitled
to receive on such Distribution Date at its Pass-Through Rate over (2) the amount of interest such Class
of Certificates would have been entitled to receive on such Distribution Date had the Pass-Through Rate
for such Class been the REMIC Pass-Through Rate.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation Proceeds that are in
excess of the sum of (1) the unpaid principal balance of such Liquidated Loan as of the date of such
23
liquidation plus (2) interest at the Mortgage Rate from the Due Date as to which interest was last paid
or advanced to Certificateholders (and not reimbursed to the Servicers) up to the Due Date in the month
in which such Liquidation Proceeds are required to be distributed on the unpaid principal balance of
such Liquidated Loan outstanding during each Due Period as to which such interest was not paid or
advanced.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Extra Principal Distribution Amount: With respect to any Distribution Date, the lesser of (A)
the amount distributed pursuant to 4.04(b)(vii) and (B) an amount necessary to maintain the
Overcollateralization Target Amount.
▇▇▇▇▇▇ Mae: 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.
Fitch: Fitch Ratings, or any successor in interest.
Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage Loan Schedule as having a
Mortgage Rate which is fixed.
Fixed Swap Payment: For any Distribution Date, the product of (i) 5.35% per annum and (ii) the
notional balance for the related Distribution Date as set forth in the schedule of notional balances
contained in the Swap Agreement, determined on the basis of a 360-day year consisting of twelve 30-day
months.
Floating Swap Payment: For any Distribution Date, the product of (i) One-Month LIBOR, as
determined pursuant to the Swap Agreement, for the related Distribution Date and (ii) the notional
balance for the related Distribution Date as set forth in the schedule of notional balances contained in
the Swap Agreement, determined based on a 360-day year and the actual number of days in the related
Accrual Period.
Form 8-K Disclosure Information: As defined in Section 11.04.
▇▇▇▇▇▇▇ Mac: 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.
Grantor Trusts: The grantor trusts described in Section 2.07 hereof.
Gross Margin: The percentage set forth in the related Mortgage Note for each of the Adjustable
Rate Mortgage Loans which is to be added to the applicable index for use in determining the Mortgage
Rate on each Adjustment Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.
Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first Adjustment Date
following the origination of such Mortgage Loan.
Initial Certificate Principal Balance: With respect to any Certificate, the Certificate
Principal Balance of such Certificate or any predecessor Certificate on the Closing Date as set forth in
Section 5.01 hereof.
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Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in effect prior to the
Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan or the related Mortgaged Property (or the
related Underlying Mortgaged Property, in the case of a Co-op Loan) included in the Trust Fund, any
insurance policy, including all riders and endorsements thereto in effect with respect to such Mortgage
Loan or Mortgaged Property (or related Underlying Mortgage Property, in the case of a Co-op Loan),
including any replacement policy or policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of a Mortgage Loan or the related Mortgaged
Property (or the related Underlying Mortgaged Property, in the case of a Co-op Loan) pursuant to any
Insurance Policy or any other insurance policy covering such Mortgage Loan or Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan), to the extent such proceeds are payable to
the mortgagee under the Mortgage, a Servicer or the trustee under the deed of trust and are not applied
to the restoration of the related Mortgaged Property (or the related Underlying Mortgaged Property, in
the case of a Co-op Loan) or released either to the Mortgagor or to the holder of a senior lien on the
related Mortgaged Property (or the related Underlying Mortgaged Property in the case of a Co-op Loan) in
accordance with the procedures that the applicable Servicer would follow in servicing mortgage loans
held for its own account, in each case other than any amount included in such Insurance Proceeds in
respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other insurance policy with
respect to a Mortgage Loan or the related Mortgaged Property (or the related Underlying Mortgaged
Property, in the case of a Co-op Loan).
Interest Carry Forward Amount: Any of the Class A-1 Interest Carry Forward Amount, the Class
A-2 Interest Carry Forward Amount, the Class A-3 Interest Carry Forward Amount, the Class M-1 Interest
Carry Forward Amount, the Class M-2 Interest Carry Forward Amount, the Class M-3 Interest Carry Forward
Amount, the Class M-4 Interest Carry Forward Amount, the Class B-1 Interest Carry Forward Amount, the
Class B-2 Interest Carry Forward Amount or the Class X Interest Carry Forward Amount, as the case may be.
Interest Determination Date: With respect to the Certificates, (i) for any Accrual Period
other than the first Accrual Period, the second LIBOR Business Day preceding the commencement of such
Accrual Period and (ii) for the first Accrual Period, December 21, 2006.
Interest Funds: With respect to any Distribution Date, the sum, without duplication, of (1)
all scheduled interest due during the related Due Period and received before the related Servicer
Remittance Date or advanced on or before the related Servicer Remittance Date less the Servicing Fee and
the Lender Paid Mortgage Insurance Premium, (2) all Advances relating to interest with respect to the
Mortgage Loans and such Distribution Date, (3) all Compensating Interest with respect to the Mortgage
Loans and such Distribution Date, (4) Liquidation Proceeds with respect to the Mortgage Loans (to the
extent such Liquidation Proceeds relate to interest) collected during the related Prepayment Period and
(5) all proceeds of any purchase pursuant to Section 2.02 or 2.03 during the related Prepayment Period
or pursuant to Section 9.01 not later than the related Determination Date (to the extent that such
proceeds relate to interest) less the Servicing Fee, less (A) all Non-Recoverable Advances relating to
interest and (B) other amounts reimbursable to the Servicers and the Trustee pursuant to this Agreement.
Latest Possible Maturity Date: The latest maturity date for any Mortgage Loan in the Trust
Fund plus one year.
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Lender Paid Mortgage Insurance Premium: With respect to each Distribution Date and to those
Mortgage Loans serviced by National City to which it applies, a monthly fee paid from interest collected
with respect to such Mortgage Loan generally equal to the product of (a) the Lender Paid Mortgage
Insurance Premium Rate and (b) the Stated Principal Balance of such Mortgage Loan.
Lender Paid Mortgage Insurance Premium Rate: A fee for lender paid mortgage insurance,
expressed as a percentage rate of the Stated Principal Balance of those Mortgage Loans to which it
applies.
LIBOR Business Day: Any day on which banks in the City of London, England and New York City,
U.S.A. are open and conducting transactions in foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a defaulted Mortgage Loan that either
(a) pursuant to Section 3.12 has been realized upon or liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable law governing the real
property subject to the related Mortgage and any security agreements and as to which the applicable
Servicer has certified (in accordance with Section 3.12) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such liquidation or (b) as to which is not
a first lien Mortgage Loan and is delinquent 180 days or longer, the applicable Servicer has certified
in a certificate of an officer of the Servicer delivered to the Depositor and the Trustee that it does
not believe that there is a reasonable likelihood that any further net proceeds will be received or
recovered with respect to such Mortgage Loan.
Liquidation Proceeds: Amounts, including Condemnation Proceeds and Insurance Proceeds
received in connection with the partial or complete liquidation of a Mortgage Loan, whether through
trustee's sale, foreclosure sale, sale by the applicable Servicer pursuant to this Agreement 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 the final sale of a related REO Property,
less the sum of related unreimbursed Advances, Servicing Fees, Servicing Advances and any other expenses
related to such Mortgage Loan.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction, expressed as a
percentage, the numerator of which is the original principal balance of the related Mortgage Loan and
the denominator of which is the lesser of (X) the Appraised Value of the related Mortgaged Property (or
applicable dwelling unit, in the case of a Co-op Loan) and (Y) the sales price of the related Mortgaged
Property (or applicable dwelling unit, in the case of a Co-op Loan) at the time of origination.
Losses: Any losses, claims, damages, liabilities or expenses collectively.
Marker Rate: With respect to the Class X Certificates or REMIC III Regular Interest X-IO and
any Distribution Date, in relation to the REMIC II Regular Interests LT1, LT2, LT3, and LT4, a per annum
rate equal to two (2) times the weighted average of the Uncertificated REMIC II Pass-Through Rates for
REMIC II Regular Interest LT2 and REMIC II Regular Interest LT3.
Maturity Date: With respect to each Class of Certificates representing ownership of regular
interests or Uncertificated Regular Interest issued by each of REMIC I, REMIC II and REMIC III the
latest possible maturity date, solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
Regulations, by which the Certificate Principal Balance of each such Class of Certificates representing
a regular interest in the Trust Fund would be reduced to zero, which is, for each such regular interest,
February 25, 2037, which is the Distribution Date occurring in the month following the last scheduled
monthly payment of the Mortgage Loans.
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Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan, the maximum rate of
interest set forth as such in the related Mortgage Note and with respect to each Fixed Rate Mortgage
Loan, the rate of interest set forth in the related Mortgage Note.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation organized and existing
under the laws of the State of Delaware, or any successor thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgage electronically maintained by MERS.
MIN: The loan number for any MERS Loan.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage Loan, the minimum rate of
interest set forth as such in the related Mortgage Note.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee, solely as nominee for the
originator of such Mortgage Loan and its successors and assigns.
Monthly Statement: The statement, substantially in the form of Exhibit Q hereto, delivered to
the Certificateholders pursuant to Section 4.05.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor in interest.
Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan, the mortgage, deed of
trust or other instrument with all riders attached thereto creating a first lien or a first priority
ownership interest in an estate in fee simple in real property securing a Mortgage Note. With respect
to a Co-op Loan, the security agreement with all riders attached thereto creating a security interest in
the stock allocated to a dwelling unit in a residential cooperative housing corporation and pledged to
secure such Co-op Loan and the related Co-op Lease.
Mortgage File: The mortgage documents listed in Section 2.01 hereof pertaining to a particular
Mortgage Loan and any additional documents delivered to the Custodian to be added to the Mortgage File
pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the Trustee pursuant to
the provisions hereof as from time to time are held as a part of the Trust Fund (including any REO
Properties), the mortgage loans so held being identified in the Mortgage Loan Schedule, notwithstanding
foreclosure or other acquisition of title of the related Mortgaged Property. Any mortgage loan that was
intended by the parties hereto to be transferred to the Trust Fund as indicated by such Mortgage Loan
Schedule which is in fact not so transferred for any reason shall continue to be a Mortgage Loan
hereunder until the Purchase Price with respect thereto has been paid to the Trust Fund.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time amended by the
Servicers to reflect the deletion of Deleted Mortgage Loans and the addition of Replacement Mortgage
Loans pursuant to the provisions of this Agreement based on information provided to the Servicers)
transferred to the Custodian as part of the Trust Fund and from time to time subject to this Agreement,
attached hereto as Exhibit B, setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
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(ii) borrower name and address;
(iii) the unpaid principal balance of the Mortgage Loans;
(iv) the Initial Mortgage Rate;
(v) the original maturity date and the months remaining before maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment due date of the Mortgage Loan;
(ix) the Loan-to-Value Ratio at origination with respect to a Mortgage Loan;
(x) a code indicating whether the residential dwelling at the time of origination was represented
to be owner-occupied;
(xi) a code indicating the property type;
(xii) with respect to each Adjustable Rate Mortgage Loan;
(A) the frequency of each Adjustment Date;
(B) the next Adjustment Date;
(C) the Maximum Mortgage Rate;
(D) the Minimum Mortgage Rate;
(E) the Mortgage Rate as of the Cut-off Date;
(F) the related Periodic Rate Cap;
(G) the Gross Margin;
(H) the lifetime rate cap;
(xiii) location of the related Mortgaged Property (or Underlying Mortgaged Property, in the case of a
Co-op Loan);
(xiv) a code indicating whether a Prepayment Charge is applicable and, if so the term of such
Prepayment Charge;
(xv) the Credit Score and date obtained; and
(xvi) the MIN.
Mortgage Note: The original executed note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan and all amendments, modifications and attachments
thereto with all riders attached thereto.
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Mortgage Pool: The aggregate of the Mortgage Loans identified in the Mortgage Loan Schedule.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from time to time.
Mortgagor: The obligor on a Mortgage Note.
National City: National City Mortgage Co., or any successor in interest.
National City Mortgage Loans: The Mortgage Loans serviced by National City.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum rate equal to the
then current Mortgage Rate less the Servicing Fee Rate, the Trustee Fee Rate and the Lender Paid
Mortgage Insurance Premium Rate.
Net Rate: With respect to any Distribution Date, the product of (x) the weighted average Net
Mortgage Rate for the Mortgage Loans calculated based on the respective Net Mortgage Rates and the
Stated Principal Balances of such Mortgage Loans as of the preceding Distribution Date (or, in the case
of the first Distribution Date, as of the Cut-off Date) and (y) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days in the related Accrual Period.
Net Swap Payment: With respect to any Distribution Date, the net amount of the Fixed Swap
Payment that the Supplemental Interest Trust is obligated to pay to the Swap Counterparty and the
Floating Swap Payment that the Swap Counterparty is obligated to pay to the Supplemental Interest Trust
on the Scheduled Payment Date (as defined in the Swap Agreement).
Non-Recoverable Advance: Any portion of an Advance previously made or proposed to be made by
the applicable Servicer that, in the good faith judgment of the Servicer, will not or, in the case of a
current delinquency, would not, be ultimately recoverable by the Servicer from the related Mortgagor,
related Liquidation Proceeds or otherwise with respect to the related Mortgage Loan.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance previously made or
proposed to be made by the applicable Servicer that, in the good faith judgment of the Servicer, will
not or, in the case of a current Servicing Advance, would not, be ultimately recoverable by the Servicer
from the related Mortgagor, related Liquidation Proceeds or otherwise with respect to the related
Mortgage Loan.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Offered Certificates: The Class A-1, Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-1, Class M-2, Class M-3,
Class M-4, Class B-1 and Class B-2 Certificates.
Officer's Certificate: A certificate (1) signed by the Chairman of the Board, the Vice
Chairman of the Board, the President, a vice president (however denominated), an Assistant Vice
President, the Treasurer, the Secretary, or one of the assistant treasurers or assistant secretaries of
the Depositor, a Servicer or the Trustee (or any other officer customarily performing functions similar
to those performed by any of the above designated officers and also to whom, with respect to a
particular matter, such matter is referred because of such officer's knowledge of and familiarity with a
particular subject) or (2), if provided for in this Agreement, signed by a Servicing Officer, as the
case may be, and delivered to the Depositor, the Servicers or the Trustee, as the case may be, as
required by this Agreement.
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One-Month LIBOR: With respect to any Accrual Period, the rate determined by the Trustee on the
related Interest Determination Date on the basis of (a) the offered rates for one-month United States
dollar deposits, as such rates appear on Telerate page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date or (b) if such rate does not appear on Telerate Page 3750 as of 11:00 a.m.
(London time), the offered rates of the Reference Banks for one-month United States dollar deposits, as
such rates appear on the Reuters Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest
Determination Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each Interest
Determination Date, One-Month LIBOR for the related Accrual Period will be established by the Trustee as
follows:
(i) If on such Interest Determination Date two or more Reference Banks provide such offered
quotations, One-Month LIBOR for the related Accrual Period shall be the
arithmetic mean of such offered quotations (rounded upwards if necessary to
the nearest whole multiple of 0.03125%).
(ii) If on such Interest Determination Date fewer than two Reference Banks provide such offered
quotations, One-Month LIBOR for the related Accrual Period shall be the higher
of (i) One-Month LIBOR as determined on the previous Interest Determination
Date and (ii) the Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be counsel for the Depositor, a
Servicer or the Trustee, reasonably acceptable to each addressee of such opinion; provided, however,
that with respect to Section 6.04 or 10.01, or the interpretation or application of the REMIC Provisions
(unless otherwise stated in such Opinion of Counsel), such counsel must (1) in fact be independent of
the Depositor, the Servicers or the Trustee, (2) not have any direct financial interest in the
Depositor, the Servicers or the Trustee or in any affiliate of any such party and (3) not be connected
with the Depositor, the Servicers or the Trustee as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
Optional Termination: The termination of the Trust Fund hereunder pursuant to clause (b) of
Section 9.01 hereof.
Optional Termination Amount: The amount received by the Trustee in connection with any
purchase of all of the Mortgage Loans and REO Properties pursuant to Section 9.01(b).
Optional Termination Date: The first Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is equal to or less than 10% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the Cut-off Date.
Optional Termination Price: On any date after the Optional Termination Date, an amount equal
to the sum of (A) the aggregate Stated Principal Balance of the related Mortgage Loans (or if such
Mortgage Loan is an REO Property, the fair market value of such REO Property), plus accrued interest
thereon through the Due Date preceding distribution of the proceeds, (B) any unreimbursed out-of-pocket
costs and expenses owed to the Trustee or the Servicer of such Mortgage Loans and all unreimbursed
Advances and Servicing Advances with respect to such Mortgage Loans, (C) any unreimbursed costs,
penalties and/or damages incurred by the Trust Fund in connection with any violation relating to any of
such Mortgage Loans of any predatory or abusive lending law and (D) any Swap Termination Payment owed to
the Swap Counterparty.
OTS: The Office of Thrift Supervision.
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Outstanding: With respect to the Certificates as of any date of determination, all
Certificates theretofore executed and authenticated under this Agreement except: (1) Certificates
theretofore canceled by the Trustee or delivered to the Trustee for cancellation; and (2) Certificates
in exchange for which or in lieu of which other Certificates have been executed by the Trustee and
delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan with a Stated
Principal Balance greater than zero that was not the subject of a Principal Prepayment in full, and that
did not become a Liquidated Loan, prior to the end of the related Due Period.
Overcollateralization Amount: As of any date of determination, the excess of (1) the Stated
Principal Balance of the Mortgage Loans over (2) the aggregate Certificate Principal Balance of the
Offered Certificates.
Overcollateralization Floor: 0.50% of the aggregate principal balance of the Mortgage Loans as
of the Cut-off Date.
Overcollateralization Reduction Amount: For any Distribution Date on which the
Overcollateralization Amount is, or would be, assuming that 100% of Principal Funds are applied to
reduce the Certificate Principal Balance of the Certificates on that Distribution Date, greater than the
Overcollateralization Target Amount for that Distribution Date, the lesser of (i) such excess, and (ii)
Principal Funds for that Distribution Date.
Overcollateralization Target Amount: (i) For any Distribution Date prior to the Stepdown Date,
0.65% of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date, and (ii)
for any Distribution Date on or after the Stepdown Date, the greater of (1) the lesser of (a) 0.65% of
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date, and (b) 1.30% of the
Stated Principal Balance of the Mortgage Loans and (2) the Overcollateralization Floor; provided,
however, in either case, for any Distribution Date on which a Stepdown Trigger Event is in effect, an
amount equal to the Overcollateralization Target Amount for the immediately preceding Distribution Date.
Ownership Interest: As to any Certificate, any ownership interest in such Certificate
including any interest in such Certificate as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial.
Pass-Through Rate: With respect to any Class of Certificates, the corresponding Pass-Through
Rate for such Class of Certificates.
PCAOB: The Public Company Accounting Oversight Board.
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the undivided beneficial ownership interest evidenced by
such Class which shall be equal to the Certificate Principal Balance of such
Class divided by the aggregate Certificate Principal Balance of all Classes;
and
(ii) any Certificate, the Percentage Interest evidenced thereby of the related Class shall equal the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of such Class; except that
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in the case of any Class P Certificates, the Percentage Interest with respect
to such Certificate shown on the face of such Certificate.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the related Mortgage Note, the
provision therein that limits permissible increases and decreases in the Mortgage Rate on any Adjustment
Date.
Permitted Activities: The primary activities of the Trust Fund created pursuant to this
Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor and other assets of the Trust Fund,
including any credit enhancement and passive derivative financial instruments
that pertain to beneficial interests issued or sold to parties other than the
Depositor, its Affiliates, or its agents;
(ii) issuing Certificates and other interests in the assets of the Trust Fund;
(iii) receiving collections on the Mortgage Loans and making payments on such Certificates and
interests in accordance with the terms of this Agreement; and
(iv) engaging in other activities that are necessary or incidental to accomplish these limited
purposes, which activities cannot be contrary to the status of the Trust Fund
as a qualified special purpose entity under existing accounting literature.
The primary activities of the Supplement Interest Trust created pursuant to this Agreement
which shall be:
(i) holding the Swap Agreement;
(ii) receiving collections or making payments with respect to the Swap Agreement;
and
(iii) engaging in other activities that are necessary or incidental to accomplish
these limited purposes, which activities cannot be contrary to the status of the
Supplement Interest Trust as a qualified special purpose entity under existing
accounting literature.
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 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 rating the Certificates;
(iii) commercial or finance company paper, other than commercial or finance company paper issued by
the Depositor, the Trustee or any of its Affiliates, which is then receiving
the highest commercial or finance company paper rating of each such Rating
Agency;
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(iv) certificates of deposit, demand or time deposits, or bankers' acceptances (other than banker's
acceptances issued by the Trustee or any of its Affiliates) 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 are then rated one of the two highest
long-term and the highest short-term ratings of each such Rating Agency for
such securities;
(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
rated in the two highest long-term or the highest short-term ratings of each
Rating Agency containing, at the time of the issuance of such agreements, such
terms and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any such Rating Agency as
evidenced by a letter from 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 (v) above;
(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, other than the Trustee or any of its
Affiliates, 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
long term ratings of each Rating Agency;
(ix) interests in any money market fund (including those managed or advised by the Trustee or its
affiliates) 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 long term rating by each Rating Agency rating such fund; and
(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,
including those sponsored by the Trustee or any of its Affiliates, which on
the date of acquisition has been rated by each such Rating Agency in their
respective highest applicable rating category;
provided, that no such instrument shall be a Permitted Investment if such instrument (i) evidences the
right to receive interest only payments with respect to the obligations underlying such instrument, (ii)
is purchased at a premium or above par or (iii) is purchased at a deep discount; provided, further, that
no such instrument shall be a Permitted Investment (A) if such instrument evidences principal and
interest payments derived from obligations underlying such instrument and the interest payments with
respect to such instrument provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price below the purchase price
(the foregoing clause (B) not to apply to investments in units of money market funds pursuant to clause
(ix) above); and provided, further, (I) that no amount beneficially owned by any REMIC (including,
33
without limitation, any amounts collected by the Servicers but not yet deposited in the Servicer
Collection Accounts) may be invested in investments (other than money market funds) treated as equity
interests for Federal income tax purposes, unless the applicable Servicer shall receive an Opinion of
Counsel, at the expense of the party requesting that such investment be made, to the effect that such
investment will not adversely affect the status of the any REMIC provided for herein as a REMIC under
the Code or result in imposition of a tax on the Trust Fund or any REMIC provided for herein and (II)
each such investment must be a "permitted investment" within the meaning of Section 860G(a)(5) of the
Code. Permitted Investments that are subject to prepayment or call may not be purchased at a price in
excess of par. Each of the Permitted Investments may be purchased by the Trustee or through an
Affiliate of the Trustee.
Permitted Transferee: Any Person other than (i) the United States, any State or political
subdivision thereof, or any agency or instrumentality of any of the foregoing, (ii) a foreign
government, International Organization or any agency or instrumentality of either of the foregoing,
(iii) an organization (except certain farmers' cooperatives described in Section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of the
Code on unrelated business taxable income) on any excess inclusions (as defined in Section 860E(c)(1) of
the Code) with respect to the Class R Certificate, (iv) rural electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the Code, (v) any organization delivered as a "disqualified
organization" under Section 860E(e)(5) of the Code and (vi) a Person that is not a citizen or resident
of the United States, a corporation or partnership (or other entity treated as a corporation or
partnership for United States federal income tax purposes) created or organized in or under the laws of
the United States or any State thereof or the District of Columbia or an estate whose income from
sources without the United States is includable in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business within the United States,
or a trust if a court within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless, in the case of this clause (v), such Person has furnished
the transferor and the Trustee with a duly completed Internal Revenue Service Form W-8ECI or applicable
successor form. The terms "United States," "State" and "International Organization" shall have the
meanings set forth in Section 7701 of the Code. A corporation will not be treated as an instrumentality
of the United States or of any State thereof for these purposes if all of its activities are subject to
tax and, with the exception of the ▇▇▇▇▇▇▇ Mac, a majority of its board of directors is not selected by
such government unit.
Person: Any individual, corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated organization or government, or any agency or
political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the aggregate of the Stated
Principal Balances, as of such Distribution Date, of the Mortgage Loans that were Outstanding Mortgage
Loans as of such date.
Prepayment Assumption: A rate or rates of prepayment, as described in the Prospectus
Supplement in the definition of "Modeling Assumptions," relating to the Offered Certificates.
Prepayment Charges: Any prepayment fees, premiums or charges to be paid by the Mortgagor on a
Mortgage Loan pursuant to the terms of the related Mortgage Note or Mortgage, as applicable, as
identified on the Mortgage Loan Schedule.
Prepayment Interest Excesses: With respect to any Servicer Remittance Date, for each Mortgage
Loan that was the subject of a Principal Prepayment in full during the portion of the related Prepayment
Period occurring between the first day of the calendar month in which such Servicer Remittance Date
34
occurs and the last day of the related Prepayment Period, an amount equal to interest (to the extent
received) at the applicable Net Mortgage Rate on the amount of such Principal Prepayment for the number
of days commencing on the first day of the calendar month in which such Servicer Remittance Date occurs
and ending on the date on which such Principal Prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution Date, the sum of, for each
Mortgage Loan that was, during the portion of the related Prepayment Period from the first day of such
Prepayment Period through the last day of the month preceding the month in which such Distribution Date
occurs, the subject of a Principal Prepayment that was not accompanied by an amount equal to one month
of interest that would have been due on such Mortgage Loan on the related Due Date and that was applied
by the applicable Servicer to reduce the outstanding principal balance of such Mortgage Loan on a date
preceding such Due Date, an amount equal to the product of (a) the Net Mortgage Rate for such Mortgage
Loan, (b) the amount of the Principal Prepayment for such Mortgage Loan, (c) 1/360 and (d) the number of
days commencing on the date on which such Principal Prepayment was applied and ending on the last day of
the calendar month in which the related Prepayment Period began.
Prepayment Period: (A) with respect to any Distribution Date and the ▇▇▇▇▇ Fargo Mortgage
Loans, (i) with respect to Principal Prepayments in full and involuntary Principal Prepayments, the
period from and including the 14th day of the calendar month immediately preceding the month in which
such Distribution Date occurs to and including the 13th day of the calendar month in which such
Distribution Date occurs; provided, however, that the initial Prepayment Period shall be the period from
and including the Cut-off Date to and including January 13, 2007, and (ii) with respect to voluntary
Principal Prepayments in part, the calendar month preceding the month in which such Distribution Date
occurs, and (B) with respect to any Distribution Date and the National City Mortgage Loans, with respect
to Principal Prepayments in full and Principal Prepayments in part, the calendar month preceding the
month in which such Distribution Date occurs.
Principal Distribution Amount: With respect to each Distribution Date, the sum of (i) the
Principal Funds for such Distribution Date and (ii) any Extra Principal Distribution Amount for such
Distribution Date minus any Overcollateralization Reduction Amount for that Distribution Date.
Principal Funds: With respect to the Mortgage Loans and any Distribution Date, the sum,
without duplication, of (1) all scheduled principal due during the related Due Period and received
before the related Servicer Remittance Date or advanced on or before the related Servicer Remittance
Date, (2) Principal Prepayments collected in the related Prepayment Period, (3) the Stated Principal
Balance of each Mortgage Loan that was purchased by the Depositor or a Servicer during the related
Prepayment Period or, in the case of a purchase pursuant to Section 9.01, on any Business Day prior to
such Distribution Date, (4) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal of the related Deleted Mortgage
Loans delivered by the applicable Seller in connection with a substitution of a Mortgage Loan pursuant
to the Sale Agreement, (5) all Liquidation Proceeds collected during the related Prepayment Period (to
the extent such Liquidation Proceeds relate to principal), (6) all Subsequent Recoveries received during
the related Due Period and (7) all other collections and recoveries in respect of principal during the
related Prepayment Period less (A) all Non-Recoverable Advances relating to principal with respect to
the Mortgage Loans and (B) other amounts reimbursable to a Servicer and the Trustee pursuant to this
Agreement and allocable to principal.
Principal Prepayment: Any Mortgagor payment or other recovery of (or proceeds with respect to)
principal on a Mortgage Loan (including Mortgage Loans purchased or repurchased under Sections 2.02,
2.03, 3.12 and 9.01 hereof) that is received or recovered in advance of its scheduled Due Date and is
not accompanied by an amount as to interest representing scheduled interest due on any date or dates in
35
any month or months subsequent to the month of prepayment. Partial Principal Prepayments shall be
applied by the applicable Servicer in accordance with the terms of the related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated December 19, 2006 relating to the
public offering of the Offered Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan repurchased by a Seller pursuant to the
applicable Sale Agreement, the Repurchase Price as defined in such Sale Agreement. With respect to any
Mortgage Loan required to be purchased by a Servicer pursuant to Section 3.12(c) hereof, an amount equal
to the sum of (i) 100% of the unpaid principal balance of the Mortgage Loan as of the date of such
purchase together with any unreimbursed Servicing Advances, (ii) accrued interest on such unpaid
principal balance at the applicable Mortgage Rate from (a) the date through which interest was last paid
by the Mortgagor to (b) the Due Date in the month in which the Purchase Price is to be distributed to
Certificateholders and (iii) any unreimbursed costs, penalties and/or damages incurred by the Trust Fund
(or the Trustee on behalf of the Trust Fund) in connection with any violation relating to such Mortgage
Loan of any predatory or abusive lending law. With respect to any REO Property purchased by a Servicer
pursuant to Section 3.12(c) hereof, an amount equal to the fair market value of such REO Property, as
determined in good faith by the applicable Servicer.
Rating Agency: S&P or ▇▇▇▇▇'▇. If any such organization or its successor is no longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating organization, or other
comparable Person, designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall mean such rating
category without giving effect to any modifiers.
Rating Agency Condition: With respect to any action to which a Rating Agency Condition
applies, that each Rating Agency shall have been given ten days (or such shorter period as is acceptable
to each rating agency) prior notice of that action and that S&P shall have notified the Trustee, the
Servicers, the Depositor and the Trust in writing that such action will not result in a reduction,
qualification or withdrawal of the then current rating of the certificates that it maintains.
Realized Loss: With respect to (1) a Liquidated Loan, the amount, if any, by which the Stated
Principal Balance and accrued interest thereon at the Net Mortgage Rate exceeds the amount actually
recovered by the applicable Servicer with respect thereto (net of reimbursement of Advances and
Servicing Advances) at the time such Mortgage Loan became a Liquidated Loan or (2) a Mortgage Loan which
is not a Liquidated Loan, any amount of principal that the Mortgagor is no longer legally required to
pay (except for the extinguishment of debt that results from the exercise of remedies due to default by
the Mortgagor).
Record Date: With respect to any Distribution Date, the close of business on the Business Day
immediately preceding the Distribution Date.
Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, N.A., Citibank, N.A., ▇▇▇▇▇ Fargo
Bank, N.A. and NatWest, N.A.; provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Trustee which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an established place of business
in London, England, (ii) whose quotations appear on the Reuters Screen LIBO Page on the relevant
Interest Determination Date and (iii) which have been designated as such by the Trustee.
36
Regular Certificate: Any one of the Offered Certificates.
Regular Interest: Any one of the regular interests in the REMICs.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100 - 229.1123, as such may be amended from time to time, and subject to such clarification and
interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Red. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the
Commission, or as may be provided by the Commission or its staff from time to time.
Relevant Servicing Criteria: The Servicing Criteria applicable to the various parties, as set
forth on Exhibit O attached hereto. For clarification purposes, multiple parties can have
responsibility for the same Relevant Servicing Criteria. With respect to a Servicing Function
Participant engaged by either Servicer or the Trustee, the term "Relevant Servicing Criteria" may refer
to a part of the Relevant Servicing Criteria applicable to such parties.
Relief Act: The Servicemembers Civil Relief Act or any similar state or local law.
Relief Act Shortfall: With respect to any Distribution Date and any Mortgage Loan, any
reduction in the amount of interest or principal collectible on such Mortgage Loan for the most recently
ended calendar month as a result of the application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" within the meaning of section 860D of the
Code. As used herein, the term "REMIC" shall mean REMIC I, REMIC II or REMIC III.
REMIC Administrator: U.S. Bank National Association. If U.S. Bank National Association is
found by a court of competent jurisdiction to no longer be able to fulfill its obligations as REMIC
Administrator under this Agreement, the Trustee shall appoint a successor REMIC Administrator, subject
to assumption of the REMIC Administrator obligations under this Agreement.
REMIC I: The segregated pool of assets subject hereto (exclusive of the Supplemental Interest
Trust, the Swap Agreement and the X-AMB Swap Agreement), constituting a portion of the primary trust
created hereby and to be administered hereunder, with respect to which a separate REMIC election is to
be made, consisting of:
(i) the Mortgage Loans and the related Mortgage Files;
(ii) all payments on and collections in respect of the Mortgage Loans due after the
Cut-off Date (other than monthly payments due in the month of the Cut-off Date) as shall be on deposit
in the Servicer Collection Accounts or in the Certificate Account and identified as belonging to the
Trust Fund;
(iii) property which secured a Mortgage Loan and which has been acquired for the
benefit of the Certificateholders by foreclosure or deed in lieu of foreclosure;
(iv) the hazard insurance policies and primary insurance policies pertaining to the
Mortgage Loans, if any; and
(v) all proceeds of clauses (i) through (iv) above.
37
REMIC I Available Distribution Amount: For any Distribution Date, the amount of funds then
available in the Certificate Account increased by the amount of any Net Swap Payment required to be made
to the Swap Counterparty.
REMIC I Distribution Amount: For any Distribution Date, the REMIC I Available Distribution
Amount shall be distributed to REMIC II in respect of the REMIC I Regular Interests and the Class R-I
Certificates in the following amounts and priority:
(a) to REMIC I Regular Interest A-I and REMIC I Regular Interest I-1-A through
I-80-B, pro rata, in an amount equal to (A) Uncertificated Accrued Interest for such REMIC I Regular
Interests for such Distribution Date, plus (B) any amounts payable in respect thereof remaining unpaid
from previous Distribution Dates; and
(b) to the extent of amounts remaining after the distributions made pursuant to
clause (a) above, payments of principal shall be allocated as follows: first, to REMIC I Regular
Interest A-I until the Uncertificated Principal Balance of such REMIC I Regular Interest is reduced to
zero and second, to the extent of any remaining amount, to REMIC I Regular Interests I-1-A through
I-80-B starting with the lowest numerical denomination until the Uncertificated Principal Balance of each
such REMIC I Regular Interest is reduced to zero, provided that, for REMIC I Regular Interests with the
same numerical denomination, such payments of principal shall be allocated pro rata between such REMIC I
Regular Interests.
REMIC I Interests: The REMIC I Regular Interests and the Class R-I Certificates.
REMIC I Realized Losses: All Realized Losses on the Mortgage Loans shall be allocated first,
on each Distribution Date, to REMIC I Regular Interest A-I until such REMIC I Regular Interest has been
reduced to zero. Second, Realized Losses shall be allocated to REMIC I Regular Interest I-1-A through
REMIC I Regular Interest I-80-B, starting with the lowest numerical denomination until such REMIC I
Regular Interest has been reduced to zero, provided that, for REMIC I Regular Interests with the same
numerical denomination, such Realized Losses shall be allocated pro rata between such REMIC I Regular
Interests.
REMIC I Regular Interest. Any of the separate non-certificated beneficial ownership interests
in REMIC I issued hereunder and designated as a "regular interest" in REMIC I. Each REMIC I Regular
Interest shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto. The designations for the respective REMIC I Regular Interests are set
forth in the Preliminary Statement hereto.
REMIC I Regular Interest A-I: A regular interest in REMIC I that is held as an asset of
REMIC II, that has an initial principal balance equal to the related Uncertificated Principal Balance,
that bears interest at the related Uncertificated REMIC I Pass-Through Rate, and that has such other
terms as are described herein.
REMIC II: The segregated pool of assets subject hereto, constituting a portion of the primary
trust created hereby and to be administered hereunder, with respect to which a separate REMIC election
is to be made, consisting of the REMIC I Regular Interests.
REMIC II Available Distribution Amount: For any Distribution Date, the amount distributed from
REMIC I to REMIC II on such Distribution Date in respect of the REMIC I Regular Interests.
38
REMIC II Distribution Amount: For any Distribution Date, the REMIC II Available Distribution
Amount shall be distributed to REMIC III in respect of the REMIC II Regular Interests and the Class R-II
Certificates in the following amounts and priority:
(a) to REMIC II Regular Interest LT-IO, in an amount equal to (i) Uncertificated
Accrued Interest for such REMIC II Regular Interest for such Distribution Date, plus (ii) any amounts in
respect thereof remaining unpaid from previous Distribution Dates;
(b) to the extent of amounts remaining after the distributions made pursuant to
clause (a) above, to REMIC II Regular Interests LT1, LT2, LT3 and LT4, pro rata, in an amount equal to
(i) their Uncertificated Accrued Interest for such Distribution Date, plus (ii) any amounts in respect
thereof remaining unpaid from previous Distribution Dates; and
(c) to the extent of amounts remaining after the distributions made pursuant to
clauses (a) and (b) above:
(i) to REMIC I Regular Interests LT2, LT3 and LT4,
their respective Principal Distribution Amounts;
(ii) to REMIC I Regular Interest LT1 any remainder until
the Uncertificated Principal Balance thereof is reduced to zero;
(iii) any remainder to REMIC II Regular Interests LT2,
LT3 and LT4, pro rata according to their respective Uncertificated Principal
Balances as reduced by the distributions deemed made pursuant to (i) above,
until their respective Uncertificated Principal Balances are reduced to zero;
and
(d) to the extent of amounts remaining after the distributions made pursuant to
clauses (a) through (c) above:
(i) first, to each of the REMIC II Regular Interests,
pro rata according to the amount of unreimbursed Realized Losses allocable to
principal previously allocated to each such REMIC II Regular Interest, the
aggregate amount of any distributions to the Certificates as reimbursement of
such Realized Losses on such Distribution Date pursuant to clause (ix) in
Section 4.02(c); provided, however, that any amounts distributed pursuant to
this paragraph (d)(i) of this definition of "REMIC II Distribution Amount"
shall not cause a reduction in the Uncertificated Principal Balances of any of
the REMIC II Regular Interests; and
(ii) second, to the Class R-II Certificates, any
remaining amount.
REMIC II Net WAC Rate: With respect to any Distribution Date, a per annum rate equal to the
weighted average of (x) with respect to REMIC I Regular Interests ending with the designation "B," the
weighted average of the Uncertificated REMIC I Pass-Through Rates for such REMIC I Regular Interests,
weighted on the basis of the Uncertificated Principal Balance of such REMIC I Regular Interests for each
such Distribution Date, (y) with respect to REMIC I Regular Interest A-I, the Uncertificated REMIC I
Pass-Through Rate for such REMIC I Regular Interest, and (z) with respect to REMIC I Regular Interests
ending with the designation "A," for each Distribution Date listed below, the weighted average of the
rates listed below for each such REMIC I Regular Interest listed below, weighted on the basis of the
Uncertificated Principal Balance of each such REMIC I Regular Interest for each such Distribution Date:
39
Distribution Date REMIC I Regular Interest Rate
___________________________________________________________________________________________________________________
1 I-1-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
2 I-2-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A Uncertificated REMIC I Pass-Through Rate
3 I-3-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A and I-2-A Uncertificated REMIC I Pass-Through Rate
4 I-4-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-3-A Uncertificated REMIC I Pass-Through Rate
5 I-5-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-4-A Uncertificated REMIC I Pass-Through Rate
6 I-6-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-5-A Uncertificated REMIC I Pass-Through Rate
7 I-7-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-6-A Uncertificated REMIC I Pass-Through Rate
8 I-8-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-7-A Uncertificated REMIC I Pass-Through Rate
9 I-9-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-8-A Uncertificated REMIC I Pass-Through Rate
10 I-10-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-9-A Uncertificated REMIC I Pass-Through Rate
11 I-11-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-10-A Uncertificated REMIC I Pass-Through Rate
12 I-12-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-11-A Uncertificated REMIC I Pass-Through Rate
13 I-13-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-12-A Uncertificated REMIC I Pass-Through Rate
14 I-14-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-13-A Uncertificated REMIC I Pass-Through Rate
15 I-15-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-14-A Uncertificated REMIC I Pass-Through Rate
16 I-16-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-15-A Uncertificated REMIC I Pass-Through Rate
17 I-17-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-16-A Uncertificated REMIC I Pass-Through Rate
18 I-18-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-17-A Uncertificated REMIC I Pass-Through Rate
19 I-19-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
40
I-1-A through I-18-A Uncertificated REMIC I Pass-Through Rate
20 I-20-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-19-A Uncertificated REMIC I Pass-Through Rate
21 I-21-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-20-A Uncertificated REMIC I Pass-Through Rate
22 I-22-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-21-A Uncertificated REMIC I Pass-Through Rate
23 I-23-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-22-A Uncertificated REMIC I Pass-Through Rate
24 I-24-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-23-A Uncertificated REMIC I Pass-Through Rate
25 I-25-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-24-A Uncertificated REMIC I Pass-Through Rate
26 I-26-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-25-A Uncertificated REMIC I Pass-Through Rate
27 I-27-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-26-A Uncertificated REMIC I Pass-Through Rate
28 I-28-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-27-A Uncertificated REMIC I Pass-Through Rate
29 I-29-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-28-A Uncertificated REMIC I Pass-Through Rate
30 I-30-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-29-A Uncertificated REMIC I Pass-Through Rate
31 I-31-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-30-A Uncertificated REMIC I Pass-Through Rate
32 I-32-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-31-A Uncertificated REMIC I Pass-Through Rate
33 I-33-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-32-A Uncertificated REMIC I Pass-Through Rate
34 I-34-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-33-A Uncertificated REMIC I Pass-Through Rate
35 I-35-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-34-A Uncertificated REMIC I Pass-Through Rate
36 I-36-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-35-A Uncertificated REMIC I Pass-Through Rate
37 I-37-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-36-A Uncertificated REMIC I Pass-Through Rate
38 I-38-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-37-A Uncertificated REMIC I Pass-Through Rate
41
39 I-39-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-38-A Uncertificated REMIC I Pass-Through Rate
40 I-40-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-39-A Uncertificated REMIC I Pass-Through Rate
41 I-41-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-40-A Uncertificated REMIC I Pass-Through Rate
42 I-42-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-41-A Uncertificated REMIC I Pass-Through Rate
43 I-43-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-42-A Uncertificated REMIC I Pass-Through Rate
44 I-44-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-43-A Uncertificated REMIC I Pass-Through Rate
45 I-45-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-44-A Uncertificated REMIC I Pass-Through Rate
46 I-46-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-45-A Uncertificated REMIC I Pass-Through Rate
47 I-47-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-46-A Uncertificated REMIC I Pass-Through Rate
48 I-48-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-47-A Uncertificated REMIC I Pass-Through Rate
49 I-49-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-48-A Uncertificated REMIC I Pass-Through Rate
50 I-50-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-49-A Uncertificated REMIC I Pass-Through Rate
51 I-51-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-50-A Uncertificated REMIC I Pass-Through Rate
52 I-52-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-51-A Uncertificated REMIC I Pass-Through Rate
53 I-53-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-54-A Uncertificated REMIC I Pass-Through Rate
54 I-54-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-53-A Uncertificated REMIC I Pass-Through Rate
55 I-55-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-54-A Uncertificated REMIC I Pass-Through Rate
56 I-56-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-55-A Uncertificated REMIC I Pass-Through Rate
57 I-57-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-56-A Uncertificated REMIC I Pass-Through Rate
58 I-58-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
42
I-1-A through I-57-A Uncertificated REMIC I Pass-Through Rate
59 I-59-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-58-A Uncertificated REMIC I Pass-Through Rate
60 I-60-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-59-A Uncertificated REMIC I Pass-Through Rate
61 I-61-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-59-A Uncertificated REMIC I Pass-Through Rate
62 I-62-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-61-A Uncertificated REMIC I Pass-Through Rate
63 I-63-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-62-A Uncertificated REMIC I Pass-Through Rate
64 I-64-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-63-A Uncertificated REMIC I Pass-Through Rate
65 I-65-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-64-A Uncertificated REMIC I Pass-Through Rate
66 I-66-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-65-A Uncertificated REMIC I Pass-Through Rate
67 I-67-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-66-A Uncertificated REMIC I Pass-Through Rate
68 I-68-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-67-A Uncertificated REMIC I Pass-Through Rate
69 I-69-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-68-A Uncertificated REMIC I Pass-Through Rate
70 I-70-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-69-A Uncertificated REMIC I Pass-Through Rate
71 I-71-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-70-A Uncertificated REMIC I Pass-Through Rate
72 I-72-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-71-A Uncertificated REMIC I Pass-Through Rate
73 I-73-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-72-A Uncertificated REMIC I Pass-Through Rate
74 I-74-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-73-A Uncertificated REMIC I Pass-Through Rate
75 I-75-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-74-A Uncertificated REMIC I Pass-Through Rate
76 I-76-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-75-A Uncertificated REMIC I Pass-Through Rate
77 I-77-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-76-A Uncertificated REMIC I Pass-Through Rate
43
78 I-78-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-77-A Uncertificated REMIC I Pass-Through Rate
79 I-79-A through I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-78-A Uncertificated REMIC I Pass-Through Rate
80 I-80-A 2 multiplied by Swap LIBOR, subject to a maximum rate of
Uncertificated REMIC I Pass-Through Rate
I-1-A through I-79-A Uncertificated REMIC I Pass-Through Rate
Thereafter I-1-A through I-80-A Uncertificated REMIC I Pass-Through Rate
REMIC II Principal Reduction Amounts: For any Distribution Date, the amounts by which the
principal balances of the REMIC II Regular Interests LT1, LT2, LT3 and LT4, respectively will be reduced
on such Distribution Date by the allocation of Realized Losses and the distribution of principal,
determined as follows:
For purposes of the succeeding formulas the following symbols shall have the meanings set forth
below:
Y1 = the principal balance of the REMIC II Regular Interest LT1 after distributions on the
prior Distribution Date.
Y2 = the principal balance of the REMIC II Regular Interest LT2 after distributions on the
prior Distribution Date.
Y3 = the principal balance of the REMIC II Regular Interest LT3 after distributions on the
prior Distribution Date.
Y4 = the principal balance of the REMIC II Regular Interest LT4 after distributions on the
prior Distribution Date (note: Y3 = Y4).
(Δ)Y1 = the REMIC II Regular Interest LT1 Principal Reduction Amount.
(Δ)Y2 = the REMIC II Regular Interest LT2 Principal Reduction Amount.
(Δ)Y3 = the REMIC II Regular Interest LT3 Principal Reduction Amount.
(Δ)Y4 = the REMIC II Regular Interest LT4 Principal Reduction Amount.
P0 = the aggregate principal balance of REMIC II Regular Interests LT1, LT2, LT3 and LT4
after distributions and the allocation of Realized Losses on the prior Distribution
Date.
P1 = the aggregate principal balance of the REMIC II Regular Interests LT1, LT2, LT3 and
LT4 after distributions and the allocation of Realized Losses to be made on such
Distribution Date.
(Δ)P = P0 - P1 = the aggregate of the REMIC II Regular Interests LT1, LT2, LT3 and
LT4 Principal Reduction Amounts.
= the aggregate of the principal portions of Realized Losses to be allocated to, and the
principal distributions to be made on, the Certificates on such Distribution Date
44
(including distributions of accrued and unpaid interest on the Class X Certificates
for prior Distribution Dates).
R0 = the REMIC II Net WAC Rate (stated as a monthly rate) after giving effect to amounts
distributed and Realized Losses allocated on the prior Distribution Date.
R1 = the REMIC II Net WAC Rate (stated as a monthly rate) after giving effect to amounts to
be distributed and Realized Losses to be allocated on such Distribution Date.
(α) = (Y2 + Y3)/P0. The initial value of (α) on the Closing Date for use on the
first Distribution Date shall be 0.0001.
(γ)0 = the lesser of (A) the sum for all Classes of Certificates other than the
Class X Certificates and REMIC III Regular Interest IO of the product for each Class of
(i) the monthly interest rate (as limited by the REMIC II Net WAC Rate, if applicable)
for such Class applicable for distributions to be made on such Distribution Date and
(ii) the aggregate Certificate Principal Balance for such Class after distributions
and the allocation of Realized Losses on the prior Distribution Date and (B) R0*P0.
(γ)1 = the lesser of (A) the sum for all Classes of Certificates other than the
Class X Certificates and REMIC III Regular Interest IO of the product for each Class of
(i) the monthly interest rate (as limited by the REMIC II Net WAC Rate, if applicable)
for such Class applicable for distributions to be made on the next succeeding
Distribution Date and (ii) the aggregate Certificate Principal Balance for such
Class after distributions and the allocation of Realized Losses to be made on such
Distribution Date and (B) R1*P1.
Then, based on the foregoing definitions:
(Δ)Y1 = (Δ)P - (Δ)Y2 - Y3 - Y4;
(Δ)Y2 = (α/2){(γ0R1 - γ1R0)/R0R1};
(Δ)Y3 = (α(Δ)P - (Δ)Y2; and
(Δ)Y4 = (Δ)Y3.
if both (Δ)Y2 and (Δ)Y3, as so determined, are non-negative numbers. Otherwise:
(1) If (Δ)Y2, as so determined, is negative, then
(Δ)Y2 = 0
(Δ)Y3 = α{γ1R0P0 - γ0R1P1}/{γ1R0};
(Δ)Y4 = (Δ)Y3; and
(Δ)Y1 = (▇)▇ - (▇)▇▇ - (▇)▇▇ - (▇)▇▇.
(2) If (Δ)Y3, as so determined, is negative, then
45
(Δ)Y3 = 0;
(Δ)Y2 = α{γ1R0P0 - γ0R1P1}/{2R1R0P1 - γ1R0};
(Δ)Y4 = (Δ)Y3; and
(Δ)Y1 = (▇)▇ - (▇)▇▇ - (▇)▇▇ - (▇)▇▇.
REMIC II Realized Losses: Realized Losses on the Mortgage Loans shall be allocated to the
REMIC II Regular Interests as follows. The interest portion of Realized Losses on the Mortgage Loans, if
any, shall be allocated among REMIC II Regular Interests LT1, LT2 and LT4, pro rata according to the
amount of interest accrued but unpaid thereon, in reduction thereof. Any interest portion of such
Realized Losses in excess of the amount allocated pursuant to the preceding sentence shall be treated as
a principal portion of Realized Losses not attributable to any specific Mortgage Loan and allocated
pursuant to the succeeding sentences. The principal portion of Realized Losses with respect to Mortgage
Loans shall be allocated to the REMIC II Regular Interests as follows: first, to REMIC II Regular
Interests LT2, LT3 and LT4, pro-rata according to their respective REMIC II Principal Reduction Amounts
to the extent thereof in reduction of the Uncertificated Principal Balance of such REMIC II Regular
Interests and, second, the remainder, if any, of such principal portion of such Realized Losses shall be
allocated to REMIC II Regular Interest LT1 in reduction of the Uncertificated Principal Balance thereof.
REMIC II Regular Interests: REMIC II Regular Interest LT1, REMIC II Regular Interest LT2,
REMIC II Regular Interest LT3, REMIC II Regular Interest LT4 and REMIC II Regular Interest LT-IO.
REMIC II Regular Interest LT1: A regular interest in REMIC II that is held as an asset of
REMIC III, that has an initial principal balance equal to the related Uncertificated Principal Balance,
that bears interest at the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.
REMIC II Regular Interest LT1 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the REMIC II Regular Interest LT1 Principal Reduction Amount for such Distribution
Date over the Realized Losses allocated to the REMIC II Regular Interest LT1 on such Distribution Date.
REMIC II Regular Interest LT2: A regular interest in REMIC II that is held as an asset of
REMIC III, that has an initial principal balance equal to the related Uncertificated Principal Balance,
that bears interest at the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.
REMIC II Regular Interest LT2 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the REMIC II Regular Interest LT2 Principal Reduction Amount for such Distribution
Date over the Realized Losses allocated to the REMIC II Regular Interest LT2 on such Distribution Date.
REMIC II Regular Interest LT3: A regular interest in REMIC II that is held as an asset of
REMIC III, that has an initial principal balance equal to the related Uncertificated Principal Balance,
that bears interest at the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.
REMIC II Regular Interest LT3 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the REMIC II Regular Interest LT3 Principal Reduction Amount for such Distribution
Date over the Realized Losses allocated to the REMIC II Regular Interest LT3 on such Distribution Date.
46
REMIC II Regular Interest LT4: A regular interest in REMIC II that is held as an asset of
REMIC III, that has an initial principal balance equal to the related Uncertificated Principal Balance,
that bears interest at the related Uncertificated REMIC II Pass-Through Rate, and that has such other
terms as are described herein.
REMIC II Regular Interest LT4 Principal Distribution Amount: For any Distribution Date, the
excess, if any, of the REMIC II Regular Interest LT4 Principal Reduction Amount for such Distribution
Date over the Realized Losses allocated to the REMIC II Regular Interest LT4 on such Distribution Date.
REMIC II Regular Interest LT-IO: A regular interest in REMIC II that is held as an asset of
REMIC III, that has no initial principal balance, that bears interest at the related Uncertificated
REMIC II Pass-Through Rate on its Uncertificated Notional Amount, and that has such other terms as are
described herein.
REMIC III: The segregated pool of assets subject hereto, constituting a portion of the primary
trust created hereby and to be administered hereunder, with respect to which a separate REMIC election
is to be made, consisting of the REMIC II Regular Interests.
REMIC III Available Distribution Amount: For any Distribution Date, the amount distributed
from REMIC II to REMIC III on such Distribution Date in respect of the REMIC II Regular Interests.
REMIC III Distribution Amount: For any Distribution Date, the REMIC III Available Distribution
Amount shall be deemed distributed to Class A, Class M, Class B and Class X Certificates in respect of
the portion of such Certificates representing ownership of REMIC III Regular Interests and the Class R-
III Certificates in the following amounts and priority:
(i) to the Class X Certificateholders in respect of REMIC III Regular Interest IO, the
amount distributable with respect to such REMIC III Regular Interest as described in the Preliminary
Statement, being paid from and in reduction of the REMIC III Available Distribution Amount for such
Distribution Date;
(ii) to the Class A Certificateholders, the Current Interest payable on the Class A
Certificates with respect to such Distribution Date, plus any related amounts accrued pursuant to this
clause (ii) but remaining unpaid from any prior Distribution Date, being paid from and in reduction of
the REMIC III Available Distribution Amount for such Distribution Date;
(iii) to the Class M Certificateholders, from the amount, if any, of the funds then
available in the Certificate Account remaining after the foregoing distributions, Current Interest
payable on the Class M Certificates with respect to such Distribution Date, plus any related amounts
accrued pursuant to this clause (iii) but remaining unpaid from any prior Distribution Date,
sequentially, to the Class M-1 Certificateholders, Class M-2 Certificateholders, Class M-3
Certificateholders and Class M-4 Certificateholders, in that order, being paid from and in reduction of
the REMIC III Available Distribution Amount for such Distribution Date;
(iv) to the Class B Certificateholders, from the amount, if any, of the funds then
available in the Certificate Account remaining after the foregoing distributions, Current Interest
payable on the Class B Certificates with respect to such Distribution Date, plus any related amounts
accrued pursuant to this clause (iv) but remaining unpaid from any prior Distribution Date, sequentially,
to the Class B-1 Certificateholders and Class B-2 Certificateholders, in that order, being paid from and
in reduction of the REMIC III Available Distribution Amount for such Distribution Date;
47
(v) the Principal Distribution Amount shall be distributed as follows, to be applied to
reduce the principal balance of the REMIC III Regular Interest related to the applicable Certificates in
each case to the extent of the remaining Principal Distribution Amount:
(A) first, the Class A Principal Distribution Amount shall be distributed
sequentially to the Class A-1 Certificateholders, Class A-2 Certificateholders and Class A-3
Certificateholders, in that order, in each case until the Certificate Principal Balance thereof is
reduced to zero;
(B) second, to the Class M-1 Certificateholders, the Class M-1 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-1 Certificates has been
reduced to zero;
(C) third, to the Class M-2 Certificateholders, the Class M-2 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-2 Certificates has been
reduced to zero;
(D) fourth, to the Class M-3 Certificateholders, the Class M-3 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-3 Certificates has been
reduced to zero;
(E) fifth, to the Class M-4 Certificateholders, the Class M-4 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-4 Certificates has been
reduced to zero;
(F) sixth, to the Class B-1 Certificateholders, the Class B-1 Principal
Distribution Amount, until the Certificate Principal Balance of the Class B-1 Certificates has been
reduced to zero; and
(G) seventh, to the Class B-2 Certificateholders, the Class B-2 Principal
Distribution Amount, until the Certificate Principal Balance of the Class B-2 Certificates has been
reduced to zero; and
(vi) to the Class A Certificateholders, Class M Certificateholders and Class B
Certificateholders, the amount of any Prepayment Interest Shortfalls allocated thereto for such
Distribution Date, on a pro rata basis based on Prepayment Interest Shortfalls allocated thereto to the
extent not offset by Compensating Interest on such Distribution Date;
(vii) to the Class A Certificateholders, Class M Certificateholders and Class B
Certificateholders, the amount of any Prepayment Interest Shortfalls previously allocated thereto
remaining unpaid from prior Distribution Dates together with interest thereon at the related
Pass-Through Rate, on a pro rata basis based on unpaid Prepayment Interest Shortfalls previously
allocated thereto;
(viii) to the Class X Certificates, (A) from the amount, if any, of the REMIC III Available
Distribution Amount remaining after the foregoing distributions, the sum of (I) Current Interest
thereon, (II) the amount of any Excess Principal Distribution Amount for such Distribution Date and
(III) for any Distribution Date after the Certificate Principal Balance of each Class of Class A
Certificates, Class M Certificates and Class B Certificates has been reduced to zero, the
Overcollateralization Amount and (B) from prepayment charges on deposit in the Certificate Account, any
prepayment charges received on the Mortgage Loans during the related Prepayment Period; and
48
(ix) to the Holders of the Class R-III Certificates, the balance, if any, of the REMIC III
Available Distribution Amount.
REMIC III Regular Interest X-PO: A separate non-certificated beneficial ownership interests in
REMIC III issued hereunder and designated as a Regular Interest in REMIC III. REMIC III Regular
Interest X-PO shall have no entitlement to interest, and shall be entitled to distributions of principal
subject to the terms and conditions hereof, in aggregate amount equal to the initial Certificate
Principal Balance of the Class X Certificates as set forth in the Preliminary Statement hereto.
REMIC III Regular Interest X-IO: A separate non-certificated beneficial ownership interests in
REMIC III issued hereunder and designated as a Regular Interest in REMIC III. REMIC III Regular
Interest X-IO shall have no entitlement to principal, and shall be entitled to distributions of interest
subject to the terms and conditions hereof, in aggregate amount equal to the interest distributable with
respect to the Class X Certificates pursuant to the terms and conditions hereof.
REMIC III Regular Interest IO: A separate non-certificated beneficial ownership interests in
REMIC III issued hereunder and designated as a Regular Interest in REMIC III. REMIC III Regular
Interest IO shall have no entitlement to principal, and shall be entitled to distributions of interest
subject to the terms and conditions hereof, in aggregate amount equal to the interest distributable with
respect to REMIC II Regular Interest LT-IO.
REMIC III Regular Interests: REMIC III Regular Interests X-IO, X-PO and IO, together with the
Class A Certificates, Class M Certificates and Class B Certificates exclusive of their respective rights
to receive the payment of Available Funds Cap Carryover and other amounts pursuant to the X-AMB Swap
Agreement.
REMIC Pass-Through Rate: The Pass-Through Rate for a Class of Certificates calculated by
replacing "Available Funds Cap" in such definition with "Net Rate."
REMIC Provisions: 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 proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in effect from time to time as
well as provisions of applicable state laws.
Remittance Report: As defined in Section 4.04(j) hereof.
REO Property: A Mortgaged Property acquired by a Servicer, on behalf of the Trust for the
benefit of the Certificateholders, through foreclosure or deed-in-lieu of foreclosure in connection with
a defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor for a Deleted Mortgage
Loan, which must, on the date of such substitution, as confirmed in a Request for Release, substantially
in the form of Exhibit I (1) 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 less than 90% of
the Stated Principal Balance of the Deleted Mortgage Loan; (2) with respect to any Fixed Rate Mortgage
Loan, have a Mortgage Rate not less than or no more than 1% per annum higher than the Mortgage Rate of
the Deleted Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a Maximum
Mortgage Rate no more than 1% per annum higher or lower than the Maximum Mortgage Rate of the Deleted
Mortgage Loan; (B) have a Minimum Mortgage Rate no more than 1% per annum higher or lower than the
Minimum Mortgage Rate of the Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as
49
that of the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher or lower than
that of the Deleted Mortgage Loan; (D) not permit conversion of the related Mortgage Rate to a fixed
Mortgage Rate and (F) currently be accruing interest at a rate not more than 1% per annum higher or
lower than that of the Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio no higher than that of the
Deleted Mortgage Loan; (5) have a remaining term to maturity no greater than (and not more than one year
less than) that of the Deleted Mortgage Loan; (6) provide for a Prepayment Charge on terms substantially
similar to those of the Prepayment Charge, if any, of the Deleted Mortgage Loan; (7) have the same lien
priority as the Deleted Mortgage Loan; (8) constitute the same occupancy type as the Deleted Mortgage
Loan; and (9) comply with each representation and warranty set forth in Section 2.03 hereof.
Reportable Event: As defined in Section 11.04.
Reporting Servicer: As defined in Section 11.03.
Request for Release: The Request for Release of Documents submitted by the applicable Servicer
to the Custodian, substantially in the form of Exhibit I hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance policy that is
required to be maintained from time to time under this Agreement.
Required Percentage: As of any Distribution Date following the Stepdown Date, the quotient of
(1) the excess of (A) the Stated Principal Balances of the Mortgage Loans as of such Distribution Date,
over (B) the Certificate Principal Balance of the most senior Class of Certificates outstanding as of
such Distribution Date, prior to giving effect to distributions to be made on such Distribution Date and
(2) the Stated Principal Balance of the Mortgage Loans as of such Distribution Date.
Reserve Interest Rate: With respect to any Interest Determination Date, the rate per annum
that the Trustee determines to be (1) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 0.03125%) of the one-month United States dollar lending rates which New York City
banks selected by the Trustee are quoting on the relevant Interest Determination Date to the principal
London offices of leading banks in the London interbank market or (2) in the event that the Trustee can
determine no such arithmetic mean, the lowest one-month United States dollar lending rate which New York
City banks selected by the Trustee are quoting on such Interest Determination Date to leading European
banks.
Responsible Officer: When used with respect to the Trustee or a Servicer, any officer of the
Trustee or the Servicer, as applicable, with direct responsibility for the administration of this
Agreement and any other officer to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace such LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor in
interest.
Sale Agreement(s): The Mortgage Loan Purchase Agreement dated as of December 27, 2006 between
the Depositor and American Mortgage Network, Inc., and the Mortgage Loan Purchase Agreement date as of
50
December 27, 2006 between the Depositor and Wachovia Bank, National Association.
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act: The ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations of the
Commission promulgated thereunder (including any interpretations thereof by the Commission's staff).
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.
Section 302 Requirements: Any rules or regulations promulgated pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, as amended.
Seller(s): American Mortgage Network, Inc., a Delaware corporation, or its successor in
interest and Wachovia Bank, National Association, a national banking association, or its successor in
interest.
Servicer(s): Each of ▇▇▇▇▇ Fargo Bank, N.A., a national banking association, or its successor
in interest, and National City Mortgage Co., an Ohio corporation, or its successor in interest.
Servicer Advance Date: As to any Distribution Date, the related Servicer Remittance Date.
Servicer Collection Account: Each of the separate Eligible Accounts created and initially
maintained by each Servicer pursuant to Section 3.05(d). Funds in the Servicer Collection Accounts
shall be held in trust for the uses and purposes set forth in this Agreement.
Servicer Remittance Date: With respect to any Distribution Date, the third Business Day prior
to the related Distribution Date.
Service(s)(ing): In accordance with Regulation AB, the act of servicing and administering the
Mortgage Loans or any other assets of the Trust by an entity that meets the definition of "servicer" set
forth in Item 1101 of Regulation AB and is subject to the disclosure requirements set forth in 1108 of
Regulation AB. For clarification purposes, any uncapitalized occurrence of this term shall have the
meaning commonly understood by participants in the residential mortgage-backed securitization market.
Servicing Advances: All customary, reasonable and necessary "out of pocket" costs and expenses
incurred in the performance of the applicable Servicer's servicing obligations hereunder, including,
but not limited to, the cost of (1) the preservation, inspection, restoration and protection of a
Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op Loan), including without
limitation advances in respect of real estate taxes and assessments, (2) any collection, enforcement or
judicial proceedings, including without limitation foreclosures, collections and liquidations, (3) the
conservation, management, sale and liquidation of any REO Property, (4) executing and recording
instruments of satisfaction, deeds of reconveyance or Assignments of Mortgage to the extent not
otherwise recovered from the related Mortgages or payable under this Agreement, (5) correcting errors of
prior servicers; costs and expenses charged to the Servicer by the Trustee; tax tracking; title
research; flood certifications; lender paid mortgage insurance, (6) obtaining or correcting any legal
documentation required to be included in the Mortgage Files and reasonably necessary for the Servicer to
perform its obligations under this Agreement, (7) compliance with the obligations under Sections 3.01
and 3.10; provided that such amounts are required to be advanced only to the extent such advances
constitute "unanticipated expenses" within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)
and (8) costs and expenses (including reasonable attorney's fees and expenses) incurred by the Servicer
51
in connection with executing and recording instruments of satisfaction, deeds of reconveyance or
Assignments in connection with any foreclosure in respect of any Mortgage Loan to the extent not
received from the related Mortgagor or otherwise payable under this Agreement. Neither Servicer shall
be required to make any Non-Recoverable Servicing Advances in respect of a Mortgage Loan or REO Property.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of Regulation AB, as
such may be amended from time to time.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an amount equal to the
product of (x) one-twelfth of the Servicing Fee Rate and (y) the Stated Principal Balance of such
Mortgage Loan or, in the event of any payment of interest that accompanies a Principal Prepayment in
full made by the Mortgagor, interest at the Servicing Fee Rate on the Stated Principal Balance of such
Mortgage Loan as of the preceding Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: 0.25% per annum.
Servicing Function Participant: Any Subservicer, Subcontractor or any other Person, other than
the Servicers and the Trustee, that is "participating in the servicing function" within the meaning of
Item 1122 of Regulation AB, unless such Person's activities relate only to 5% or less of the Mortgage
Loans (measured by aggregate Stated Principal Balance of the Mortgage Loans, annually at the
commencement of the calendar year prior to the year in which an Assessment of Compliance is required to
be delivered, multiplied by a fraction, the numerator of which is the number of months during which such
Servicing Function Participant Services the related Mortgage Loans and the denominator of which is 12,
or, in the case of the year in which the Closing Date occurs, the number of months elapsed from the
Cut-Off Date to the end of such calendar year).
Servicing Officer: Any officer of a Servicer 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 Trustee by the Servicers on the Closing Date pursuant to this
Agreement, as such lists may from time to time be amended.
Servicing Transfer Costs: All costs associated with the transfer of servicing from the
predecessor Servicer, including, without limitation, any costs or expenses associated with the
termination of the predecessor Servicer, the appointment of a successor servicer, the complete transfer
of all servicing data and the completion, correction or manipulation of such servicing data as may be
required by any successor servicer to correct any errors or insufficiencies in the servicing data or
otherwise to enable the successor servicer to service the Mortgage Loans properly and effectively.
SFAS 140: Statement of Financial Accounting Standard No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities dated September 2000, published by the
Financial Accounting Standards Board of the Financial Accounting Foundation.
Startup Day: As defined in Section 2.07(b) hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related REO Property (1) as of
the Cut-off Date, the Cut-off Date Principal Balance thereof, and (2) as of any Distribution Date, such
Cut-off Date Principal Balance, minus the sum of (A) the principal portion of the Scheduled Payments (x)
due with respect to such Mortgage Loan during each Due Period ending prior to such Distribution Date and
(y) that were received by the applicable Servicer as of the close of business on the Determination Date
related to such Distribution Date or with respect to which Advances were made on the Servicer Advance
52
Date prior to such Distribution Date and (B) all Principal Prepayments with respect to such Mortgage
Loan received on or prior to the last day of the related Prepayment Period, and all Liquidation Proceeds
to the extent applied by the Servicer as recoveries of principal in accordance with Section 3.12 with
respect to such Mortgage Loan, that were received by the Servicer as of the close of business on the
last day of the related Due Period. Notwithstanding the foregoing, the Stated Principal Balance of a
Liquidated Loan shall be deemed to be zero.
Stepdown Date: The earlier to occur of (1) the Distribution Date on which the Class A
Certificate Principal Balance is reduced to zero and (2) the later to occur of (x) the Distribution Date
in January 2010 and (y) the first Distribution Date on which the Class A Certificate Principal Balance
(reduced by the Principal Funds with respect to such Distribution Date) is less than or equal to 88.80%
of the Stated Principal Balances of the Mortgage Loans as of such Distribution Date.
Stepdown Delinquency Trigger: The situation that exists with respect to any Distribution Date
on or after the Stepdown Date, if the quotient of (1) the aggregate Stated Principal Balance of all
Mortgage Loans 60 or more days Delinquent, measured on a rolling three-month basis (including Mortgage
Loans in foreclosure, REO Properties and Mortgage Loans with respect to which the applicable Mortgagor
is in bankruptcy) and (2) the Stated Principal Balance of all of the Mortgage Loans, in each case as of
the preceding Servicer Remittance Date, equals or exceeds the product of (i) 40.55% and (ii) the
Required Percentage
Stepdown Loss Trigger: For any Distribution Date, the applicable percentage for such
Distribution Date set forth in the following table:
Distribution Date Occurring In Cumulative Loss Percentage
January 2009 - December 2009 0.25% with respect to January 2009, plus an
additional 1/12th of 0.30% for each month
thereafter
January 2010 - December 2010 0.55% with respect to January 2010, plus an
additional 1/12th of 0.40% for each month
thereafter
January 2011 - December 2011 0.95% with respect to January 2011, plus an
additional 1/12th of 0.45% for each month
thereafter
January 2012 - December 2012 1.40% with respect to January 2012, plus an
additional 1/12th of 0.25% for each month
thereafter
January 2013 and thereafter 1.65%
Stepdown Trigger Event: With respect to the Certificates on or after the Stepdown Date, a
Distribution Date on which (1) the quotient of (A) the aggregate Stated Principal Balance of all
Mortgage Loans which are 60 or more days Delinquent measured on a rolling three-month basis (including,
for the purposes of this calculation, Mortgage Loans in foreclosure and REO Properties and Mortgage
Loans with respect to which the applicable Mortgagor is in bankruptcy) and (B) the Stated Principal
Balance of the Mortgage Loans as of the preceding Servicer Remittance Date, equals or exceeds the
product of (i) 40.55% and (ii) the Required Percentage or (2) the quotient (expressed as a percentage)
of (A) the aggregate Realized Losses incurred from the Cut-off Date through the last day of the calendar
month preceding such Distribution Date and (B) the aggregate principal balance of the Mortgage Loans as
of the Cut-off Date exceeds the Stepdown Loss Trigger.
53
Subcontractor: Any vendor, subcontractor or other Person that is not responsible for the
overall servicing of Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to Mortgage Loans under the direction or authority of a Servicer
(or a Subservicer of a Servicer) or the Trustee.
Subordinated Certificates: Each Class of the Class M Certificates and Class B Certificates.
Subsequent Recovery: Any amount received on a Mortgage Loan (net of amounts reimbursed to the
applicable Servicer related to such Mortgage Loan) subsequent to such Mortgage Loan being determined to
be a Liquidated Mortgage Loan.
Subservicer: Any Person that (i) services Mortgage Loans on behalf of a Servicer and (ii) is
responsible for the performance (whether directly or through sub-servicers or Subcontractors) of
Servicing functions required to be performed under this Agreement or any Subservicing Agreement that are
identified in Item 1122(d) of Regulation AB.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term pursuant to Section 2.03(c).
Supplemental Interest Trust: The non-interest bearing trust account established by the
Supplemental Interest Trust Trustee pursuant to Section 4.04(k) of this Agreement out of which any Swap
Termination Payments or Net Swap Payments owed to the Swap Counterparty will be paid, certain
distributions to Certificateholders will be made, and into which any Swap Termination Payments or Net
Swap Payments received from the Swap Counterparty will be deposited as set forth in Sections 4.04(f)(v)
and 4.04(k) hereof.
Supplemental Interest Trust Trustee: U.S. Bank National Association, a national banking
association, not in its individual capacity, but solely in its capacity as trustee of the Supplemental
Interest Trust, and any successor thereto, and any corporation or national banking association resulting
from or surviving any consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee hereunder.
Swap Agreement: The interest rate swap agreement, consisting of a 1992 ISDA Master Agreement
(Multicurrency Border) with a schedule and credit support annex attached thereto, dated as of December
27, 2006, between Wachovia Bank, National Association and the Supplemental Interest Trust Trustee on
behalf of the Supplemental Interest Trust or any other cap agreement or swap agreement (including any
related schedules and/or credit support annexes) entered into by the Supplemental Interest Trust Trustee
on behalf of the Supplemental Interest Trust pursuant to Section 4.04(k) hereof.
Swap Counterparty: Wachovia Bank, National Association or any successor counterparty who meets
the requirements set forth in the Swap Agreement.
Swap LIBOR: LIBOR as determined pursuant to the Swap Agreement.
Swap Termination Payment: Any payment payable by the Supplemental Interest Trust or the Swap
Counterparty upon termination of the Swap Agreement as a result of an Event of Default (as defined in
the Swap Agreement) or a Termination Event (as defined in the Swap Agreement).
54
Tax Matters Person: The Person designated as "tax matters person" in the manner provided under
Treasury regulation Section 1.860F-4(d) and Treasury regulation Section 301.6231(a)(7)-1.
Tax Returns: The federal income tax return on Internal Revenue Service Form 1066, U.S. Real
Estate Mortgage Investment Conduit Income Tax Return, including Schedule Q thereto, Quarterly Notice to
Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of any REMIC hereunder due to its classification as a REMIC under the REMIC Provisions,
together with any and all other information, reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws (including, without
limitation, with respect to the Supplemental Interest Trust).
Transfer: Any direct or indirect transfer or sale of any Ownership Interest in a Certificate.
Trust Fund: The corpus of the trust (the "Wachovia Mortgage Loan Trust, Series 2006-ALT1" or
the "Trust") created hereunder consisting of (i) the Mortgage Loans and all interest and principal
received on or with respect thereto on and after the Cut-off Date to the extent not applied in computing
the Cut-off Date Principal Balance thereof, exclusive of interest not required to be deposited in the
Servicer Collection Accounts; (ii) the Servicer Collection Accounts and the Certificate Account and all
amounts deposited therein pursuant to the applicable provisions of this Agreement; (iii) property that
secured a Mortgage Loan and has been acquired by foreclosure, deed in lieu of foreclosure or otherwise;
(iv) the mortgagee's rights under the Insurance Policies with respect to the Mortgage Loans; and (v) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or other liquid
property.
Trustee: U.S. Bank National Association, a national banking association, not in its individual
capacity, but solely in its capacity as trustee for the benefit of the Certificateholders under this
Agreement, and any successor thereto, and any corporation or national banking association resulting from
or surviving any consolidation or merger to which it or its successors may be a party and any successor
trustee as may from time to time be serving as successor trustee hereunder.
Trustee Fee: The monthly fee paid to the Trustee generally equal to the product of (a)
one-twelfth of the Trustee Fee Rate and (b) the Stated Principal Balance of such Mortgage Loan. The
Trustee is also entitled to investment income earned on amounts on deposit in the Certificate Account.
Trustee Fee Rate: 0.0025% per annum for each Mortgage Loan.
Uncertificated Accrued Interest: With respect to any Uncertificated Regular Interest for any
Distribution Date, one month's interest at the related Uncertificated Pass-Through Rate for such
Distribution Date, accrued on the Uncertificated Principal Balance or Uncertificated Notional Amount, as
applicable, immediately prior to such Distribution Date. Uncertificated Accrued Interest for the
Uncertificated Regular Interests shall accrue on the basis of a 360-day year consisting of twelve 30-day
months. For purposes of calculating the amount of Uncertificated Accrued Interest for the REMIC I
Regular Interests for any Distribution Date, any Prepayment Interest Shortfalls and Relief Act
Shortfalls (to the extent not covered by Compensating Interest) shall be allocated among REMIC I Regular
Interests, pro rata, based on, and to the extent of, Uncertificated Accrued Interest, as calculated
without application of this sentence. For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC II Regular Interests for any Distribution Date, any Prepayment Interest
Shortfalls and Relief Act Shortfalls (to the extent not covered by Compensating Interest) shall be
allocated among the REMIC II Regular Interests, pro rata, based on, and to the extent of, Uncertificated
Accrued Interest, as calculated without application of this sentence. Uncertificated Interest on
REMIC III Regular Interest X-PO shall be zero. Uncertificated Accrued Interest on the REMIC III Regular
55
Interest X-IO for each Distribution Date shall equal Accrued Certificate Interest for the Class X
Certificates.
Uncertificated Notional Amount: With respect to the Class X Certificates or REMIC III Regular
Interest X-IO, immediately prior to any Distribution Date, the aggregate of the Uncertificated Principal
Balances of the REMIC II Regular Interests.
With respect to REMIC II Regular Interest LT-IO and each Distribution Date listed below, the
aggregate Uncertificated Principal Balance of the REMIC I Regular Interests ending with the designation
"A" listed below:
Distribution Date REMIC I Regular Interests
_______________________________________________________________________________
1 I-1-A through ▇-▇▇-▇
▇ ▇-▇-▇ ▇▇▇▇▇▇▇ ▇-▇▇-▇
▇ ▇-▇-▇ through ▇-▇▇-▇
▇ ▇-▇-▇ ▇▇▇▇▇▇▇ ▇-▇▇-▇
▇ ▇-▇-▇ through ▇-▇▇-▇
▇ ▇-▇-▇ ▇▇▇▇▇▇▇ ▇-▇▇-▇
▇ ▇-▇-▇ through ▇-▇▇-▇
▇ ▇-▇-▇ ▇▇▇▇▇▇▇ ▇-▇▇-▇
▇ ▇-▇-▇ through I-80-A
10 I-10-A through I-80-A
11 I-11-A through I-80-A
12 I-12-A through I-80-A
13 I-13-A through I-80-A
14 I-14-A through I-80-A
15 I-15-A through I-80-A
16 I-16-A through I-80-A
17 I-17-A through I-80-A
18 I-18-A through I-80-A
19 I-19-A through I-80-A
20 I-20-A through I-80-A
21 I-21-A through I-80-A
22 I-22-A through I-80-A
23 I-23-A through I-80-A
24 I-24-A through I-80-A
25 I-25-A through I-80-A
26 I-26-A through I-80-A
27 I-27-A through I-80-A
28 I-28-A through I-80-A
29 I-29-A through I-80-A
30 I-30-A through I-80-A
31 I-31-A through I-80-A
32 I-32-A through I-80-A
33 I-33-A through I-80-A
34 I-34-A through I-80-A
35 I-35-A through I-80-A
36 I-36-A through I-80-A
37 I-37-A through I-80-A
56
Distribution Date REMIC I Regular Interests
_______________________________________________________________________________
38 I-38-A through I-80-A
39 I-39-A through I-80-A
40 I-40-A through I-80-A
41 I-41-A through I-80-A
42 I-42-A through I-80-A
43 I-43-A through I-80-A
44 I-44-A through I-80-A
45 I-45-A through I-80-A
46 I-46-A through I-80-A
47 I-47-A through I-80-A
48 I-48-A through I-80-A
49 I-49-A through I-80-A
50 I-50-A through I-80-A
51 I-51-A through I-80-A
52 I-52-A through I-80-A
53 I-53-A through I-80-A
54 I-54-A through I-80-A
55 I-55-A through I-80-A
56 I-56-A through I-80-A
57 I-57-A through I-80-A
58 I-58-A through I-80-A
59 I-59-A through I-80-A
60 I-60-A through I-80-A
61 I-61-A through I-80-A
62 I-62-A through I-80-A
63 I-63-A through I-80-A
64 I-64-A through I-80-A
65 I-65-A through I-80-A
66 I-66-A through I-80-A
67 I-67-A through I-80-A
68 I-68-A through I-80-A
69 I-69-A through I-80-A
70 I-70-A through I-80-A
71 I-71-A through I-80-A
72 I-72-A through I-80-A
73 I-73-A through I-80-A
74 I-74-A through I-80-A
75 I-75-A through I-80-A
76 I-76-A through I-80-A
77 I-77-A through I-80-A
78 I-78-A through I-80-A
79 I-79-A through I-80-A
80 I-80-A
thereafter $0.00
With respect to REMIC III Regular Interest IO, immediately prior to any Distribution Date, an
amount equal to the Uncertificated Notional Amount of REMIC II Regular Interest LT-IO.
Uncertificated Pass-Through Rate: The Uncertificated REMIC I Pass-Through Rate or the
Uncertificated REMIC II Pass-Through Rate, as applicable.
57
Uncertificated Principal Balance: The principal amount of any Uncertificated Regular Interest
outstanding as of any date of determination. The Uncertificated Principal Balance of each REMIC Regular
Interest shall never be less than zero. With respect to REMIC III Regular Interest X-PO the initial
amount set forth with respect thereto in the Preliminary Statement as reduced by distributions deemed
made in respect thereof pursuant to Section 4.02 and Realized Losses allocated thereto pursuant to
Section 4.05.
Uncertificated Regular Interests: The REMIC I Regular Interests and the REMIC II Regular
Interests.
Uncertificated REMIC I Pass-Through Rate: With respect to each REMIC I Regular Interest ending
with the designation "A," a per annum rate equal to the weighted average Net Mortgage Rate of the
Mortgage Loans multiplied by two (2), subject to a maximum rate of 10.70%. With respect to each REMIC I
Regular Interest ending with the designation "B," the greater of (x) a per annum rate equal to the
excess, if any, of (i) 2 multiplied by the weighted average Net Mortgage Rate of the Mortgage Loans over
(ii) 10.70% and (y) 0.00000%. With respect to REMIC I Regular Interest A-I, the weighted average Net
Mortgage Rate of the Mortgage Loans.
Uncertificated REMIC II Pass-Through Rate: With respect to any Distribution Date and
(i) REMIC II Regular Interests LT1 and LT2, the REMIC II Net WAC Rate, (ii) REMIC II Regular Interest
LT3, zero (0.00%), (iii) REMIC II Regular Interest LT4, twice the REMIC II Net WAC Rate, and (iv)
REMIC II Regular Interest LT-IO, the excess of (i) the weighted average of the Uncertificated REMIC I
Pass-Through Rates for REMIC I Regular Interests ending with the designation "A," over (ii) 2 multiplied
by Swap LIBOR.
Underlying Mortgaged Property: With respect to each Co-op Loan, the underlying real property
owned by the related residential cooperative housing corporation.
Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount, Class M-2 Unpaid
Realized Loss Amount, Class M-3 Unpaid Realized Loss Amount, Class M-4 Unpaid Realized Loss Amount,
Class B-1 Unpaid Realized Loss Amount, Class B-2 Unpaid Realized Loss Amount and Class X Unpaid Realized
Loss Amount, collectively.
Voting Rights: The portion of the voting rights of all the Certificates that is allocated to
any of the Certificates for purposes of the voting provisions hereunder. Voting Rights allocated to
each Class of Certificates shall be allocated as follows: (1) 97% to the Class A, Class M and Class B
Certificates, with the allocation among such Certificates to be in proportion to the Certificate
Principal Balance of each Class relative to the Certificate Principal Balance of all other Classes and
(2) each Class of the Class R, Class X and Class P Certificates will be allocated 1% of the Voting
Rights. Voting Rights will be allocated among the Certificates of each such Class in accordance with
their respective Percentage Interests.
▇▇▇▇▇ Fargo: ▇▇▇▇▇ Fargo Bank, N.A., or its successor in interest.
▇▇▇▇▇ Fargo Mortgage Loans: The Mortgage Loans serviced by ▇▇▇▇▇ Fargo.
X-AMB Swap Agreement: The swap between the Class X Certificateholders and the Class A, Class M
and Class B Certificateholders evidenced by the confirmation attached hereto as Exhibit U and
incorporated herein by reference.
58
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does hereby sell, transfer,
assign, set over and convey to the Trustee without recourse all the right, title and interest of the
Depositor in and to all of the assets that constitute the Trust Fund, including all interest and
principal received on or with respect to the Mortgage Loans on or after the Cut-off Date (other than
Scheduled Payments due on the Mortgage Loans on or before the Cut-off Date), all accounts, chattel
paper, deposit accounts, documents, general intangibles, goods, instruments, investment property,
letter-of-credit rights, letters of credit, money, and oil, gas, and other minerals, consisting of,
arising from, or relating to, any of the foregoing, and all proceeds of the foregoing. In connection
with the conveyance by the Depositor of the assets of the Trust Fund, the Depositor further agrees, at
its own expense, on or prior to the Closing Date, to indicate in its books and records that the Mortgage
Loans have been sold to the Trustee pursuant to this Agreement, and to deliver to the Trustee the
Mortgage Loan Schedule. The Mortgage Loan Schedule shall be marked as Exhibit B to this Agreement and
is hereby incorporated into and made a part of this Agreement.
It is agreed and understood by the Depositor, the Servicers and the Trustee that it is not
intended that any Mortgage Loan be included in the Trust that is, without limitation, either (i) a
"High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective November 27, 2003; (ii) a
"High-Cost Home Loan" as defined in the New Mexico Home Loan Protection Act effective January 1, 2004;
(iii) a "High-Cost Home Loan" as defined in the Massachusetts Predatory Home Loan Practices Act
effective November 7, 2004 or (iv) a "High-Cost Home Loan" as defined by the Indiana High Cost Home Loan
Law effective January 1, 2005.
(i) In connection with such assignment, the Depositor does hereby deliver to, and deposit with,
the Custodian, the following documents or instruments with respect to each Mortgage Loan so assigned
that is not a Co-op Loan:
(A) The original Mortgage Note endorsed in blank or, "Pay to the order of U.S. Bank National
Association, as trustee, without recourse" together with all riders thereto. The Mortgage Note
shall include all intervening endorsements showing a complete chain of the title from the
originator to [____________________];
(B) Except as provided below and for each Mortgage Loan that is not a MERS Loan, the original
recorded Mortgage with all riders thereto, with evidence of recording thereon, or, if the
original Mortgage has not yet been returned from the recording office, a copy of the original
Mortgage certified by the Transferor to be true copy of the original of the Mortgage that has
been delivered for recording in the appropriate recording office of the jurisdiction in which
the Mortgaged Property is located and in the case of each MERS Loan, the original Mortgage,
noting the presence of the MIN of the Loan and either language indicating that the Mortgage
Loan is a MOM Loan or if the Mortgage Loan was not a MOM Loan at origination, the original
Mortgage and the assignment thereof to MERS, with evidence of recording indicated thereon, or a
copy of the Mortgage certified by the public recording office in which such Mortgage has been
recorded;
59
(C) In the case of each Mortgage Loan that is not a MERS Loan, the original Assignment of each
Mortgage endorsed either in blank or, to "U.S. Bank National Association, as trustee;"
(D) The original policy of title insurance (or a preliminary title report, commitment or binder if
the original title insurance policy has not been received from the title insurance company);
(E) Originals of any intervening assignments of the Mortgage, with evidence of recording thereon
or, if the original intervening assignment has not yet been returned from the recording office,
a copy of such assignment certified to be a true copy of the original of the assignment which
has been sent for recording in the appropriate jurisdiction in which the Mortgaged Property is
located; and
(F) Originals of all assumption and modification agreements, if any.
(ii) In connection with such assignment, the Depositor does hereby deliver to, and deposit
with, the Custodian the following documents or instruments with respect to each Mortgage Loan so
assigned that is a Co-op Loan:
(A) (i) The original Mortgage Note (or a lost note affidavit (including a copy of the original
Mortgage Note)) or (ii) original consolidation, extension and modification agreement (or a lost
note affidavit (including a copy of the original consolidation, extension and modification
agreement)), in either case endorsed either in blank or, "Pay to the order of U.S. Bank
National Association as trustee, without recourse;"
(B) The original Mortgage entered into by the Mortgagor with respect to such Co-Op Loan;
(C) The original Assignment of Mortgage endorsed either in blank or to "U.S. Bank National
Association, as trustee;"
(D) Original assignments of Mortgage showing a complete chain of assignment from the originator of
the related Co-Op Loan to the last endorsee on the Mortgage Note;
(E) Original Form UCC-1 and any continuation statements with evidence of filing thereon entered
into by the Mortgagor with respect to such Co-Op Loan (or a recorded copy thereof);
(F) Form UCC-3 (or copy thereof) by the applicable Seller or its agent assigning the security
interest covered by such Form UCC-1 to "U.S. Bank National Association, as trustee," together
with all Forms UCC-3 (or copies thereof) showing a complete chain of assignment from the
originator of the related Co-op Loan to the applicable Seller, with evidence of recording
thereon;
(G) Original stock certificate representing the stock allocated to the related dwelling unit in the
related residential cooperative housing corporation and pledged by the related Mortgagor to the
originator of such Co-op Loan with a stock power in blank attached;
(H) Original proprietary lease;
60
(I) Original assignment of proprietary lease or a copy thereof, to the Trustee or in blank, and all
intervening assignments thereof;
(J) Original recognition agreement or a copy thereof of the interests of the mortgagee with respect
to the Co-op Loan by the residential cooperative housing corporation, the stock of which was
pledged by the related Mortgagor to the originator of such Co-op Loan; and
(K) Originals of any assumption, consolidation or modification agreements relating to any of the
items specified in (A) through (F) above with respect to such Co-op Loan.
If in connection with any Mortgage Loan that is not a Co-op Loan, the Depositor cannot deliver
the Mortgage, Assignments of Mortgage or assumption, consolidation or modification, as the case may be,
with evidence of recording thereon, if applicable, concurrently with the execution and delivery of this
Agreement solely because of a delay caused by the public recording office where such Mortgage,
Assignments of Mortgage or assumption, consolidation or modification, as the case may be, has been
delivered for recordation, the Depositor shall deliver or cause to be delivered to the Custodian written
notice stating that such Mortgage or assumption, consolidation or modification, as the case may be, has
been delivered to the appropriate public recording office for recordation. Thereafter, the Depositor
shall deliver or cause to be delivered to the Custodian such Mortgage, Assignments of Mortgage or
assumption, consolidation or modification, as the case may be, with evidence of recording indicated
thereon, if applicable, upon receipt thereof from the public recording office. To the extent any
required endorsement is not contained on a Mortgage Note or an Assignment of Mortgage, the Depositor
shall make or cause such endorsement to be made.
With respect to any Mortgage Loan that is not a Co-op Loan, none of the Depositor, the
Servicers or the Trustee shall be obligated to cause to be recorded the Assignment of Mortgage referred
to in this Section 2.01. With respect to any Co-op Loan, none of the Depositor, the Servicers or the
Trustee shall be obligated to cause to be filed the Form UCC-3 referred to in this Section 2.01. In the
event that any Assignment of Mortgage referred to in this Section 2.01 is not recorded or is improperly
recorded, neither the Servicers, the Trustee nor the Custodian shall have any liability for any failure
to receive or act on notices related to such Assignment of Mortgage
The ownership of each Mortgage Note, the Mortgage and the contents of the related Mortgage File
is vested in the Trustee on behalf of the Certificateholders. Neither the Depositor nor the Servicers
shall take any action inconsistent with such ownership and shall not claim any ownership interest
therein. The Depositor and the Servicers shall respond to any third-party inquiries with respect to
ownership of the Mortgage Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not delivered to the Custodian
are and shall be held in trust by the applicable Servicer, for the benefit of the Trustee as the owner
thereof, and the Servicer's possession of the contents of each Mortgage File so retained is for the sole
purpose of servicing the related Mortgage Loan, and such retention and possession by the Servicer is in
a custodial capacity only. The Depositor agrees to take no action inconsistent with the Trustee's
ownership of the Mortgage Loans, to promptly indicate to all inquiring parties that the Mortgage Loans
have been sold and to claim no ownership interest in the Mortgage Loans.
It is the intention of this Agreement that the conveyance of the Depositor's right, title and
interest in and to the Trust Fund pursuant to this Agreement shall constitute a purchase and sale and
not a loan. If the conveyance of the Mortgage Loans from the Depositor to the Trustee is not
characterized as a sale, this Agreement shall constitute a security agreement under applicable law, and
the Depositor shall be deemed to have granted to the Trustee, and does hereby grant to the Trustee, a
first priority security interest in all of the Depositor's right, title and interest, whether now owned
61
or hereafter acquired, in, to and under the Mortgage Loans, all payments of principal of or interest on
such Mortgage Loans, all other rights relating to and payments made in respect of the Trust Fund, and
all proceeds of any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security interest created hereby shall
continue in full force and effect and the Trustee (or the Custodian on its behalf) shall be deemed to be
the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this Section 2.01, the Depositor
does hereby convey, assign and set over to the Trustee for the benefit of the Certificateholders its
rights and interests under each Sale Agreement, including the Depositor's right, title and interest in
the representations and warranties contained in each Sale Agreement, and the benefit of the repurchase
obligations and the obligation of the Sellers contained in the Sale Agreements to take, at the request
of the Depositor or the Trustee, all action on its part which is reasonably necessary to ensure the
enforceability of a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be entitled to
exercise all rights of the Depositor under each Sale Agreement as if, for such purpose, it were the
Depositor. The foregoing sale, transfer, assignment, set-over, deposit and conveyance does not and is
not intended to result in creation or assumption by the Trustee of any obligation of the Depositor, the
Sellers, or any other Person in connection with the Mortgage Loans or any other agreement or instrument
relating thereto except as specifically set forth herein.
SECTION 2.02. Acceptance by the Custodian of the Mortgage Loans.
Except as set forth in the Exception Report delivered contemporaneously herewith (the
"Exception Report"), the Custodian, on behalf of the Trustee, acknowledges receipt of the Mortgage Note
for each Mortgage Loan and delivery of a Mortgage File (but does not acknowledge receipt of all
documents required to be included in such Mortgage File) with respect to each Mortgage Loan and declares
that it holds and will hold such documents and any other documents constituting a part of the Mortgage
Files delivered to it in trust for the use and benefit of all present and future Certificateholders.
The Depositor will cause the applicable Seller to repurchase any Mortgage Loan to the extent required by
the related Sale Agreement.
The Custodian, on behalf of the Trustee, acknowledges receipt of the Sale Agreements. The
Supplemental Interest Trust Trustee acknowledges receipt of the Swap Agreement.
The Custodian agrees, for the benefit of Certificateholders, to review each Mortgage File
delivered to it within 45 days after the Closing Date to ascertain and to certify, within 45 days of the
Closing Date, to the Depositor, the Trustee and the applicable Servicer that all documents required by
Section 2.01 have been executed and received, and that such documents relate to the Mortgage Loans
identified in Exhibit B that have been conveyed to it. If the Custodian finds any document or documents
constituting a part of a Mortgage File to be missing or defective (that is, mutilated, damaged, defaced
or unexecuted) in any material respect, the Custodian shall promptly (and in any event within no more
than five Business Days) after such finding so notify the applicable Servicer, the applicable Seller,
the Trustee and the Depositor. In addition, the Custodian shall also notify the applicable Servicer,
the applicable Seller, the Trustee and the Depositor if the original Mortgage with evidence of recording
thereon with respect to a Mortgage Loan is not received within 45 days of the Closing Date; if it has
not been received because of a delay caused by the public recording office where such Mortgage has been
delivered for recordation, the Depositor shall deliver or cause to be delivered to the Custodian written
notice stating that such Mortgage has been delivered to the appropriate public recording office for
recordation and thereafter the Depositor shall deliver or cause to be delivered such Mortgage with
evidence of recording thereon upon receipt thereof from the public recording office. The Trustee shall
request that the applicable Seller correct or cure such omission, defect or other irregularity, or
substitute a Mortgage Loan pursuant to the provisions the related Sale Agreement, which provides that
62
within 90 days from the date the Seller was notified of such omission or defect and, if the Seller does
not correct or cure such omission or defect within such period, that the Seller purchase such Mortgage
Loan from the Trust Fund within 90 days from the date the Seller was notified of such omission, defect
or other irregularity at the Purchase Price of such Mortgage Loan. The Purchase Price for any Mortgage
Loan purchased pursuant to this Section 2.02 shall be paid to the applicable Servicer and deposited by
such Servicer in the Certificate Account or Servicer Collection Account, as appropriate, promptly upon
receipt, and, upon receipt by the Custodian of written notification of such deposit signed by a
Servicing Officer, the Custodian, upon receipt of a Request for Release, shall promptly release to the
applicable Seller the related Mortgage File and the Trustee shall execute and deliver such instruments
of transfer or assignment, without recourse, as shall be requested by the applicable Seller and
necessary to vest in the Seller or its designee, as the case may be, any Mortgage Loan released pursuant
hereto, and neither the Trustee nor the Custodian shall have any further responsibility with regard to
such Mortgage Loan. It is understood and agreed that the obligation of the applicable Seller, pursuant
to the related Sale Agreement, to purchase, cure or substitute any Mortgage Loan as to which a material
defect in or omission of a constituent document exists shall constitute the sole remedy respecting such
defect or omission available to the Trustee on behalf of Certificateholders. The preceding sentence
shall not, however, limit any remedies available to the Certificateholders, the Depositor or the Trustee
pursuant to each Sale Agreement with respect to other matters. The Custodian shall be under no duty or
obligation to inspect, review and examine such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, recordable or appropriate to the represented purpose, or
that they have actually been recorded, or that they are other than what they purport to be on their
face. The Custodian shall not have any responsibility for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or recordable form, whether any
document has been recorded in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction. The Servicers, the Trustee and
the Custodian shall keep confidential the name of each Mortgagor except as required by this Agreement
and the Servicers, the Trustee and the Custodian shall not solicit any such Mortgagor for the purpose of
refinancing the related Mortgage Loan; notwithstanding anything herein to the contrary, the foregoing
shall not be construed to prohibit (i) disclosure of any and all information that is or becomes publicly
known, or information obtained by the Custodian, Trustee or the Servicers from sources other than the
other parties hereto, (ii) disclosure of any and all information (A) if required by any applicable law,
rule or regulation, (B) to any government agency or regulatory body having or claiming authority to
regulate or oversee any aspects of the Custodian's business or that of its affiliates, (C) pursuant to
any subpoena, civil investigation demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Custodian or any affiliate or an officer, director,
employer or shareholder thereof is a party or (D) to any affiliate, independent or internal auditor,
agent, employee or attorney of the Trustee, the Custodian or the Servicers having a need to know the
same, provided that the Trustee, the Custodian or the Servicers, as applicable, advises such recipient
of the confidential nature of the information being disclosed, or (iii) any other disclosure authorized
by the Depositor. It is understood and agreed that all rights and benefits relating to the solicitation
of any Mortgagors and the attendant rights, title and interest in and to the list of Mortgagors and data
relating to their Mortgages shall be retained by the applicable Servicer.
Within 45 days of the Closing Date, the Custodian shall deliver to the Depositor, the Trustee,
the Sellers and the Servicers the Custodian's Certification, substantially in the form of Exhibit D
attached hereto, evidencing the completeness of the Mortgage Files, with any exceptions noted thereto.
SECTION 2.03. Representations, Warranties and Covenants of the Depositor.
(a) The Depositor hereby represents and warrants to the Servicers, the Custodian and the Trustee as
follows, as of the date hereof:
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(i) The Depositor is duly organized and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware and has full power and authority (corporate
and other) necessary to own or hold its properties and to conduct its business as now conducted
by it and to enter into and perform its obligations under this Agreement and the Sale Agreement.
(ii) The Depositor has the full corporate power and authority to execute, deliver and perform, and
to enter into and consummate the transactions contemplated by, this Agreement and each Sale
Agreement and has duly authorized, by all necessary corporate action on its part, the
execution, delivery and performance of this Agreement and each Sale Agreement; and this
Agreement and each Sale Agreement, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its terms, subject, as to
enforceability, to (i) bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and (ii) general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement and each Sale Agreement by the Depositor, the
consummation of the transactions contemplated by this Agreement and the Sale Agreement, and the
fulfillment of or compliance with the terms hereof are in the ordinary course of business of
the Depositor and will not (A) result in a material breach of any term or provision of the
charter or by-laws of the Depositor or (B) materially conflict with, result in a violation or
acceleration of, or result in a material default under, the terms of any other material
agreement or instrument to which the Depositor is a party or by which it may be bound or (C)
constitute a material violation of any statute, order or regulation applicable to the Depositor
of any court, regulatory body, administrative agency or governmental body having jurisdiction
over the Depositor; and the Depositor is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute, order or regulation
of any court, regulatory body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Depositor's ability to perform or
meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the Depositor's knowledge, threatened, against the
Depositor that would materially and adversely affect the execution, delivery or enforceability
of this Agreement and each Sale Agreement or the ability of the Depositor to perform its
obligations under this Agreement and each Sale Agreement in accordance with the terms hereof.
(v) No consent, approval, authorization or order of any court or governmental agency or body is
required for the execution, delivery and performance by the Depositor of, or compliance by the
Depositor with, this Agreement and each Sale Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or order is required, the
Depositor has obtained the same. The Depositor hereby represents and warrants to the Trustee
with respect to each Mortgage Loan as of the Closing Date, and following the transfer of the
Mortgage Loans to it by the Sellers, the Depositor had good title to the Mortgage Loans and the
Mortgage Notes were subject to no offsets, claims, liens, mortgage, pledge, charge, security
interest, defenses or counterclaims.
(b) (i) The representations and warranties of each Seller with respect to the
Mortgage Loans contained in the applicable Sale Agreement were made as of the Closing Date. The
Trustee acknowledges that the Depositor shall have no obligation or liability with respect to any
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breach of any representation or warranty with respect to the Mortgage Loans (except as set forth in
Section 2.03(a)(v)) under any circumstances.
(ii) The Depositor makes the following representations and warranties to the
parties hereto as to the Mortgage Loans on which the Trustee is deemed to have relied in acquiring the
Mortgage Loans. Such representations and warranties speak as of the Closing Date, but shall survive
until the termination of this Agreement. Such representations and warranties shall not be waived by any
of the parties to this Agreement:
(A) This Agreement creates a valid and continuing security interest (as defined in the Uniform
Commercial Code as in force in the relevant jurisdiction) in the Mortgage
Loans in favor of the Trustee, which security interest is prior to all other
liens, and is enforceable as such as against creditors of and purchasers from
the Depositor.
(B) The Mortgage Loans constitute "instruments" within the meaning of the Uniform Commercial Code
as in force in the relevant jurisdiction.
(C) The Depositor owns and has good and marketable title to the Mortgage Loans free and clear of
any lien, claim or encumbrance of any Person.
(D) The Depositor has received all consents and approvals required by the terms of the Mortgage
Loans to the sale of the Mortgage Loans hereunder to the Trustee.
(E) The Depositor has caused or will have caused, within ten days, the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security interest
in the Mortgage Loans granted to the Trustee hereunder.
(F) 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 statements against
the Depositor that include a description of collateral covering the Mortgage
Loans other than any financing statement relating to the security interest
granted to the Trustee hereunder or that has been terminated. Debtor is not
aware of any judgment or tax lien filings against it.
(G) The Custodian has in its possession all original copies of the Mortgage Notes that constitute
or evidence the Mortgage Loans. The Mortgage Notes that constitute or
evidence the Mortgage Loans do not have any marks or notations indicating that
they have been pledged, assigned or otherwise conveyed to any Person other
than the Trustee. All financing statements filed or to be filed against the
Depositor in favor of the Trustee in connection herewith describing the
Mortgage Loans contain a statement to the following effect: "A purchase of or
security interest in any collateral described in this financing statement will
violate the rights of the secured party as more fully described in, and
subject to the terms of, the related transaction documents."
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(iii) The Depositor hereby covenants to maintain the perfection and priority of the
security interest of the Trustee created by this Agreement.
(c) Upon discovery by any of the Depositor, the Servicers or the Trustee of a breach of any of the
representations and warranties of a Seller under the related Sale Agreement that adversely and
materially affects the value of the related Mortgage Loan, Prepayment Charges or the interests of the
Certificateholders, the party discovering such breach shall give prompt written notice to the other
parties. Within 90 days of the discovery of such breach of any representation or warranty of the
applicable Seller under the related Sale Agreement, the Seller, pursuant to the related Sale
Agreement, is obligated to either (a) cure such breach in all material respects, (b) repurchase such
Mortgage Loan or any property acquired in respect thereof from the Trustee at the Purchase Price or
(c) within the two year period following the Closing Date, substitute a Replacement Mortgage Loan for
the affected Mortgage Loan. In the event of discovery of a breach of any representation and warranty
of a Seller, the Trustee shall enforce its rights under the related Sale Agreement for the benefit of
Certificateholders. In the event that such breach relates solely to the unenforceability of a
Prepayment Charge, amounts received in respect of such indemnity up to the amount of such Prepayment
Charge shall be distributed pursuant to Section 4.04(b)(i). Any such substitution of a Mortgage Loan
shall not be effected prior to the additional delivery to the Custodian of a Request for Release
substantially in the form of Exhibit I and shall not be effected unless it is within two years of the
Startup Day. As provided in the Sale Agreements, the applicable Seller indemnifies and holds the
Trust Fund, the Trustee, the Depositor, the Custodian, the Servicers 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 Depositor, the Custodian, the Servicers and any Certificateholder may sustain in
connection with any actions of the Seller relating to a repurchase of a Mortgage Loan other than in
compliance with the terms of the related Sale Agreement, to the extent that any such action causes (i)
any federal or state tax to be imposed on the Trust Fund or any REMIC provided for herein, including
without limitation, any federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of
the Code or on "contributions after the startup day" under Section 860G(d)(1) of the Code, or (ii) any
REMIC created hereunder to fail to qualify as a REMIC at any time that any Certificate is outstanding.
In furtherance of the foregoing, the Sale Agreements provide that if the applicable Seller is not a
member of MERS and repurchases a Mortgage Loan which is registered on the MERS System, the Seller, at
its own expense and without any right of reimbursement, shall cause MERS to execute and deliver an
assignment of the Mortgage in recordable form to transfer the Mortgage from MERS to the Seller and
shall cause such Mortgage to be removed from registration on the MERS System in accordance with MERS'
rules and regulations.
With respect to any Mortgage Loan repurchased by the Depositor pursuant to this Agreement, or
by a Seller pursuant to the Sale Agreements, the principal portion of the funds received by the
applicable Servicer in respect of such repurchase of a Mortgage Loan will be considered a Principal
Prepayment and shall be deposited by the Servicer in the Servicer Collection Account pursuant to Section
3.05 and the Servicer shall notify the Trustee of its receipt of the same. The Custodian, upon written
receipt of notice from the Servicer of its receipt of the full amount of the Purchase Price for a
Deleted Mortgage Loan, or upon receipt of the Mortgage File for a Replacement Mortgage Loan substituted
for a Deleted Mortgage Loan, shall release or cause to be released and the Trustee shall reassign to the
Depositor or the Seller, as applicable, the related Mortgage File for the Deleted Mortgage Loan and
shall execute and deliver such instruments of transfer or assignment, in each case without recourse,
representation or warranty, as shall be necessary to vest in such party or its designee or assignee
title to any Deleted Mortgage Loan released pursuant hereto, free and clear of all security interests,
liens and other encumbrances created by this Agreement, which instruments shall be prepared by the
Depositor or the Seller, as applicable, and the Custodian shall have no further responsibility with
respect to the Mortgage File relating to such Deleted Mortgage Loan.
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With respect to each Replacement Mortgage Loan to be delivered to the Custodian pursuant to the
terms of this Article II in exchange for a Deleted Mortgage Loan: (i) the Depositor or the applicable
Seller (pursuant to the related Sale Agreement), as applicable, must deliver to the Custodian the
Mortgage File for the Replacement Mortgage Loan containing the documents set forth in Section 2.01 along
with a written certification certifying as to the delivery of such Mortgage File and containing the
granting language set forth in Section 2.01; and (ii) the Depositor will be deemed to have made, with
respect to such Replacement Mortgage Loan, each of the representations and warranties made by it with
respect to the related Deleted Mortgage Loan. The Custodian shall review the Mortgage File with respect
to each Replacement Mortgage Loan and certify to the Depositor that all documents required by Section
2.01 have been executed and received.
For any month in which a Seller substitutes one or more Replacement Mortgage Loans for one or
more Deleted Mortgage Loans, the Seller, pursuant to the related Sale Agreement, will determine the
amount (if any) by which the aggregate principal balance of all such Replacement Mortgage Loans as of
the date of substitution and the aggregate Prepayment Charges with respect to such Replacement Mortgage
Loans is less than the aggregate Stated Principal Balance (after application of the principal portion of
the Scheduled Payment due in the month of substitution) and aggregate Prepayment Charges of all such
Deleted Mortgage Loans. Pursuant to the Sale Agreement, an amount equal to the aggregate of the
deficiencies described in the preceding sentence (such amount, the "Substitution Adjustment Amount")
plus an amount equal to any unreimbursed costs, penalties and/or damages incurred by the Trust Fund in
connection with any violation relating to such Deleted Mortgage Loan of any predatory or abusive lending
law shall be remitted by the Seller to the applicable Servicer for deposit into the Servicer Collection
Account on the Determination Date for the Distribution Date relating to the Prepayment Period during
which the related Mortgage Loan became required to be purchased or replaced hereunder.
Notwithstanding any other provision of this Agreement, the right to substitute Mortgage Loans
pursuant to this Article II shall be subject to the additional limitations that no substitution of a
Replacement Mortgage Loan for a Deleted Mortgage Loan shall be made unless the Trustee shall have
received an Opinion of Counsel (at the expense of the party seeking to make the substitution) that,
under current law, such substitution will not (A) affect adversely the status of any REMIC established
hereunder as a REMIC, or of the related "regular interests" as "regular interests" in any such REMIC, or
(B) cause any such REMIC to engage in a "prohibited transaction" or prohibited contribution pursuant to
the REMIC Provisions.
Each Servicer shall cause the Mortgage Loan Schedule to be amended in accordance with the terms
of this Agreement base on information provided to such Servicer.
The Depositor shall give or cause to be given written notice to the Certificateholders that
such substitution has taken place, shall amend the Mortgage Loan Schedule to reflect the removal of such
Deleted Mortgage Loan from the terms of this Agreement and the substitution of the Replacement Mortgage
Loan or Replacement Mortgage Loans and shall deliver a copy of such amended Mortgage Loan Schedule to
each Servicer and the Trustee. Upon such substitution by a Seller, such Replacement Mortgage Loan or
Replacement Mortgage Loans shall constitute part of the Mortgage Pool and shall be subject in all
respects to the terms of this Agreement and the related Sale Agreement, including all applicable
representations and warranties thereof included in the related Sale Agreement as of the date of
substitution.
(d) It is understood and agreed that the representations, warranties and indemnification (i) set
forth in this Section 2.03 and (ii) of the Sellers and the Depositor set forth in the Sale Agreements
and assigned to the Trustee by the Depositor hereunder shall each survive delivery of the Mortgage
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Files and the Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.
(e) The Depositor shall deliver a copy of the Mortgage Loan Schedule to each Servicer on the
Closing Date.
SECTION 2.04. Representations and Warranties of the Servicers and the Trustee.
(a) ▇▇▇▇▇ Fargo hereby represents and warrants to the Depositor, the Custodian and the Trustee as
follows, as of the date hereof:
(i) ▇▇▇▇▇ Fargo is duly organized and is validly existing as a national banking association and is
duly authorized and qualified to transact any and all business contemplated by this Agreement to be
conducted by ▇▇▇▇▇ Fargo in any state in which a Mortgaged Property (or Underlying Mortgaged Property,
in the case of a Co-op Loan) is located or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business laws of any such state, to the
extent necessary to ensure its ability to enforce each Mortgage Loan, to service the Mortgage Loans in
accordance with the terms of this Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) ▇▇▇▇▇ Fargo has the corporate power and authority to service each Mortgage Loan, and to
execute, deliver and perform, and to enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on the part of ▇▇▇▇▇ Fargo the
execution, delivery and performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of ▇▇▇▇▇ Fargo, enforceable against ▇▇▇▇▇ Fargo in accordance with its terms, except
that (a) the enforceability hereof may be limited by bankruptcy, insolvency, moratorium, receivership,
laws administered by the FDIC affecting the contract obligations of insured banks and other similar laws
relating to creditors' rights generally and (b) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by ▇▇▇▇▇ Fargo, the servicing of the Mortgage
Loans under this Agreement, the consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof are in the ordinary course of
business of ▇▇▇▇▇ Fargo and will not (A) result in a material breach of any term or provision of the
charter or by-laws of ▇▇▇▇▇ Fargo or (B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under, the terms of any other material
agreement or instrument to which ▇▇▇▇▇ Fargo is a party or by which it may be bound, or (C) constitute a
material violation of any statute, order or regulation applicable to ▇▇▇▇▇ Fargo of any court,
regulatory body, administrative agency or governmental body having jurisdiction over ▇▇▇▇▇ Fargo; and
▇▇▇▇▇ Fargo is not in breach or violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it which breach or violation may
materially impair ▇▇▇▇▇ Fargo's ability to perform or meet any of its obligations under this Agreement.
(iv) ▇▇▇▇▇ Fargo is an approved servicer of mortgage loans for ▇▇▇▇▇▇ ▇▇▇ and is an approved
servicer of mortgage loans for ▇▇▇▇▇▇▇ Mac.
(v) No litigation is pending or, to the best of ▇▇▇▇▇ Fargo's knowledge, threatened, against ▇▇▇▇▇
Fargo that would materially and adversely affect the execution, delivery or enforceability of this
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Agreement or the ability of ▇▇▇▇▇ Fargo to service the Mortgage Loans or to perform any of its other
obligations under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court or governmental agency or body is
required for the execution, delivery and performance by ▇▇▇▇▇ Fargo of, or compliance by ▇▇▇▇▇ Fargo
with, this Agreement or the consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, ▇▇▇▇▇ Fargo has obtained the same.
(vii) ▇▇▇▇▇ Fargo has fully furnished (for the period it serviced the Mortgage Loans), in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information
(e.g., favorable and unfavorable) on its borrower credit files to Equifax, Experian and Trans Union
Credit Information Company on a monthly basis.
(viii) Each Mortgage Loan, during the time period it has been serviced by ▇▇▇▇▇ Fargo, has been
serviced in all material respects in accordance with all applicable laws and regulations, including,
without limitation, usury, equal credit opportunity, disclosure and recording laws and all
anti-predatory, abusive and fair lending laws and the terms of the related Mortgage Note, the Mortgage
and other loan documents.
(ix) Each Mortgage Loan, during the time period it has been serviced by ▇▇▇▇▇ Fargo, has been
serviced in accordance with accepted servicing practices.
(b) National City hereby represents and warrants to the Depositor, the Custodian and the Trustee as
follows, as of the date hereof:
(i) National City is duly organized and is validly existing under the laws of Ohio and is duly
authorized and qualified to transact any and all business contemplated by this Agreement to be conducted
by National City in any state in which a Mortgaged Property (or Underlying Mortgaged Property, in the
case of a Co-op Loan) is located or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business laws of any such state, to the
extent necessary to ensure its ability to enforce each Mortgage Loan, to service the Mortgage Loans in
accordance with the terms of this Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) National City has the corporate power and authority to service each Mortgage Loan, and to
execute, deliver and perform, and to enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on the part of National City the
execution, delivery and performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto, constitutes a legal, valid and
binding obligation of National City, enforceable against National City in accordance with its terms,
except that (a) the enforceability hereof may be limited by bankruptcy, insolvency, moratorium,
receivership, and other similar laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by National City, the servicing of the Mortgage
Loans under this Agreement, the consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof are in the ordinary course of
business of National City and will not (A) result in a material breach of any term or provision of the
charter or by-laws of National City or (B) materially conflict with, result in a material breach,
69
violation or acceleration of, or result in a material default under, the terms of any other material
agreement or instrument to which National City is a party or by which it may be bound, or (C) constitute
a material violation of any statute, order or regulation applicable to National City of any court,
regulatory body, administrative agency or governmental body having jurisdiction over National City; and
National City is not in breach or violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it which breach or violation may
materially impair National City's ability to perform or meet any of its obligations under this Agreement.
(iv) National City is an approved servicer of mortgage loans for ▇▇▇▇▇▇ Mae and is an approved
servicer of mortgage loans for ▇▇▇▇▇▇▇ Mac.
(v) No litigation is pending or, to the best of National City's knowledge, threatened, against
National City that would materially and adversely affect the execution, delivery or enforceability of
this Agreement or the ability of National City to service the Mortgage Loans or to perform any of its
other obligations under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court or governmental agency or body is
required for the execution, delivery and performance by National City of, or compliance by National City
with, this Agreement or the consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, National City has obtained the same.
(vii) National City has fully furnished (for the period it serviced the Mortgage Loans), in
accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to Equifax, Experian and
Trans Union Credit Information Company on a monthly basis.
(viii) Each Mortgage Loan, during the time period it has been serviced by National City, has been
serviced in all material respects in accordance with all applicable laws and regulations, including,
without limitation, usury, equal credit opportunity, disclosure and recording laws and all
anti-predatory, abusive and fair lending laws and the terms of the related Mortgage Note, the Mortgage
and other loan documents.
(ix) Each Mortgage Loan, during the time period it has been serviced by National City, has been
serviced in accordance with accepted servicing practices.
(c) The Trustee hereby makes the following representations and warranties to the Depositor and the
Servicers, as of the Closing Date:
(i) The Trustee is a national banking association duly organized, validly existing, and in good
standing under the federal laws of the United States of America and has all licenses necessary to carry
on its business as now being conducted and is licensed, qualified and in good standing in each of the
states where a Mortgaged Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the Trustee. The Trustee has power
and authority to execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Trustee and the consummation of the transactions
contemplated hereby have been duly and validly authorized. This Agreement, assuming due authorization,
execution and delivery by the other parties hereto, evidences the valid, binding and enforceable
obligation of the Trustee, except as enforceability may be limited by (A) bankruptcy, insolvency,
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liquidation, receivership, moratorium, reorganization or other similar laws affecting the enforcement of
the rights of creditors and (B) general principles of equity, whether enforcement is sought in a
proceeding in equity or at law. All requisite corporate action has been taken by the Trustee to make
this Agreement valid and binding upon the Trustee in accordance with its terms.
(ii) No consent, approval, authorization or order is required for the transactions contemplated by
this Agreement from any court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Trustee or, if required, such consent, approval, authorization or order has
been or will, prior to the Closing Date, be obtained.
(iii) The consummation of the transactions contemplated by this Agreement are in the ordinary course
of business of the Trustee and will not result in the breach of any term or provision of the charter or
by-laws of the Trustee or result in the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any obligation under, any agreement,
indenture or loan or credit agreement or other instrument to which the Trustee or its property is
subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which the
Trustee or its property is subject.
(iv) There is no action, suit, proceeding or investigation pending or, to the actual knowledge of
the Trustee, threatened against the Trustee which, either individually or in the aggregate, would result
in any material adverse change in the business, operations, financial condition, properties or assets of
the Trustee, or in any material impairment of the right or ability of the Trustee to carry on its
business substantially as now conducted or which would draw into question the validity of this Agreement
or of any action taken or to be taken in connection with the obligations of the Trustee contemplated
herein, or which would materially impair the ability of the Trustee to perform under the terms of this
Agreement.
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are not "Qualified Mortgages".
Upon discovery by the Depositor, the Servicers 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 promptly (and in any event within 5 Business Days of discovery) give written
notice thereof to the other parties. In connection therewith, the Depositor shall, at the Depositor's
option, either (i) substitute, if the conditions in Section 2.03(c) with respect to substitutions are
satisfied, a Replacement Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the affected
Mortgage Loan within 90 days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty contained in Section 2.03. The Trustee, upon the written request
of the Depositor, shall reconvey to the Depositor 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 contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust Fund and, concurrently
with such transfer and assignment, has caused to be authenticated and delivered to or upon the order of
the Depositor, in exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee in
authorized denominations evidencing ownership of the entire Trust Fund. The Trustee agrees to hold the
Trust Fund and exercise the rights referred to above for the benefit of all present and future Holders
of the Certificates and to perform its duties set forth in this Agreement in accordance with the
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provisions hereof to the best of its abilities, to the end that the interests of the Holders may be
adequately and effectively protected.
SECTION 2.07. REMIC Elections.
(a) The REMIC Administrator shall make an election to treat all REMICs created hereunder as a REMIC
under the Code and, if necessary, under applicable state law. Each such election will be made on Form
1066 or other appropriate federal tax or information return (including Form 8811) or any appropriate
state return for the taxable year ending on the last day of the calendar year in which the Certificates
are issued. The REMIC I Regular Interests shall be designated as the "regular interests" and the Class
R-I Certificates shall be designated as the sole Class of "residual interests" in the REMIC I. The
REMIC II Regular Interests shall be designated as the "regular interests" and the Class R-II Certificates
shall be designated as the sole Class of "residual interests" in the REMIC II. The REMIC III Regular
Interests shall be designated as the "regular interests" and the Class R-III Certificates shall be
designated as the sole Class of "residual interests" in the REMIC III. The REMIC Administrator and the
Trustee shall not permit the creation of any "interests" (within the meaning of Section 860G of the
Code) in REMIC I, REMIC II or REMIC III other than the REMIC I Regular Interests, the REMIC II Regular
Interests, REMIC III Regular Interest IO and the Certificates.
(b) The Preliminary Statement sets forth the designations and "latest possible maturity date" for
federal income tax purposes of all interests created hereby. The "Startup Day" for purposes of the
REMIC Provisions shall be the Closing Date. Each REMIC's fiscal year shall be the calendar year.
(c) The "tax matters person" with respect to each REMIC for purposes of the REMIC Provisions shall
be the beneficial owner of the Class R Certificate; provided, however, that the Holder of the Class R
Certificate, by its acceptance thereof, irrevocably appoints the Trustee as its agent and
attorney-in-fact to act as "tax matters person" with respect to each REMIC for purposes of the REMIC
Provisions. If there is more than one beneficial owner of the Class R Certificate, the "tax matters
person" shall be the Person with the greatest percentage interest in the Class R Certificate and, if
there is more than one such Person, shall be determined under Treasury regulation Section 1.860F-4(d)
and Treasury regulation Section 301.6231(a)(7)-1.
(d) It is intended that the rights of each Class of the Class A, Class M and Class B Certificates
to receive payments in respect of Available Funds Cap Carryover shall be treated as a right in notional
principal contracts written by the Class X Certificateholders in favor of the holders of each Class of
the Class A, Class M and Class B Certificates, evidenced by the X-AMB Swap Agreement, and such shall be
accounted for as property held separate and apart from the regular interests in REMIC III held by the
holders of the Class A, Class M and Class B Certificates. For information reporting requirements, the
rights of the Class A, Class M and Class B Certificates to receive payments in respect of Available
Funds Cap Carryover shall be assumed to have zero value or a de minimis value. This provision is
intended to satisfy the requirements of Treasury Regulations Section 1.860G-2(i) for the treatment of
property rights coupled with REMIC interests to be separately respected and shall be interpreted
consistently with such regulation. On each Distribution Date, to the extent that any of the Class A,
Class M and Class B Certificates receive payments of Available Funds Cap Carryover, such amounts, to the
extent not derived from payments on the Swap Agreement, will be treated as distributed by REMIC III to
the Class X Certificates pro rata and then paid to the relevant Class of Certificates pursuant to the
X-AMB Swap Agreement. It is intended that the obligations of each Class of the Class A, Class M and
Class B Certificates to make payments in respect of the Class IO Distribution Amount shall be treated
as an obligation in notional principal contracts in favor of the holders of the Class X Certificates,
evidenced by the X-AMB Swap Agreement, and such shall be accounted for as property held separate and
apart from the regular interests in REMIC III held by the holders of the Class A, Class M and Class B
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Certificates. For information reporting requirements, the obligations of the Class A, Class M and Class
B Certificates to make payments in respect of the Class IO Distribution Amount shall be assumed to
have zero value or a de minimis value. On each Distribution Date, to the extent that any of the Class A,
Class M and Class B Certificates is deemed to make payments in respect of the Class IO Distribution
Amount, such amounts will be treated as distributed by REMIC III to the relevant Class of Certificates
as payment in respect of the REMIC Regular Interest represented by such Certificate and then paid to the
Class X Certificateholders pursuant to the X-AMB Swap Agreement.
(e) [Reserved].
(f) [Reserved].
(g) In the event that any REMIC provided for herein 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 Trustee of
its duties and obligations set forth herein, the Trustee shall indemnify the Trust Fund against any and
all Losses resulting from such negligence; provided, however, that the Trustee shall not be liable for
any such Losses attributable to the action or inaction of a Servicer, the Depositor or the Holder of the
residual interest in such REMIC, as applicable, nor for any such Losses resulting from misinformation
provided by the Holder of the residual interest in such REMIC on which the Trustee has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of the Holder of the residual
interest in such REMIC now or hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Trustee have any liability (1) for any action or omission that is taken
in accordance with and in compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any Losses other than those arising out of a negligent performance by
the Trustee of its duties and obligations set forth herein, and (3) for any special or consequential
damages to Certificateholders (in addition to payment of principal and interest on the Certificates).
SECTION 2.08. [Reserved].
SECTION 2.09. Covenants of the Servicers.
Each Servicer hereby covenants to each of the other parties to this Agreement as follows:
(a) such Servicer shall comply in the performance of its obligations under this Agreement with all
reasonable rules and requirements of the insurer under each Required Insurance Policy;
(b) such Servicer shall use commercially reasonable efforts consistent with Accepted Servicing
Practices to assure that no written information, certificate of an officer, statement furnished in
writing or written report delivered to the Depositor, the Custodian or the Trustee, or any affiliate
of the Depositor, the Custodian or the Trustee and prepared by such Servicer pursuant to this Agreement
will be inaccurate in any material respect; provided, however, that such Servicer shall not be
responsible for inaccurate information provided to it by third parties.
SECTION 2.10. [Reserved].
SECTION 2.11. Permitted Activities of the Trust.
The Trust is created for the object and purpose of engaging in the Permitted Activities. In
furtherance of the foregoing, the Trustee is hereby authorized and directed to execute and deliver on
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behalf of the Trust, and to perform the duties and obligations of the Trustee under, the Swap Agreement
and any other agreement or instrument related thereto, in each case in such form as the Depositor shall
direct or shall approve, the execution and delivery of any such agreement by the Depositor to be
conclusive evidence of its approval thereof.
SECTION 2.12. Agreement Regarding Ability to Disclose.
The Depositor, the Servicers and the Trustee hereby agree that, notwithstanding any other
express or implied agreement to the contrary, any and all Persons, and any of their respective
employees, representatives, and other agents may disclose, immediately upon commencement of discussions,
to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the
transaction and all materials of any kind (including opinions or other tax analyses) that are provided
to any of them relating to such tax treatment and tax structure. For purposes of this paragraph, the
terms "tax," "tax treatment," "tax structure," and "tax benefit" are defined under Treasury Regulation §
1.6011-4(c).
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Servicers to Service Mortgage Loans.
For and on behalf of the Certificateholders, ▇▇▇▇▇ Fargo (or any successor Servicer thereto)
shall service and administer the ▇▇▇▇▇ Fargo Mortgage Loans, and National City (or any successor
Servicer thereto) shall service and administer the National City Mortgage Loans, in each case, including
without limitation, any powers of attorney, in accordance with Accepted Servicing Practices, all
applicable requirements of the Servicing Criteria, applicable law and the terms of the related Mortgage
Notes and Mortgages. In connection with such servicing and administration, each Servicer shall have
full power and authority, acting alone and/or through subservicers as provided in Section 3.02 hereof,
to do or cause to be done any and all things that it may deem necessary or desirable in connection with
such servicing and administration, including but not limited to, the power and authority, subject to the
terms hereof (i) to execute and deliver, with respect to the Mortgage Loans it services, on behalf of
the Certificateholders and the Trustee, customary consents or waivers and other instruments and
documents, (ii) to consent, with respect to the Mortgage Loans it services, to transfers of any
Mortgaged Property (or the stock allocated to a dwelling unit related to a Co-op Loan) and assumptions
of the Mortgage Notes and related Mortgages (but only in the manner provided in this Agreement), (iii)
to collect any Insurance Proceeds and other Liquidation Proceeds relating to the Mortgage Loans it
services and (iv) subject to Section 3.12(a), to effectuate foreclosure or other conversion of the
ownership of the Mortgaged Property (or the stock allocated to a dwelling unit related to a Co-op Loan)
securing any Mortgage Loan it services; provided that, subject to Section 6.03, neither Servicer shall
take any action that is inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders in any Mortgage Loan serviced by it under this Agreement or the rights and interests
of the other parties to this Agreement except as otherwise required by this Agreement or by law.
Neither Servicer shall make or permit any modification, waiver or amendment of any term of any Mortgage
Loan which would cause any of the REMICs provided for herein to fail to qualify as a REMIC or result in
the imposition of any tax under Section 860G(a) or 860G(d) of the Code. Subject to Section 6.03, each
Servicer shall represent and protect the interest of the Trust Fund in the same manner as it currently
protects its own interest in mortgage loans in its own portfolio in any claim, proceeding or litigation
regarding a Mortgage Loan, but in any case not in any manner that is a lesser standard than that
provided in the first sentence of this Section 3.01. Without limiting the generality of the foregoing,
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each Servicer, in its own name or in the name of the Depositor and the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee, when the Servicer believes it appropriate in its reasonable
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any
of them, any and all instruments of satisfaction or cancellation, or of partial or full release or
discharge, subordinations and all other comparable instruments, with respect to the Mortgage Loans it
services, and with respect to the related Mortgaged Properties held for the benefit of the
Certificateholders. Each Servicer shall prepare and deliver to the Depositor and the Trustee such
documents requiring execution and delivery by any or all of them as are necessary or appropriate to
enable the Servicer to service and administer the Mortgage Loans, including without limitation, any
powers of attorney. Upon receipt of such documents, the Depositor and the Trustee shall execute such
documents and deliver them to the applicable Servicer. For purposes of this Section 3.01, the Trustee
hereby grants to each Servicer, with respect to the Mortgage Loans it services, a limited power of
attorney to execute and file any and all documents necessary to fulfill the obligations of such Servicer
under this Section 3.01.
In accordance with the standards of the preceding paragraph, each Servicer shall advance or
cause to be advanced funds as necessary for the purpose of effecting the payment of taxes and
assessments on the Mortgaged Properties relating to the Mortgage Loans it services, which advances shall
be reimbursable in the first instance from related collections from the Mortgagors pursuant to Section
3.06, and further as provided in Section 3.08. To the extent that a Mortgage does not provide for
escrow payments, (i) each Servicer shall, with respect to the Mortgage Loans it services, determine
whether any such payments are made by the Mortgagor in a manner and at a time that is necessary to avoid
the loss of the Mortgaged Property due to a tax sale or to foreclosure as a result of a tax lien and
(ii) each Servicer shall, with respect to the Mortgage Loans it services, ensure that all insurance
required to be maintained on the Mortgaged Property pursuant to this Agreement is maintained. If any
such payment has not been made and a Servicer receives notice of a tax lien being imposed with respect
to a Mortgage Loan it services, such Servicer will, to the extent required to avoid loss of the
Mortgaged Property, advance or cause to be advanced funds necessary to discharge such lien on the
Mortgaged Property.
All costs incurred by a Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the Stated Principal Balance
under the related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit;
provided, however, that the limitations contained in this sentence shall not apply to modifications made
pursuant to Section 3.05(a).
In the event that the Mortgage Loan Documents relating to any Mortgage Loan contain provisions
requiring the related Mortgagor to submit to binding arbitration any disputes arising in connection with
such Mortgage Loan, the applicable Servicer shall be entitled to waive any such provisions on behalf of
the Trust and to send written notice of such waiver to the related Mortgagor, although the Mortgagor may
still require arbitration of such disputes at its option.
Each Servicer shall deliver a list of Servicing Officers to the Trustee and the Custodian on or
before the Closing Date.
Each Servicer will transmit full-file credit reporting data for each Mortgage Loan it services
pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 97-02 and that for each such Mortgage Loan, the Servicer
agrees that it shall report one of the following statuses each month as follows: current, delinquent
(30-, 60-, 90-days, etc.), foreclosed or charged-off.
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Each Servicer further is authorized and empowered by the Trustee, on behalf of the
Certificateholders and the Trustee, in its own name or in the name of the Sub-Servicer, when such
Servicer or the Sub-Servicer, as the case may be, believes it is appropriate in its best judgment to
register any Mortgage Loan it services on the MERS System, or cause the removal from the registration of
any Mortgage Loan it services on the MERS System, to execute and deliver, on behalf of the Trustee and
the Certificateholders or any of them, any and all instruments of assignment, release and other
comparable instruments with respect to such assignment, release or re-recording of a Mortgage in the
name of MERS, solely as nominee for the Trustee and its successors and assigns. Any reasonable expenses
incurred in connection with the actions described in the preceding sentence or as a result of MERS
discontinuing or becoming unable to continue operations in connection with the MERS System, shall be
subject to withdrawal by the applicable Servicer from the applicable Servicer Collection Account.
SECTION 3.02. Servicing, Subservicing and Subcontracting; Enforcement of the Obligations of Servicer.
(a) Each Servicer may arrange for the subservicing of any Mortgage Loan by a subservicer, which may
be an affiliate (each, a "subservicer") pursuant to a Subservicing Agreement (each, a "Subservicing
Agreement"); provided, however, that (i) such subservicing arrangement and the terms of the related
Subservicing Agreement must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder and (ii) such agreement would not result in a
withdrawal or downgrading by any Rating Agency of the ratings of any Certificates evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor. Notwithstanding the
provisions of any Subservicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between a Servicer and a subservicer or reference to actions taken through
a subservicer or otherwise, the applicable Servicer shall remain obligated and liable to the
Depositor, the Trustee and the Certificateholders for the servicing and administration of the Mortgage
Loans it services in accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the subservicer and to the same extent and under the same terms and conditions as
if the Servicer alone were servicing and administering the Mortgage Loans. Every Subservicing
Agreement entered into by a Servicer shall contain a provision giving any successor servicer the option
to terminate such agreement in the event a successor servicer is appointed. All actions of the each
subservicer performed pursuant to the related Subservicing Agreement shall be performed as an agent of
a Servicer with the same force and effect as if performed directly by a Servicer. The Trustee shall
have no obligations, duties or liabilities with respect to a subservicer, including, without
limitation, any obligation, duty or liability to monitor such subservicer or to pay a subservicer's
fees and expenses.
(b) For purposes of this Agreement, each Servicer shall be deemed to have received any collections,
recoveries or payments with respect to the Mortgage Loans it services that are received by a
subservicer regardless of whether such payments are remitted by the subservicer to the Servicer.
(c) As part of its servicing activities hereunder, each Servicer, for the benefit of the Trustee
and the Certificateholders, shall use its best reasonable efforts to enforce the obligations of each
Subservicer engaged by the Servicer under the related Subservicing Agreement, to the extent that the
non-performance of any such obligation would have a material and adverse effect on a Mortgage Loan.
Such enforcement, including, without limitation, the legal prosecution of claims, termination of
Subservicing Agreements and the pursuit of other appropriate remedies, shall be in such form and
carried out to such an extent and at such time as the Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Servicer shall pay the costs of
such enforcement at its own expense, and shall be reimbursed therefor only (i) from a general recovery
resulting from such enforcement to the extent, if any, that such recovery exceeds all amounts due in
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respect of the related Mortgage Loan or (ii) from a specific recovery of costs, expenses or attorneys
fees against the party against whom such enforcement is directed.
(d) Any Subservicing Agreement entered into by a Servicer shall provide that it may be assumed or
terminated by the Trustee, if the Trustee has assumed the duties of a Servicer, or any successor
Servicer, at the Trustee's or successor Servicer's option, as applicable, without cost or obligation to
the assuming or terminating party or the Trust, upon the assumption by such party of the obligations
of the Servicer pursuant to Section 8.05. Each Servicer shall be solely responsible for any fees and
expenses payable to any Subservicer in connection with the assumption or termination of any
Subservicing Agreement.
Any Subservicing Agreement, and any other transactions or services relating to the
Mortgage Loans involving a Subservicer, shall be deemed to be between the applicable Servicer and such
Subservicer alone, and the Trustee and the Certificateholders shall not be deemed parties thereto and
shall have no obligations, duties or liabilities to or with respect to the Subservicer or its officers,
directors or employees, except as set forth in Section 3.01.
(e) A Servicer shall not permit a Subservicer to perform any servicing responsibilities hereunder
with respect to the Mortgage Loans unless that Subservicer first agrees in writing with such Servicer
to deliver:
(i) an Item 1123 Certificate, an Assessment of Compliance, an Accountant's Attestation and a
Back-Up Certification in such manner and at such times that permits that Servicer to comply
with Sections 12.06, 12.07, 12.08 and 12.09 of this Agreement, respectively; and
(ii) a description of (A) any litigation or governmental proceedings pending against such
Subservicer that are material to Certificateholders, (B) any affiliations or relationships
between such Subservicer and any Servicer, the Master Servicer, the Certificate Administrator,
the Custodian or the Trustee, and (C) any litigation or affiliations described in clauses (A)
or (B) above, respectively, that occur or arise after such Subservicer agrees to perform any
servicing responsibilities hereunder. Each such description shall be delivered to the related
Servicer in such manner and at such times that permits the Servicer to comply with Sections
12.02 and 12.04 of this Agreement.
(f) A Servicer shall not outsource one or more separate servicing functions hereunder with respect
to the Mortgage Loans to any Subcontractor unless that Subcontractor first agrees in writing with the
Servicer to deliver an Assessment of Compliance and an Accountant's Attestation in such manner and at
such times that permits that Servicer to comply with Sections 12.07 and 12.08 of this Agreement.
SECTION 3.03. Rights of the Depositor, the Custodian and the Trustee in Respect of the Servicer.
None of the Custodian, the Trustee nor the Depositor shall have any responsibility or liability
for any action or failure to act by the Servicers, and none of them is obligated to supervise the
performance of the Servicers hereunder or otherwise.
SECTION 3.04. Trustee to Act as Servicer.
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In the event that a Servicer shall for any reason no longer be a servicer hereunder (including
by reason of an Event of Default), the Trustee or its designee shall, within a period of time not to
exceed ninety (90) days from the date of notice of termination or resignation, thereupon assume all of
the rights and obligations of such Servicer hereunder arising thereafter (except that the Trustee shall
not be (i) liable for losses of the Servicer pursuant to Section 3.10 hereof or for any acts or
omissions of such predecessor servicer hereunder, (ii) obligated to make Advances if it is prohibited
from doing so by applicable law, (iii) obligated to effectuate repurchases or substitutions of Mortgage
Loans hereunder, including pursuant to Section 2.02 or 2.03 hereof, (iv) responsible for any expenses of
the Servicer pursuant to Section 2.03 or (v) deemed to have made any representations and warranties
hereunder, including pursuant to Section 2.04 or the first paragraph of Section 6.02 hereof; provided,
however, that the Trustee or its designee, in its capacity as a successor servicer, shall immediately
assume the Servicer's obligation to make Advances and Servicing Advances. Any such assumption shall be
subject to Section 7.02. No such termination or resignation shall affect any obligation of a Servicer
to pay amounts owed under this Agreement and to perform its duties under this Agreement until its
successor assumes all of its rights and obligations hereunder. If a Servicer shall for any reason no
longer be a servicer (including by reason of any Event of Default), the Trustee (or any other successor
servicer) may, at its option, succeed to any rights and obligations of such Servicer under any
subservicing agreement in accordance with the terms thereof; provided, however, that the Trustee (or any
other successor servicer) shall not incur any liability or have any obligations in its capacity as
servicer under a subservicing agreement arising prior to the date of such succession unless it expressly
elects to succeed to the rights and obligations of the Servicer thereunder; and the Servicer shall not
thereby be relieved of any liability or obligations under the subservicing agreement arising prior to
the date of such succession. To the extent any Servicing Transfer Costs or expenses are not paid by the
applicable Servicer pursuant to this Agreement, such amounts shall be payable out of the Certificate
Account; provided that the terminated servicer shall reimburse the Trust Fund for any such expense
incurred by the Trust Fund upon receipt of a reasonably detailed invoice evidencing such expenses. If
the Trustee is unwilling or unable to act as servicer, the Trustee shall seek to appoint a successor
servicer that is eligible in accordance with the criteria specified this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Trustee, as successor
Servicer, is not responsible for the accounting, records (including computer records) and work of the
prior Servicer relating to the collateral (collectively, the "Predecessor Servicer Work Product"), and
the Trustee shall have no liability for the acts and omissions of the prior Servicer. If any error,
inaccuracy, omission or incorrect or non-standard practice or procedure (collectively, "Errors") exist
in any Predecessor Servicer Work Product and such Errors make it materially more difficult to service or
should cause or materially contribute to the Trustee making or continuing any Errors (collectively,
"Continued Errors"), the Trustee shall have no liability for such Continued Errors; provided, however,
that the Trustee agrees to use its best efforts to prevent Continued Errors. In the event that the
Trustee becomes aware of Errors or Continued Errors, the Trustee shall, with the prior consent of
Depositor, use its best efforts to reconstruct and reconcile such data as is commercially reasonable to
correct such Errors and Continued Errors and to prevent future Continued Errors. The Trustee shall be
entitled to recover its costs thereby expended in accordance with Section 3.08 and Section 8.06
The applicable Servicer shall, upon request of the Trustee, but at the expense of the Servicer,
deliver to the assuming party all documents and records relating to each subservicing agreement and the
Mortgage Loans then being serviced and otherwise use its best efforts to effect the orderly and
efficient transfer of the subservicing agreement to the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Servicer Collection Account; Certificate Account.
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(a) Each Servicer shall make reasonable efforts in accordance with Accepted Servicing Practices to
collect all payments called for under the terms and provisions of the Mortgage Loans it services to
the extent such procedures shall be consistent with this Agreement and the terms and provisions of any
related Required Insurance Policy. Consistent with the foregoing, each Servicer may in its discretion
(i) waive any late payment charge or, if applicable, any default interest charge, or (ii) subject to
Section 3.01, extend the due dates for payments due on a Mortgage Note for a period not greater than
180 days; provided, however, that any extension pursuant to clause (ii) above shall not affect the
amortization schedule of any Mortgage Loan for purposes of any computation hereunder, except as
provided below. In the event of any such arrangement pursuant to clause (ii) above, subject to
Section 4.01, the applicable Servicer shall make any Advances on the related Mortgage Loan during the
scheduled period in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. Notwithstanding the foregoing, in the event that
any Mortgage Loan is in default or, in the judgment of a Servicer, such default is reasonably
foreseeable, the Servicer, consistent with the standards set forth in Section 3.01, may also waive,
modify or vary any term of such Mortgage Loan (including, but not limited to, modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend the final maturity
date of such Mortgage Loan), accept payment from the related Mortgagor of an amount less than the
Stated Principal Balance in final satisfaction of such Mortgage Loan, or consent to the postponement
of strict compliance with any such term or otherwise grant indulgence to any Mortgagor (any and all
such waivers, modifications, variances, forgiveness of principal or interest, postponements, or
indulgences collectively referred to herein as "forbearance"); provided, however, that in no event
shall a Servicer grant any such forbearance (other than as permitted by the second sentence of this
Section) with respect to any one Mortgage Loan more than once in any 12 month period or more than
three times over the life of such Mortgage Loan, and provided, further, that in determining which
course of action permitted by this sentence it shall pursue, the Servicer shall adhere to the
standards of Section 3.01. In connection with any modification pursuant to this Section 3.05(a) and
to the extent there are any unreimbursed Advances, the applicable Servicer shall reimburse itself for
such amounts from the applicable Servicer Collection Account.
(b) A Servicer will not waive any Prepayment Charge or portion thereof unless, (i) the
enforceability thereof shall have been limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally or is otherwise prohibited by law, or (ii)
the collectability thereof shall have been limited due to acceleration in connection with a
foreclosure or other involuntary payment, or (iii) in the Servicer's reasonable judgment as described
in Section 3.01 hereof, (x) such waiver relates to a default or a reasonably foreseeable default, (y)
such waiver would maximize recovery of total proceeds taking into account the value of such Prepayment
Charge and related Mortgage Loan and (z) doing so is standard and customary in servicing similar
Mortgage Loans (including any waiver of a Prepayment Charge in connection with a refinancing of a
Mortgage Loan that is related to a default or a reasonably foreseeable default), or (iv) the
collection of such Prepayment Penalty would be considered "predatory" pursuant to written guidance
published or issued by any applicable federal, state or local regulatory authority acting in its
official capacity and having jurisdiction over such matters. Except as provided in the preceding
sentence, in no event will a Servicer waive a Prepayment Charge in connection with a refinancing of a
Mortgage Loan that is not related to a default or a reasonably foreseeable default. Except as
otherwise provided above, a Servicer shall not waive any Prepayment Penalty in connection with a
voluntary sale of the related Mortgaged Property unless there is an acceleration of the maturity date
of such Mortgage Loan. If a Servicer waives or does not collect all or a portion of a Prepayment
Charge relating to a Principal Prepayment in full or in part due to any action or omission of the
Servicer, other than as provided above, the Servicer shall deposit the amount of such Prepayment
Charge (or such portion thereof as had been waived for deposit) into the Servicer Collection Account
for distribution in accordance with the terms of this Agreement.
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(c) Neither Servicer shall be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Mortgage Note or otherwise or against any public
or governmental authority with respect to a taking or condemnation) if it reasonably believes that
enforcing the provision of the Mortgage or other instrument pursuant to which such payment is required
is prohibited by applicable law.
(d) Each Servicer shall establish and maintain so long as it is acting as servicer hereunder, on
behalf of the Trustee for the benefit of the Certificateholders, a Servicer Collection Account. Each
Servicer shall deposit into a clearing account, on a daily basis, and into its Servicer Collection
Account, within two Business Days of receipt thereof, in immediately available funds, the following
payments and collections received or made by it on and after the Cut-Off Date with respect to the
Mortgage Loans:
(i) all payments on account of principal, including Principal Prepayments, on the Mortgage Loans,
other than principal due on the Mortgage Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans net of the related Servicing Fee
permitted under Section 3.15, other than (x) interest due on the Mortgage Loans on or prior to the
Cut-off Date and (y) Prepayment Interest Excess;
(iii) all Liquidation Proceeds, other than proceeds to be applied to the restoration or repair of the
Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op Loan) or released to either
the Mortgagor or the holder of a senior lien on the Mortgaged Property (or Underlying Mortgaged
Property, in the case of a Co-op Loan) in accordance with the Servicer's normal servicing procedures;
(iv) all Subsequent Recoveries;
(v) all Compensating Interest;
(vi) any amount required to be deposited by the Servicer pursuant to Section 3.05(f) in connection
with any losses on Permitted Investments;
(vii) any amounts required to be deposited by the Servicer pursuant to Section 3.10 hereof;
(viii) all Purchase Prices and Substitution Adjustment Amounts;
(ix) all Advances made by the Servicer pursuant to Section 4.01;
(x) all Prepayment Charges;
(xi) all net monthly rental income from REO Properties required to be deposited by the Servicer
pursuant to Section 3.12; and
(xii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by a Servicer into the Servicer Collection Account
shall be exclusive, it being understood and agreed that, without limiting the generality of the
foregoing, all servicing-related fees, including all late payment charges, insufficient funds charges,
customary real estate referral fees and payments in the nature of assumption fees (i.e. fees related to
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the assumption of a Mortgage Loan upon the purchase of the related Mortgaged Property or stock allocated
to a dwelling unit in the case of a Co-op Loan), modification fees, extension fees and other similar
ancillary fees and charges (other than Prepayment Charges) if collected, and any Prepayment Interest
Excess need not be remitted by the Servicer. Rather, such fees and charges and similar amounts may be
retained by the applicable Servicer as additional servicing compensation. In the event that a Servicer
shall remit any amount not required to be remitted and not otherwise subject to withdrawal pursuant to
Section 3.08 hereof, it may at any time withdraw or direct the Trustee, or such other institution
maintaining its Servicer Collection Account, to withdraw such amount from the Servicer Collection
Account, any provision herein to the contrary notwithstanding. Each Servicer shall maintain adequate
records with respect to all withdrawals made pursuant to this Section. All funds deposited in a
Servicer Collection Account shall be held in trust for the Certificateholders until withdrawn in
accordance with Section 3.08. In no event shall the Trustee incur liability for withdrawals from a
Servicer Collection Account at the direction of a Servicer.
Each Servicer shall give notice to the Trustee of the location of the Servicer Collection
Account maintained by it when established and prior to any change thereof. Not later than twenty days
after each Distribution Date, each Servicer shall forward to the Trustee the most current available bank
statement for its Servicer Collection Account. Copies of such statement shall be provided by the
Trustee to any Certificateholder and to any Person identified to the Trustee as a prospective transferee
of a Certificate, upon request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Trustee.
A Servicer Collection Account may contain funds that belong to one or more trust funds created
for mortgage pass-through certificates of other series and may contain other funds respecting payments
on mortgage loans belonging to a Servicer or serviced by a Servicer on behalf of others; provided that
such commingling of funds shall not be permitted at any time during which (i) Fitch's senior long-term
unsecured debt rating of the Servicer is below "A" or (ii) Fitch's short-term rating of such Servicer is
below F1. Notwithstanding such commingling of funds, each Servicer shall keep records that accurately
reflect the funds on deposit in the applicable Servicer Collection Account that have been identified by
it as being attributable to the amounts deposited to the Servicer Collection Account pursuant to this
Agreement. Each Servicer shall maintain adequate records with respect to all withdrawals made pursuant
to this Section 3.05. All funds required to be deposited in a Servicer Collection Account shall be held
in trust for the Certificateholders until withdrawn in accordance with Section 3.08.
Each Servicer Collection Account shall be an Eligible Account held by the applicable Servicer.
The amount at any time credited to a Servicer Collection Account may be invested, in the name of the
Trustee, for the benefit of the Certificateholders, in Permitted Investments as directed by the
applicable Servicer. All Permitted Investments shall mature or be subject to redemption or withdrawal
on or before, and shall be held until, (i) the next succeeding Distribution Date if the obligor for such
Permitted Investment is the institution acting as Servicer or if such Permitted Investment is a money
market mutual fund the advisor of which is the applicable Servicer or an Affiliate thereof or (ii) if
such obligor is any other Person, the Business Day preceding such Distribution Date. All income or gain
(net of any losses) realized from any such investment of funds on deposit in a Servicer Collection
Account shall be for the benefit of the applicable Servicer as servicing compensation and shall be
retained by it monthly as provided herein. The amount of any losses realized in a Servicer Collection
Account in respect of any such investments shall promptly be deposited by the applicable Servicer in the
Servicer Collection Account out of the Servicer's own funds immediately as realized.
(e) The Trustee shall establish and maintain, on behalf of the Certificateholders, the Certificate
Account. The Trustee shall, promptly upon receipt, deposit or cause to be deposited in the
Certificate Account and retain therein the following:
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(i) the aggregate amount withdrawn by each Servicer from the applicable Servicer Collection Account
and required to be deposited in the Certificate Account;
(ii) any amount required to be deposited by the Trustee pursuant to Section 3.05(f) in connection
with any losses on Permitted Investments; and
(iii) the Optional Termination Amount paid by a Servicer pursuant to Section 9.01.
Any amounts received by the Trustee prior to 1:00 p.m. New York City time (or such earlier
deadline for investment in the Permitted Investments designated by the Trustee) which are required to be
deposited in the Certificate Account by the Servicer may be invested in Permitted Investments on the
Business Day on which they were received. The foregoing requirements for remittance by each Servicer
and deposit by the Servicers into the Certificate Account shall be exclusive. In the event that a
Servicer shall remit any amount not required to be remitted and not otherwise subject to withdrawal
pursuant to Section 3.08 hereof, it may at any time withdraw such amount from the Certificate Account,
any provision herein to the contrary notwithstanding. All funds deposited in the Certificate Account
shall be held by the Trustee in trust for the Certificateholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3.08. In no event shall the Trustee incur liability
for withdrawals from the Certificate Account at the direction of the Servicer. The Trustee shall give
notice to the Servicer of the location of the Certificate Account maintained by it when established and
prior to any change thereof.
(f) Each institution that maintains a Servicer Collection Account or the Certificate Account may
invest the funds in each such account as directed in writing by the applicable Servicer or the
Trustee, respectively, in Permitted Investments, which shall mature not later than (i) in the case of a
Servicer Collection Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that maintains such Servicer
Collection Account or is otherwise immediately available, then such Permitted Investment shall mature
not later than the Servicer Remittance Date) and (ii) in the case of the Certificate Account, the
Business Day immediately preceding the first Distribution Date that follows the date of such
investment (except that if such Permitted Investment is an obligation of the institution that
maintains such Certificate Account or is otherwise immediately available, then such Permitted
Investment shall mature not later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be made in the name of a
Servicer or the Trustee, as applicable, for the benefit of the Certificateholders. All income and
gain net of any losses realized from amounts on deposit in a Servicer Collection Account shall be for
the benefit of the applicable Servicer as servicing compensation and shall be remitted to it or
withdrawn by it monthly as provided herein. The amount of any losses incurred in a Servicer
Collection Account in respect of any such investments shall be deposited by the applicable Servicer in
the Collection Account out of the Servicer's own funds immediately as realized. All income and gain
net of any losses realized from amounts on deposit in the Certificate Account shall be for the benefit
of the Trustee and shall be remitted to or withdrawn by it monthly as provided herein. The amount of
any losses incurred in the Certificate Account in respect of any such investments shall be deposited
by the Trustee in the Certificate Account out of the Trustee's own funds immediately as realized.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow Accounts.
To the extent required by the related Mortgage Note, the applicable Servicer shall establish
and maintain one or more accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Servicer) for the payment of taxes, assessments,
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hazard insurance premiums or comparable items for the account of the Mortgagors. Nothing herein shall
require a Servicer to compel a Mortgagor to establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made only to effect timely
payment of taxes, assessments, insurance premiums, condominium or PUD association dues, or comparable
items, to reimburse the Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes, assessments, dues or comparable items and insurance premiums) and
3.10 hereof (with respect to hazard insurance), to refund to any Mortgagors any sums as may be
determined to be overages, to pay interest, if required by law or the terms of the related Mortgage or
Mortgage Note, to Mortgagors on balances in the Escrow Account to withdraw funds deposited in error or
amounts previously deposited but returned as unpaid due to a "not sufficient funds" or other denial by
the related Mortgagor's banking institution or to clear and terminate the Escrow Account at the
termination of this Agreement in accordance with Section 9.01 hereof. The Escrow Accounts shall not be
a part of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information Regarding the Mortgage Loans.
Upon reasonable advance notice in writing if required by federal regulation, and with respect
to a Certificateholder that is a savings and loan association, bank or insurance company, a Servicer
will provide to Trustee certain reports and reasonable access to information and documentation regarding
the Mortgage Loans, as may be available to the Servicer and necessary to permit such Certificateholder
to comply with applicable regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to be reimbursed by each
such Certificateholder for actual expenses incurred by the Servicer in providing such reports and access.
SECTION 3.08. Permitted Withdrawals from a Servicer Collection Account and Certificate Account.
(a) Each Servicer may from time to time, make withdrawals from its Servicer Collection Account for
the following purposes (the order below not constituting an order of priority):
(i) to pay to the Servicer (to the extent not previously paid to or withheld by the Servicer), as
servicing compensation in accordance with Section 3.15, that portion of any payment or recovery of
interest on a Mortgage Loan it services that equals the Servicing Fee for the period with respect to
which such interest payment or recovery was made or allocated, and, as additional servicing
compensation, those other amounts set forth in Section 3.15;
(ii) to reimburse the Servicer for Advances made by it with respect to the Mortgage Loans it
services, such right of reimbursement pursuant to this subclause (ii) being limited to amounts received
on particular Mortgage Loan(s) (including, for this purpose, Condemnation Proceeds, Insurance Proceeds,
Liquidation Proceeds) that represent late recoveries of payments of principal and/or interest on such
particular Mortgage Loan(s) in respect of which any such Advance was made;
(iii) to reimburse the Servicer for any Non-Recoverable Advance previously made and any
Non-Recoverable Servicing Advances previously made by it to the extent that, in the case of
Non-Recoverable Servicing Advances, reimbursement therefor constitutes "unanticipated expenses" within
the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii);
(iv) to pay to the Servicer earnings on or investment income with respect to funds in or credited to
its Servicer Collection Account;
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(v) to reimburse the Servicer from Insurance Proceeds for Insured Expenses covered by the related
Insurance Policy;
(vi) to pay the Servicer any unpaid Servicing Fees and to reimburse it for any unreimbursed
Servicing Advances (to the extent that reimbursement for Servicing Advances would constitute an
"unanticipated expense" within the meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii)), the
Servicer's right to reimbursement of Servicing Advances pursuant to this subclause (vi) with respect to
any Mortgage Loan being limited to amounts received on particular Mortgage Loan(s)(including, for this
purpose, Liquidation Proceeds and purchase and repurchase proceeds) that represent late recoveries of
the payments for which such advances were made pursuant to Section 3.01 or Section 3.06;
(vii) to pay to the Depositor or the Servicer, as applicable, with respect to each Mortgage Loan or
property acquired in respect thereof that has been purchased pursuant to Section 2.02, 2.03 or 3.12, all
amounts received thereon and not taken into account in determining the related Stated Principal Balance
of such repurchased Mortgage Loan;
(viii) to reimburse the Servicer, the Trustee or the Depositor for expenses incurred by any of them in
connection with the Mortgage Loans or the Certificates and reimbursable pursuant to Section 3.25 or
Section 6.03 hereof;
(ix) to reimburse the Trustee for enforcement expenses reasonably incurred in respect of a breach or
defect giving rise to the purchase obligation in Section 2.03 that were incurred in the Purchase Price
of the Mortgage Loans including any expenses arising out of the enforcement of the purchase obligation;
provided that any such expenses will be reimbursable under this subclause (ix) only to the extent that
such expenses would constitute "unanticipated expenses" within the meaning of Treasury Regulation
Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for herein;
(x) to withdraw any amount deposited in the applicable Servicer Collection Account and not required
to be deposited therein;
(xi) to withdraw funds deposited in error or amounts previously deposited but returned as unpaid due
to a "not sufficient funds" or other denial by the related Mortgagor's banking institution;
(xii) to clear and terminate the applicable Servicer Collection Account upon termination of this
Agreement pursuant to Section 9.01 hereof;
(xiii) to reimburse itself for Advances or Servicing Advances from amounts in the applicable Servicer
Collection Account held for future distributions that were not included in Available Funds for the
preceding Distribution Date. An amount equal to the amount withdrawn from the Servicer Collection
Account pursuant to this subclause (xiii) shall be deposited in the Servicer Collection Account by the
Servicer on the next succeeding Distribution Date on which funds are to be distributed to
Certificateholders; and
(xiv) to reimburse itself from any amounts in the applicable Servicer Collection Account for any
prior Advances which have not otherwise been reimbursed at the time the related Mortgage Loan is
modified.
In addition, no later than 1:00 p.m. Eastern Time on the Servicer Remittance Date, each
Servicer shall cause to be withdrawn from its Servicer Collection Account the Interest Funds and the
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Principal Funds to the extent on deposit, and such amount shall be deposited in the Certificate Account;
provided, however, if the Trustee does not receive such Interest Funds and Principal Funds by 2:00 p.m.
Eastern Time, such Interest Funds and Principal Funds shall be deposited in the Certificate Account on
the next Business Day.
Each Servicer shall keep and maintain separate accounting, on a Mortgage Loan by Mortgage Loan
basis, for the purpose of justifying any withdrawal from its Servicer Collection Account in relation to
subclauses (ii), (iii), (v), (vi), (vii), (viii), (ix), (x), (xi), (xiii) and (xiv).
Each Servicer shall provide written notification to the Trustee on or prior to the next
succeeding Servicer Remittance Date upon making any withdrawals from its Servicer Collection Account
pursuant to subclauses (iii) and (viii) above.
In the event of any failure by a Servicer to remit to the Trustee for deposit into the
Certificate Account any amounts (including any Advance) required to be so remitted by the Servicer on
the Servicer Remittance Date, the Servicer shall pay to the Trustee, for its own account, interest on
such amounts at the "prime rate" (as specified in the New York edition of The Wall Street Journal) until
such failure is remedied.
Unless otherwise specified, any amounts reimbursable to a Servicer or the Trustee from amounts
on deposit in the applicable Servicer Collection Account or the Certificate Accounts shall be deemed to
come from first, Interest Funds, and thereafter, Principal Funds for the related Distribution Date.
(b) The Trustee shall withdraw funds from the Certificate Account for distribution to the
Certificateholders in the manner specified in this Agreement (and shall withhold from the amounts so
withdrawn, the amount of any taxes that it is authorized to retain pursuant to this Agreement). In
addition, the Trustee may from time to time make withdrawals from the Certificate Account for the
following purposes (the order below not constituting an order of priority):
(i) to withdraw any amount deposited in the Certificate Account and not required to be deposited
therein;
(ii) to clear and terminate the Certificate Account upon termination of the Agreement pursuant to
Section 9.01 hereof (after paying all amounts necessary to the Trustee or the Servicer in connection
with any such termination); and
(iii) to reimburse the Trustee for any fees, expenses and indemnification reimbursable pursuant to
this Agreement, including without limitation Sections 3.04, 6.03, 8.06 and 11.02 hereof.
SECTION 3.09. Credit Reporting.
Each Servicer will fully furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit Information Company on a monthly basis.
SECTION 3.10. Maintenance of Hazard Insurance.
Each Servicer shall cause to be maintained, for each Mortgage Loan (other than a Co-op Loan) it
services, fire and hazard insurance with extended coverage in an amount that is at least equal to the
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least of (i) the replacement value of the improvements that are part of such Mortgaged Property, or (ii)
the greater of (a) the outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds of such policy shall be sufficient to prevent the related Mortgagor and/or mortgagee from
becoming a co-insurer or (iii) the amount required under applicable HUD/FHA regulations. Each policy of
standard hazard insurance shall contain, or have an accompanying endorsement that contains, a standard
mortgagee clause. Each Servicer shall also cause flood insurance to be maintained on property acquired
upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan it services, to the extent
described below. Pursuant to Section 3.05 hereof, any amounts collected by a Servicer under any such
policies (other than the amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in accordance with the
Servicer's normal servicing procedures) shall be deposited in the applicable Servicer Collection
Account. Any cost incurred by the Servicer in maintaining any such insurance shall not, for the purpose
of calculating monthly distributions to the Certificateholders or remittances to the Trustee for their
benefit, be added to the principal balance of the Mortgage Loan, notwithstanding that the terms of the
Mortgage Loan so permit; provided, however, that the limitations contained in this sentence shall not
apply to modifications made pursuant to Section 3.05(a). Such costs shall be recoverable by the
applicable Servicer out of late payments by the related Mortgagor or out of Liquidation Proceeds to the
extent and as otherwise permitted by Section 3.08 hereof. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor or maintained on property
acquired in respect of a Mortgage other than pursuant to such applicable laws and regulations as shall
at any time be in force and as shall require such additional insurance. If the Mortgaged Property is
located at the time of origination of the Mortgage Loan in a federally designated special flood hazard
area and such area is participating in the national flood insurance program, the Servicer shall cause
flood insurance to be maintained with respect to such Mortgage Loan. Such flood insurance shall be in
an amount equal to the least of (i) the original principal balance of the related Mortgage Loan, (ii)
the replacement value of the improvements that are part of such Mortgaged Property, or (iii) the maximum
amount of such insurance available for the related Mortgaged Property under the Flood Disaster
Protection Act of 1973, as amended.
In the event that a Servicer shall obtain and maintain a blanket policy insuring against hazard
losses on all of the Mortgage Loans it services, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.10, it being understood and agreed that
such policy may contain a deductible clause on terms substantially equivalent to those commercially
available and maintained by comparable servicers. If such policy contains a deductible clause, the
Servicer shall, in the event that there shall not have been maintained on the related Mortgaged Property
a policy complying with the first sentence of this Section 3.10, and there shall have been a loss that
would have been covered by such policy, deposit in the Servicer Collection Account the amount not
otherwise payable under the blanket policy because of such deductible clause. In connection with its
activities as servicer of the Mortgage Loans it services, each Servicer agrees to present, on behalf of
itself, the Depositor and the Trustee for the benefit of the Certificateholders, claims under any such
blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any property subject to a Mortgage
has been or is about to be conveyed by the Mortgagor, the applicable Servicer shall to the extent that
it has knowledge of such conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, but only to the extent that such enforcement will not adversely affect or jeopardize
coverage under any Required Insurance Policy; provided, however, that the Servicer shall not exercise
any such right if the due-on-sale clause, in the reasonable belief of the Servicer, is not enforceable
under applicable law. An opinion of counsel, which shall be reimbursable as a Servicing Advance (to
the extent it is an "unanticipated expense" within the meaning of Treasury Regulation Section
1.860G-1(b)(3)(ii)), delivered to the Trustee and the Depositor shall conclusively establish the
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reasonableness of such belief to the extent permitted under applicable law. Notwithstanding the
foregoing, the Servicer is not required to exercise such rights with respect to a Mortgage Loan if the
Person to whom the related Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) has been conveyed or is proposed to be conveyed satisfies the terms and conditions
contained in the Mortgage Note and Mortgage related thereto and the consent of the mortgagee under
such Mortgage Note or Mortgage is not otherwise so required under such Mortgage Note or Mortgage as a
condition to such transfer. In the event that a Servicer is prohibited by law from enforcing any such
due-on-sale clause, or if coverage under any Required Insurance Policy would be adversely affected, or
if nonenforcement is otherwise permitted hereunder, the Servicer is authorized, subject to Section
3.11(b), to take or enter into an assumption and modification agreement from or with the Person to
whom such property has been or is about to be conveyed, pursuant to which such Person becomes liable
under the Mortgage Note and, unless prohibited by applicable state law, the Mortgagor remains liable
thereon, provided that the Mortgage Loan shall continue to be covered (if so covered before the
Servicer enters such agreement) by the applicable Required Insurance Policies. The Servicer, subject
to Section 3.11(b), is also authorized with the prior approval of the insurers under any Required
Insurance Policies to enter into a substitution of liability agreement with such Person, pursuant to
which the original Mortgagor is released from liability and such Person is substituted as Mortgagor
and becomes liable under the Mortgage Note. Notwithstanding the foregoing, a Servicer shall not be
deemed to be in default under this Section 3.11(a) by reason of any transfer or assumption that the
Servicer reasonably believes it is restricted by law from preventing.
(b) Subject to each Servicer's duty to enforce any due-on-sale clause to the extent set forth in
Section 3.11(a) hereof, in any case in which a Mortgaged Property (or stock allocated to a dwelling
unit, in the case of Co-op Loan) has been conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption agreement or modification agreement or supplement to the Mortgage Note or
Mortgage that requires the signature of the Trustee, or if an instrument of release signed by the
Trustee is required releasing the Mortgagor from liability on the Mortgage Loan, the applicable
Servicer shall prepare and deliver or cause to be prepared and delivered to the Trustee for signature
and shall direct, in writing, the Trustee to execute the assumption agreement with the Person to whom
the Mortgaged Property (or the stock allocated to a dwelling unit, in the case of a Co-op Loan) is to
be conveyed and such modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage or
otherwise to comply with any applicable laws regarding assumptions or the transfer of the Mortgaged
Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan) to such Person. In
connection with any such assumption, no material term of the Mortgage Note (including, but not limited
to, the Mortgage Rate, the amount of the Scheduled Payment, the Maximum Rate, the Minimum Rate, the
Gross Margin, the Periodic Rate Cap, the Adjustment Date, any prepayment penalty and any other term
affecting the amount or timing of payment on the Mortgage Loan) may be changed. The applicable
Servicer shall notify the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Custodian the original of such substitution or assumption agreement,
which in the case of the original shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. The applicable Servicer shall be responsible for recording
any such assumption or substitution agreements. Any fee collected by the applicable Servicer for
entering into an assumption or substitution of liability agreement will be retained by the Servicer as
additional servicing compensation.
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SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds.
(a) Each Servicer shall use reasonable efforts consistent with the servicing standard set forth in
Section 3.01 to foreclose upon or otherwise comparably convert the ownership of properties securing
such of the Mortgage Loans it services as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of Delinquent payments. In connection with such
foreclosure or other conversion, each Servicer shall follow such practices and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general mortgage servicing
activities and the requirements of the insurer under any Required Insurance Policy; provided, however,
that the Servicer shall not be required to expend its own funds in connection with the restoration of
any property that shall have suffered damage due to an uninsured cause unless it shall determine (i)
that such restoration will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be recoverable to it through
Liquidation Proceeds (respecting which it shall have priority for purposes of withdrawals from the
Servicer Collection Account pursuant to Section 3.08 hereof). Each Servicer shall be responsible for
all other costs and expenses incurred by it in any such proceedings; provided, however, that it shall
be entitled to reimbursement thereof from the proceeds of liquidation of the related Mortgaged
Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan) and if applicable, as a
Non-Recoverable Servicing Advance, as contemplated in Section 3.08 hereof. If a Servicer has
knowledge that a Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op Loan)
that the Servicer is contemplating acquiring in foreclosure or by deed-in-lieu of foreclosure is
located within a one-mile radius of any site with environmental or hazardous waste risks known to the
Servicer, the Servicer will, prior to acquiring the Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan), consider such risks and only take action in accordance
with Accepted Servicing Practices.
With respect to any REO Property, the deed or certificate of sale shall be taken in the name of
the Trustee for the benefit of the Certificateholders, or its nominee, on behalf of the
Certificateholders. The Trustee's name shall be placed on the title to such REO Property solely as the
Trustee hereunder and not in its individual capacity. A Servicer servicing the related Mortgage Loan
shall ensure that the title to such REO Property references this Agreement and the Trustee's capacity
hereunder. Pursuant to its efforts to sell such REO Property, the Servicer shall either itself or
through an agent selected by the Servicer protect and conserve such REO Property in the same manner and
to such extent as is customary in the locality where such REO Property is located and may, incident to
its conservation and protection of the interests of the Certificateholders, rent the same, or any part
thereof, as the Servicer deems to be in the best interest of the Servicer and the Certificateholders for
the period prior to the sale of such REO Property. The Servicer or its affiliate may receive usual and
customary real estate referral fees for real estate brokers in connection with the listing and
disposition of REO Property. The Servicer shall prepare a statement with respect to each REO Property
that has been rented showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such times as is necessary to
enable the Servicer to comply with the reporting requirements of the REMIC Provisions. The net monthly
rental income, if any, from such REO Property shall be deposited in the Servicer Collection Account no
later than the close of business on the Determination Date immediately following the month concerned.
The Servicer shall perform the tax reporting and withholding related to foreclosures, abandonments and
cancellation of indebtedness income as specified by Sections 1445, 6050J and 6050P of the Code by
preparing and filing such tax and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan) as aforesaid or otherwise in connection with a default or
imminent default on a Mortgage Loan, the applicable Servicer shall dispose of such Mortgaged Property
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(or stock allocated to a dwelling unit, in the case of a Co-op Loan) prior to the expiration of three
years from the end of the year of its acquisition by the Trust Fund or, at the expense of the Trust
Fund, obtain, in accordance with applicable procedures for obtaining an automatic extension of the grace
period, more than 60 days prior to the day on which such three-year period would otherwise expire, an
extension of the three-year grace period, in which case such property must be disposed of prior to the
end of such extension, unless the Trustee shall have been supplied with an Opinion of Counsel (such
Opinion of Counsel not to be an expense of the Trustee), to the effect that the holding by the Trust
Fund of such Mortgaged Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
subsequent to such three-year period or extension will not result in the imposition of taxes on
"prohibited transactions" of the Trust Fund or any of the REMICs provided for herein as defined in
section 860F of the Code or cause any of the REMICs provided for herein to fail to qualify as a REMIC at
any time that any Certificates are outstanding, in which case the Trust Fund may continue to hold such
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan) (subject to any
conditions contained in such Opinion of Counsel). Notwithstanding any other provision of this
Agreement, no Mortgaged Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
acquired by the Trust Fund shall be held, rented (or allowed to continue to be rented) or otherwise used
for the production of income by or on behalf of the Trust Fund in such a manner or pursuant to any terms
that would (i) cause such Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) to fail to qualify as "foreclosure property" within the meaning of section 860G(a)(8) of the
Code or (ii) subject the Trust Fund or any REMIC provided for herein to the imposition of any federal,
state or local income taxes on the income earned from such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan) under section 860G(c) of the Code or otherwise, unless the
applicable Servicer or the Depositor has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes. No Servicer shall have any liability for any losses
resulting from a foreclosure on a second lien Mortgage Loan in connection with the foreclosure of the
related first lien mortgage loan that is not a Mortgage Loan if the Servicer does not receive notice of
such foreclosure action.
The decision of a Servicer to foreclose on a defaulted Mortgage Loan shall be subject to a
determination by the Servicer that the proceeds of such foreclosure would exceed the costs and expenses
of bringing such a proceeding. The income earned from the management of any Mortgaged Properties
acquired through foreclosure or other judicial proceeding, net of reimbursement to the applicable
Servicer for expenses incurred (including any property or other taxes) in connection with such
management and net of unreimbursed Servicing Fees, Advances, Servicing Advances and any management fee
paid or to be paid with respect to the management of such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of Co-op Loan), shall be applied for the purpose of the Trust Fund to the
payment of principal of, and interest on, the related defaulted Mortgage Loans (with interest accruing
as though such Mortgage Loans were still current) and all such net income shall be deemed, for all
purposes and as between the parties to this Agreement, to be payments on account of principal and
interest on the related Mortgage Notes and shall be deposited into the applicable Servicer Collection
Account. To the extent that any such net income received during a Prepayment Period is in excess of the
amount attributable to amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal Prepayment for all
purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of any payment to the
applicable Servicer as provided above, shall be deposited in the applicable Servicer Collection Account
on the next succeeding Determination Date following receipt thereof for distribution on the related
Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting from a partial
collection of Liquidation Proceeds and any net income from an REO Property, will be applied as between
the parties in the following order of priority: first, to reimburse the applicable Servicer for any
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related unreimbursed Servicing Advances and unpaid Servicing Fees, pursuant to Section 3.08(a)(vi) or
this Section 3.12; second, to reimburse such Servicer for any unreimbursed Advances, pursuant to Section
3.08(a)(ii) or this Section 3.12; third, to any Prepayment Charges and then to accrued and unpaid
interest (to the extent no Advance has been made for such amount) on the Mortgage Loan or related REO
Property, at the applicable Net Mortgage Rate to the Due Date occurring in the month in which such
amounts are required to be distributed; and fourth, as a recovery of principal of the Mortgage Loan.
(b) On each Determination Date, the applicable Servicer shall determine the respective aggregate
amounts of Excess Proceeds, if any, that occurred in the related Prepayment Period.
(c) Each Servicer, in its sole discretion, shall have the right to elect (by written notice sent to
the Trustee) to purchase for its own account from the Trust Fund any Mortgage Loan that it services
that is 90 days or more Delinquent or REO Property for which the Servicer has accepted a deed-in-lieu
of foreclosure at a price equal to the Purchase Price. The Purchase Price for any Mortgage Loan or
REO Property purchased hereunder shall be delivered to the Trustee for deposit to the Certificate
Account and the Custodian, upon receipt of such confirmation of deposit and a Request for Release from
the Servicer in the form of Exhibit I hereto, shall release or cause to be released to the Servicer
the related Mortgage File and shall execute and deliver such instruments of transfer or assignment
prepared by the Servicer, in each case without recourse, representation or warranty, as shall be
necessary to vest in the Servicer any Mortgage Loan or REO Property released pursuant hereto and the
Servicer shall succeed to all the Trustee's right, title and interest in and to such Mortgage Loan and
all security and documents related thereto. Such assignment shall be an assignment outright and not
for security. The Servicer shall thereupon own such Mortgage Loan, and all security and documents,
free of any further obligation to the Trustee or the Certificateholders with respect thereto. The
Servicer shall not use any procedure in selecting Mortgage Loans to be repurchased which is materially
adverse to the interests of the Certificateholders.
SECTION 3.13. Custodian to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the applicable Servicer of a
notification that payment in full will be escrowed in a manner customary for such purposes, such
Servicer will promptly notify the Custodian or its designee by delivering a Request for Release
substantially in the form of Exhibit I. Upon receipt of such request, the Custodian shall within three
(3) Business Days release the related Mortgage File to the Servicer, and the applicable Servicer is
authorized to cause the removal from the registration on the MERS System of any such Mortgage if
applicable, and the Servicer, on behalf of the Custodian shall execute and deliver the request for
reconveyance, deed of reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Mortgage together with the Mortgage Note with written evidence of cancellation thereon.
No expenses incurred in connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the related Servicer Collection Account, the Certificate Account or the related
subservicing account. From time to time and as shall be appropriate for the servicing or foreclosure of
any Mortgage Loan, including for such purpose, collection under any policy of flood insurance, any
fidelity bond or errors or omissions policy, or for the purposes of effecting a partial release of any
Mortgaged Property from the lien of the Mortgage or the making of any corrections to the Mortgage Note
or the Mortgage or any of the other documents included in the Mortgage File, the Custodian shall, upon
delivery to the Custodian of a Request for Release in the form of Exhibit I signed by a Servicing
Officer, release the Mortgage File to the Servicer. Subject to the further limitations set forth below,
the applicable Servicer shall cause the Mortgage File or documents so released to be returned to the
Custodian when the need therefor by the Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the related Servicer Collection Account.
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Each Request for Release may be delivered to the Custodian (i) via mail or courier, (ii) via
facsimile or (iii) by such other means, including, without limitation, electronic or computer readable
medium, as the applicable Servicer and the Custodian shall mutually agree. The Custodian shall release
the related Mortgage File(s) within three (3) Business Days of receipt of a properly completed Request
for Release pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed Request for
Release shall be authorization to the Custodian to release such Mortgage Files, provided the Custodian
has determined that such Request for Release has been executed, with respect to clauses (i) or (ii)
above, or approved, with respect to clause (iii) above, by an authorized Servicing Officer of the
Servicer, and so long as the Custodian complies with its duties and obligations under this Agreement.
If the Custodian is unable to release the Mortgage Files within the period previously specified, the
Custodian shall immediately notify the applicable Servicer indicating the reason for such delay. If a
Servicer is required to pay penalties or damages due to the Custodian's negligent failure to release the
related Mortgage File or the Custodian's negligent failure to execute and release documents in a timely
manner, the Custodian, shall be liable for such penalties or damages respectively caused by it.
If a Servicer at any time seeks to initiate a foreclosure proceeding in respect of any
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan) as authorized by
this Agreement, the Servicer may deliver or cause to be delivered to the Trustee, for signature, as
appropriate or on behalf of the Trustee, execute any court pleadings, requests for trustee's sale or
other documents necessary to effectuate such foreclosure or any legal action brought to obtain judgment
against the Mortgagor on the Mortgage Note or the Mortgage or to obtain a deficiency judgment or to
enforce any other remedies or rights provided by the Mortgage Note or the Mortgage or otherwise
available at law or in equity. Notwithstanding the foregoing, the applicable Servicer shall cause
possession of any Mortgage File or of the documents therein that shall have been released by the
Custodian to be returned to the Custodian promptly after possession thereof shall have been released by
the Custodian unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Servicer Collection Account, and the Servicer shall have
delivered to the Custodian a Request for Release in the form of Exhibit I or (ii) the Mortgage File or
document shall have been delivered to an attorney or to a public trustee or other public official as
required by law for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property (or stock allocated to a dwelling unit, in the case of a Co-op
Loan) and the Servicer shall have delivered to the Custodian an Officer's Certificate of a Servicing
Officer certifying as to the name and address of the Person to which the Mortgage File or the documents
therein were delivered and the purpose or purposes of such delivery.
SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control of, a Servicer in
respect of any Mortgage Loans it services, whether from the collection of principal and interest
payments or from Liquidation Proceeds, including but not limited to, any funds on deposit in the
Servicer Collection Account, shall be held by the Servicer for and on behalf of the Trustee and shall be
and remain the sole and exclusive property of the Trust Fund, subject to the applicable provisions of
this Agreement. Each Servicer also agrees that it shall not create, incur or subject any Mortgage File
or any funds that are deposited in the related Servicer Collection Account or Certificate Account or in
any Escrow Account, or any funds that otherwise are or may become due or payable to the Trustee for the
benefit of the Certificateholders, to any claim, lien, security interest, judgment, levy, writ of
attachment or other encumbrance, or assert by legal action or otherwise any claim or right of set off
against any Mortgage File or any funds collected on, or in connection with, a Mortgage Loan, except,
however, that the Servicer shall be entitled to set off against and deduct from any such funds any
amounts that are properly due and payable to the Servicer under this Agreement.
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SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, each Servicer shall be entitled to retain or
withdraw from its Servicer Collection Account out of each payment or recovery of interest on a Mortgage
Loan included in the Trust Fund an amount equal to interest at the applicable Servicing Fee Rate on the
Stated Principal Balance of the related Mortgage Loan as of the immediately preceding Distribution Date.
Additional servicing compensation in the form of any Excess Proceeds, late payment fees,
assumption fees (i.e., fees related to the assumption of a Mortgage Loan upon the purchase of the
related Mortgaged Property (or stock allocated to a dwelling unit, in the case of Co-op Loan)),
modification fees, customary real estate referral fees, extension fees and similar fees payable by the
Mortgagor, Prepayment Interest Excess, and all income and gain net of any losses realized from Permitted
Investments in the related Servicer Collection Account shall be retained by the applicable Servicer to
the extent not required to be deposited in the Servicer Collection Account pursuant to Sections 3.05 or
3.12(a) hereof. Each Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including payment of any premiums for hazard insurance, as required
by Section 3.10 hereof and maintenance of the other forms of insurance coverage required by Section 3.10
hereof) and shall not be entitled to reimbursement therefor except as specifically provided in this
Agreement. In no event shall the Trustee be liable for any Servicing Fee or for any differential
between the Servicing Fee and the amount necessary to induce a successor servicer to act as successor
servicer under this Agreement.
SECTION 3.16. Access to Certain Documentation.
Each Servicer will provide to Trustee certain reports and reasonable access to information and
documentation regarding the Mortgage Loans it services and cooperate in providing information to the OTS
and the FDIC and to comparable regulatory authorities supervising Holders of the Certificates and the
examiners and supervisory agents of the OTS, the FDIC and such other authorities, and access to the
documentation regarding the Mortgage Loans required by applicable regulations of the OTS and the FDIC.
Such access shall be afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices of the Servicer designated by it provided, that the Servicer
shall be entitled to be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access. Nothing in this Section shall limit the obligation of a
Servicer to observe any applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
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SECTION 3.17. Special Servicing Agreements. Each Servicer may enter into a special servicing
agreement with an unaffiliated Holder of 100% Percentage Interest of the Class X Certificates, but such
Servicer will be required to continue otherwise to service the Mortgage Loans it services in accordance
with the provisions of this Agreement. Such agreement shall be subject to each Rating Agency's
acknowledgement that the ratings of the Certificates in effect immediately prior to the entering into
such agreement would not be qualified, downgraded or withdrawn and the Certificates would not be placed
on credit review status (except for possible upgrading) as a result of such agreement. Any such
agreement may contain provisions whereby such holder may instruct the related Servicer to commence or
delay foreclosure proceedings with respect to delinquent Mortgage Loans and will contain provisions for
the deposit of cash by the holder that would be available for distribution to Certificateholders if
Liquidation Proceeds are less than they otherwise may have been had such Servicer acted in accordance
with its normal procedures.
SECTION 3.18. [Reserved].
SECTION 3.19. [Reserved].
SECTION 3.20. [Reserved].
SECTION 3.21. [Reserved].
SECTION 3.22. [Reserved].
SECTION 3.23. Prepayment Charge Reporting Requirements.
Promptly after each Distribution Date, each Servicer shall provide to the Trustee the following
information with regard to each Mortgage Loan it services that has prepaid during the related Prepayment
Period:
(i) loan number;
(ii) current Mortgage Rate;
(iii) current principal balance;
(iv) Prepayment Charge amount due; and
(v) Prepayment Charge amount collected.
SECTION 3.24. Statements to Trustee.
Not later than the 18th day (or if such day is not a Business Day, the immediately preceding
Business Day) of each month, each Servicer shall furnish to the Trustee an electronic file providing
loan level accounting data for the period ending on the last Business Day of the preceding month in the
format mutually agreed upon between the Servicer and the Trustee, including but not limited to
information sufficient to allow the Trustee to prepare the Monthly Statement described in Section
4.05(a).
SECTION 3.25. Indemnification.
(a) Each Servicer shall indemnify the Sellers, the Trust Fund, the Trustee, the Custodian, the
Depositor and their officers, directors, employees and agents and hold each of them harmless against
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any and all claims, losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and any other costs, fees and expenses that any of such parties may
sustain in any way related to the failure of such Servicer to perform its duties and service the
Mortgage Loans it services in compliance with the terms of this Agreement. The applicable Servicer
immediately shall notify the applicable Seller, the Trustee, the Custodian and the Depositor or any
other relevant party if a claim is made by a third party with respect to this Agreement or the
Mortgage Loans it services, assume (with the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld or delayed) 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 any of such parties in respect of such claim.
The applicable Servicer shall provide the Depositor and the Trustee with a written report of all
expenses and advances incurred by the Servicer pursuant to this Section 3.25(a), and the Servicer
shall promptly reimburse itself from the assets of the Trust Fund in its Servicer Collection Account
for all amounts advanced by it pursuant to the preceding sentence except when and to the extent a
determination has been made that the claim in any way relates to the failure of the Servicer to
service and administer the Mortgage Loans it services in material compliance with the terms of this
Agreement or the gross negligence, bad faith or willful misconduct of the Servicer. The provisions of
this paragraph shall survive the termination of this Agreement and the payment of the outstanding
Certificates.
(b) [Reserved].
(c) The Trustee immediately shall notify the Sellers, the Servicers and the Depositor or any other
relevant party if a claim is made by a third party with respect to this Agreement or the Mortgage
Loans, assume (with the prior written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed) 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 any of such parties in respect of such claim. The Trustee shall
provide the Servicers and the Depositor with a written report of all expenses and advances incurred by
the Trustee pursuant to this Section 3.25(c), and the Trustee shall promptly reimburse itself from the
assets of the Trust Fund in the Certificate Account for all amounts advanced by it pursuant to the
preceding sentence except when the claim in any way relates to the failure of the Trustee to perform
its duties in material compliance with the terms of this Agreement or the negligence, bad faith or
willful misconduct of the Trustee. The provisions of this paragraph shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
SECTION 3.26. Nonsolicitation.
For as long as a Servicer services Mortgage Loans, such Servicer covenants that it will not,
and that it will ensure that its affiliates and agents will not, directly solicit or provide information
for any other party to solicit for prepayment or refinancing of any of the Mortgage Loans by the related
Mortgagors. It is understood that the promotions undertaken by the Servicer which are directed to the
general public at large, or certain segments thereof, shall not constitute solicitation as that term is
used in this Section 3.26. In addition, and by way of further clarification, servicing the refinancing
needs of a Mortgagor who, without solicitation contacts a Servicer in connection with the refinance of
such Mortgage Loan, shall not constitute solicitation as that term is used in this Section 3.26.
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ARTICLE IV
DISTRIBUTIONS
SECTION 4.01. Advances.
(a) Subject to the conditions of this Article IV, each Servicer, as required below, shall make an
Advance and deposit such Advance in the applicable Servicer Collection Account. Each such Advance
shall be remitted to the Servicer Collection Account no later than 1:00 p.m. Eastern time on the
Servicer Advance Date in immediately available funds. A Servicer shall be obligated to make any such
Advance only to the extent that such advance would not be a Non-Recoverable Advance. If a Servicer
shall have determined that it has made a Non-Recoverable Advance or that a proposed Advance or a
lesser portion of such Advance would constitute a Non-Recoverable Advance, the Servicer shall deliver
(i) to the Trustee for the benefit of the Certificateholders, funds constituting the remaining portion
of such Advance, if applicable, and (ii) to the Depositor and each Rating Agency an Officer's
Certificate setting forth the basis for such determination. A Servicer may, in its sole discretion,
make an Advance with respect to the principal portion of the final Scheduled Payment on a Balloon
Loan, but the Servicer is under no obligation to do so; provided, however, that nothing in this
sentence shall affect the Servicer's obligation under this Section 4.01 to advance the interest
portion of the final Scheduled Payment with respect to a Balloon Loan as if such Balloon Loan were a
fully amortizing Mortgage Loan. If a Mortgagor does not pay its final Scheduled Payment on a Balloon
Loan when due, the Servicer shall Advance (unless it determines in its good faith judgment that such
amounts would constitute a Non-Recoverable Advance) a full month of interest (net of the Servicing
Fee) on the Stated Principal Balance thereof each month until its Stated Principal Balance is reduced
to zero.
In lieu of making all or a portion of such Advance from its own funds, a Servicer may (i) cause
to be made an appropriate entry in its records relating to the Servicer Collection Account that any
amount held for future distribution has been used by the Servicer in discharge of its obligation to make
any such Advance and (ii) transfer such funds from the Servicer Collection Account to the Certificate
Account. Any funds so applied and transferred shall be replaced by the Servicer by deposit in the
Servicer Collection Account no later than the close of business on the Servicer Advance Date on which
such funds are required to be distributed pursuant to this Agreement. A Servicer shall be entitled to
be reimbursed from its Servicer Collection Account for all Advances of its own funds made pursuant to
this Section as provided in Section 3.08. The obligation to make Advances with respect to any Mortgage
Loan shall continue until the earlier of (i) the date such Mortgage Loan is paid in full or (ii) the
date the related Mortgaged Property (or stock allocated to a dwelling unit, in the case of a Co-op Loan)
or related REO Property has been liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Trust Fund pursuant to any applicable provision of this Agreement, except as
otherwise provided in this Section 4.01.
(b) Notwithstanding anything in this Agreement to the contrary (including, but not limited to,
Sections 3.01 and 4.01(a) hereof), no Advance or Servicing Advance shall be required to be made
hereunder by a Servicer if such Advance or Servicing Advance would, if made, constitute a
Non-Recoverable Advance or a Non-Recoverable Servicing Advance. The determination by a Servicer that
it has made a Non-Recoverable Advance or a Non-Recoverable Servicing Advance or that any proposed
Advance or Servicing Advance, if made, would constitute a Non-Recoverable Advance or a Non-Recoverable
Servicing Advance, respectively, shall be evidenced by an Officer's Certificate of the Servicer
delivered to the Depositor and the Trustee. In addition, a Servicer shall not be required to advance
any Relief Act Shortfalls.
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SECTION 4.02. Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls.
No later than the Servicer Remittance Date immediately preceding each Distribution Date, each
Servicer shall remit to the Trustee an amount from its own funds equal to the Compensating Interest with
respect to such Servicer Remittance Date; and in case of such remittance, the Servicer shall not be
entitled to any recovery or reimbursement from the Depositor, the Trustee, the Trust Fund or the
Certificateholders. With respect to any Mortgage Loan and Distribution Date, to the extent that the
Prepayment Interest Shortfall exceeds Compensating Interest (such excess, a "Non-Supported Interest
Shortfall"), such Non-Supported Interest Shortfall shall reduce the Current Interest with respect to
each Class of Certificates, pro rata, based upon the amount of interest each such Class would otherwise
be entitled to receive on such Distribution Date. Notwithstanding the foregoing, a Servicer shall not
be obligated to pay Compensating Interest with respect to any Relief Act Shortfall.
SECTION 4.03. Distributions on the REMIC Interests.
(a) On each Distribution Date, funds then available in the Certificate Account shall be treated for
federal income tax purposes as applied to distributions on the interests issued in respect of REMIC I,
REMIC II and REMIC III as specified in this Section.
(b) (1) On each Distribution Date, the REMIC I Distribution Amount shall be
distributed by REMIC I to REMIC II on account of the REMIC I Regular Interests in the amounts and
with the priorities set forth in the definition thereof.
(2) On each Distribution Date, the REMIC II Distribution Amount shall be
distributed by REMIC II to REMIC III on account of the REMIC II Regular Interests in the amounts
and with the priorities set forth in the definition thereof.
(3) On each Distribution Date, the REMIC III Distribution Amount shall be
deemed to have been distributed by REMIC III to the Certificateholders on account of the REMIC III
Regular Interests represented thereby in the amounts and with the priorities set forth in the
definition thereof.
(4) On each Distribution Date, the amount, if any, deemed received by the
Class X Certificates in respect of REMIC III Regular Interest IO and under the X-AMB Swap Agreement
shall be deemed to have been paid on behalf of the Class X Certificates by the Supplemental
Interest Trust Trustee pursuant to Section 4.04(k) in respect of the Net Swap Payment owed to the
Swap Counterparty. On each Distribution Date, the amount, if any, received by the Supplemental
Interest Trust Trustee from the Swap Counterparty in respect of the Swap Agreement shall be deemed
to have been received by the Supplemental Interest Trust Trustee on behalf of the Class X
Certificates. On each Distribution Date, amounts paid to the Class A, Class M and Class B
Certificates pursuant to Section 4.04(f)(iv) in respect of Available Funds Cap Carryover shall be
deemed to have been paid by the Class X Certificateholder pursuant to the X-AMB Swap Agreement.
SECTION 4.04. Distributions.
(a) [Reserved].
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(b) On each Distribution Date, the Trustee shall make the following distributions from funds then
available in the Certificate Account, of an amount equal to the Interest Funds in the following order
of priority:
(i) to the Trustee, the Trustee Fee;
(ii) to the Supplemental Interest Trust, any Net Swap Payments owed to the Swap Counterparty;
(iii) to the Supplemental Interest Trust, any Swap Termination Payment owed by the Supplemental
Interest Trust to the Swap Counterparty (other than Defaulted Swap Termination Payments);
(iv) to each class of the Class A Certificates, on a pro rata basis, the Current Interest and any
Interest Carry Forward Amount with respect to each such class based upon the ratio of (x) the Current
Interest and Interest Carry Forward Amount for each class of the Class A Certificates to (y) the total
amount of Current Interest and any Interest Carry Forward Amount for the Class A Certificates;
(v) [Reserved];
(vi) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class B-1 and Class B-2
Certificates, in that order, the Current Interest for such class; and
(vii) any remainder pursuant to Section 4.04(f) hereof.
(c) On each Distribution Date, the Trustee shall distribute to the Class P Certificates from the
Certificate Account an amount equal to any Prepayment Charges received with respect to the Mortgage
Loans or paid by the applicable Servicer in respect of Prepayment Charges pursuant to this Agreement
during the related Prepayment Period.
(d) On each Distribution Date, the Trustee shall make the following distributions from the
Certificate Account of an amount equal to the Principal Distribution Amount in the following order of
priority until such amount shall have been fully distributed for such Distribution Date:
(i) to the Class A Certificates, the Class A Principal Distribution Amount will be distributed
sequentially to the Class A-1, Class A-2 and Class A-3 Certificates, in that order, until the
Certificate Principal Balance of each such class has been reduced to zero; provided, however, that in
the event that the aggregate Certificate Principal Balance of the Class A-1, Class A-2 and Class A-3
Certificates is greater than or equal to the aggregate Stated Principal Balance of the Mortgage Loans,
the Class A Principal Distribution Amount will be distributed pro rata to the Class A-1, Class A-2 and
Class A-3 Certificates based on the outstanding Certificate Principal Balances thereof, until the
Certificate Principal Balances of each class have been reduced to zero;
(ii) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class B-1 and Class B-2
Certificates, in that order, the Class M-1 Principal Distribution Amount, the Class M-2 Principal
Distribution Amount, the Class M-3 Principal Distribution Amount, the Class M-4 Principal Distribution
Amount, the Class B-1 Principal Distribution Amount and the Class B-2 Principal Distribution Amount,
respectively, for each such Class, until the Certificate Principal Balance of each class has been
reduced to zero; and
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(iii) any remainder pursuant to Section 4.04(f) hereof.
(e) [Reserved].
(f) On each Distribution Date, the Trustee shall make the following distributions up to the
following amounts from the Certificate Account of the remainders pursuant to Section 4.04(b)(vii) and
(d)(iii) hereof and each such distribution shall be made only after all distributions pursuant to
Sections 4.04(b) and (d) above shall have been made until such remainders shall have been fully
distributed for such Distribution Date:
(i) the Extra Principal Distribution Amount, as part of the Principal Distribution Amount;
(ii) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class B-1 and Class B-2
Certificates, in that order, any Interest Carry Forward Amount with respect to such class;
(iii) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class B-1 and Class B-2
Certificates, in that order, any Unpaid Realized Loss Amount for such class;
(iv) concurrently, to the Offered Certificates, on a pro rata basis based upon the Available Funds
Cap Carryover for each such Class, the Available Funds Cap Carryover; and
(v) the remainder to the Supplemental Interest Trust, to be distributed in accordance with the
priorities set forth in Section 4.04(k).
(g) [Reserved].
(h) On each Distribution Date, the Trustee shall allocate the remainder pursuant to Section
4.04(k)(xi) hereof (i) to the Trustee to reimburse amounts or pay indemnification amounts owing to the
Trustee pursuant to Section 6.03 and (ii) to the Class X Certificates and such distributions shall be
made only after all preceding distributions shall have been made until such remainder shall have been
fully distributed.
(i) On each Distribution Date, after giving effect to distributions on such Distribution Date, the
Trustee shall allocate the Applied Realized Loss Amount for the Certificates to reduce the Certificate
Principal Balances of the Class X Certificates and the Subordinated Certificates in the following
order of priority:
(i) to the Class X Certificates until the Class X Certificate Principal Balance is reduced to zero;
(ii) to the Class B-2 Certificates until the Class B-2 Certificate Principal Balance is reduced to
zero;
(iii) to the Class B-1 Certificates until the Class B-1 Certificate Principal Balance is reduced to
zero;
(iv) to the Class M-4 Certificates until the Class M-4 Certificate Principal Balance is reduced to
zero;
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(v) to the Class M-3 Certificates until the Class M-3 Certificate Principal Balance is reduced to
zero;
(vi) to the Class M-2 Certificates until the Class M-2 Certificate Principal Balance is reduced to
zero; and
(vii) to the Class M-1 Certificates until the Class M-1 Certificate Principal Balance is reduced to
zero.
All Realized Losses on the Mortgage Loans shall be allocated on each Distribution Date to the
REMIC I Regular Interests and the REMIC II Regular Interests as provided in the definition of REMIC I
Realized Losses and REMIC II Realized Losses, respectively.
Realized Losses allocated to the Class X Certificates shall, to the extent such Realized Losses
represent Realized Losses on an interest portion, be allocated to the REMIC III Regular Interest X-IO.
Realized Losses allocated to the Class X Certificates shall, to the extent such Realized Losses
represent Realized Losses on a principal portion, shall be deemed first to reduce the principal balance
of the REMIC III Regular Interest X-PO until such principal balance shall have been reduced to zero and
thereafter to reduce accrued and unpaid interest on the REMIC III Regular Interest X-IO.
(j) Subject to Section 9.02 hereof respecting the final distribution, on each Distribution Date the
Trustee shall make distributions to each Certificateholder of record on the preceding Record Date
either by wire transfer in immediately available funds to the account of such holder at a bank or
other entity having appropriate facilities therefor, if such Holder has so notified the Trustee at
least five (5) Business Days prior to the related Record Date or, if not, by check mailed by first
class mail to such Certificateholder at the address of such holder appearing in the Certificate
Register. Notwithstanding the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name of a Depository shall
be made to such Depository in immediately available funds.
In accordance with this Agreement, each Servicer shall prepare and deliver a report (the
"Remittance Report") to the Trustee in the form of a computer readable magnetic tape (or by such other
means as the Servicer and the Trustee may agree from time to time) containing such data and information
as to permit the Trustee to prepare the Monthly Statement to Certificateholders and make the required
distributions for the related Distribution Date. The Trustee will prepare the Monthly Report based
solely upon the information received from each Servicer.
(k) A separate trust is hereby established (the "Supplemental Interest Trust"), the corpus of which
shall be held by the Supplemental Interest Trust Trustee, in trust, for the benefit of the
Certificateholders. On the Closing Date, the Supplemental Interest Trust Trustee shall establish and
maintain in its name, as part of the Supplemental Interest Trust, a separate non-interest bearing
trust account for the benefit of the holders of the Certificates. Such account 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 Supplemental Interest Trust Trustee shall enforce all of the Supplemental Interest Trust's
rights and exercise any remedies under the Swap Agreement and, in the event the Swap Agreement is
terminated as a result of the designation by either party thereto of an Early Termination Date (as
defined therein), find a replacement counterparty to enter into a replacement swap agreement utilizing
the amounts of the net Swap Termination Payments received.
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Any Swap Termination Payment received by the Supplemental Interest Trust Trustee shall be
deposited in to the Supplemental Interest Trust and shall be used to make any upfront payment required
under a replacement swap agreement and any upfront payment received from the counterparty to a
replacement swap agreement shall be used to pay any Swap Termination Payment owed to the Swap
Counterparty.
Notwithstanding anything contained herein, in the event that a replacement swap agreement
cannot be obtained within 30 days after receipt by the Supplemental Interest Trust Trustee of the Swap
Termination Payment paid by the terminated Swap Counterparty, the Supplemental Interest Trust Trustee
shall deposit such Swap Termination Payment into a separate, non-interest bearing account established by
the Supplemental Interest Trust Trustee and the Supplemental Interest Trust Trustee shall, on each
Distribution Date following receipt of such Swap Termination Payment, withdraw from such account, an
amount equal to the Net Swap Payment, if any, that would have been paid to the Supplemental Interest
Trust by the original Swap Counterparty (computed in accordance with the original Swap Agreement
attached hereto as Exhibit M) and distribute such amount in accordance with Section 4.04 of this
Agreement. Any such account shall not be an asset of any REMIC. Any amounts remaining in such account
shall be distributed to the holders of the Class X Certificates on the Distribution Date following the
earlier of (i) the exercise of the option to terminate the Trust Fund by the holders Class X
Certificates and (ii) the termination date of the original Swap Agreement.
On any Distribution Date, any Swap Termination Payments or Net Swap Payments owed to the Swap
Counterparty will be paid out of, or any Net Swap Payments or Swap Termination Payments received from
the Swap Counterparty will be deposited into, the Supplemental Interest Trust. The Supplemental
Interest Trust will not be an asset of any REMIC. Funds in the Supplemental Interest Trust shall be
distributed in the following order of priority by the Supplemental Interest Trust Trustee:
(i) to the Swap Counterparty, all Net Swap Payments, if any, owed to the Swap Counterparty for such
Distribution Date;
(ii) to the Swap Counterparty, any Swap Termination Payment, other than a Defaulted Swap Termination
Payment, if any, owed to the Swap Counterparty;
(iii) to the Class A-1, Class A-2 and Class A-3 Certificates, on a pro rata basis, any Current
Interest and any Interest Carry Forward Amount with respect to such class to the extent unpaid from
Interest Funds;
(iv) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class B-1 and Class B-2
Certificates, in that order, any Current Interest for such class to the extent unpaid from Interest
Funds;
(v) to the Offered Certificates, to pay principal as described and in the same manner and order of
priority as set forth in Sections 4.04(d)(i) and 4.04(d)(ii) in order to maintain the
Overcollateralization Target Amount, and after giving effect to distributions from the Principal
Distribution Amount, including the Extra Principal Distribution Amount, for each such Class;
(vi) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class B-1 and Class B-2
Certificates, in that order, any Interest Carry Forward Amount with respect to such class to the extent
unpaid from Interest Funds and Principal Funds;
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(vii) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4, Class B-1 and Class B-2
Certificates, in that order, any Unpaid Realized Loss Amount for such class to the extent unpaid from
Interest Funds and Principal Funds;
(viii) concurrently, to the Offered Certificates, on a pro rata basis, any Available Funds Cap
Carryover to the extent not paid from Interest Funds or Principal Funds based on the amount of such
unpaid Available Funds Cap Carryover;
(ix) to the Swap Counterparty, any Defaulted Swap Termination Payment owed to the Swap Counterparty
to the extent not already paid;
(x) to the Class X Certificates in the following order of priority, (I) the Class X Current
Interest, (II) the Class X Interest Carry Forward Amount, (III) as principal on the Class X Certificates
until the Certificate Principal Balance of the Class X Certificates has been reduced to zero
(distributions pursuant to this clause (III) being made only to the extent of Interest Funds and
Principal Funds that would be remaining had distributions on such Distribution Date pursuant to prior
clauses of this Section 4.04(k) been made out of Interest Funds and Principal Funds (rather than out of
proceeds of the Swap Agreement), (IV) the Class X Unpaid Realized Loss Amount, (V) the amount of any
Overcollateralization Reduction Amount for such Distribution Date; and (VI) for any Distribution Date
after the Certificate Principal Balance of each Class of Class A, Class M and Class B Certificates has
been reduced to zero, the Overcollateralization Amount; and
(xi) the remainder pursuant to Section 4.04(h).
Upon termination of the Trust, any amounts remaining in the Supplemental Interest Trust shall
be distributed pursuant to the priorities set forth in this Section 4.04(k).
(l) With respect to the failure of the Swap Counterparty to perform any of its obligations under
the Swap Agreement, the breach by the Swap Counterparty of any of its representations and warranties
made pursuant to the Swap Agreement, or the termination of the Swap Agreement, the Supplemental
Interest Trust Trustee shall send any notices and make any demands, on behalf of the Supplemental
Interest Trust, as are required under the Swap Agreement.
(m) The Supplemental Interest Trust Trustee is hereby directed by the Depositor, on or before the
Closing Date, to sign the Swap Agreement on behalf of the Supplemental Interest Trust for the benefit
of the Certificateholders, in the form presented to it by the Depositor. The Supplemental Interest
Trust Trustee shall have no responsibility for the contents, adequacy or sufficiency of the Swap
Agreement, including, without limitation, any representations and warranties contained therein. Any
funds payable by the Trust under the Swap Agreement to the Swap Counterparty shall be paid by the
Depositor. Notwithstanding anything to the contrary contained herein or in the Swap Agreement, the
Supplemental Interest Trust Trustee shall not, individually or personally, have any liability to
perform any covenant either express or implied contained in the Swap Agreement and under no
circumstance shall the Supplemental Interest Trust Trustee be personally liable for the payment of any
amounts payable by the Supplemental Interest Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the Trust under the Swap
Agreement. In addition, the Supplemental Interest Trust Trustee shall be entitled to all of the same
protections, immunities, rights and indemnities as are provided in this Agreement to the Trustee.
(n) On the Distribution Date immediately following the last month during which a Prepayment Charge
may be assessed on a Mortgage Loan, or upon the termination of the Trust Fund pursuant to Section
9.01, an amount equal to the Class P Reserve Amount shall be withdrawn from the Certificate Account
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and distributed by the Trustee to Holders of the Class P Certificates until the Certificate Principal
Balance thereof has been reduced to zero. In addition, on each Distribution Date, all amounts
transferred from the Class P Reserve Account representing Prepayment Charges in respect of the
Prepayment Charge Loans received during the related Prepayment Period will be withdrawn from the
Certificate Account and distributed by the Trustee to Holders of the Class P Certificates and shall
not be available for distribution to the Holders of any other Class of Certificates.
(o) On the Closing Date, the Supplemental Interest Trust Trustee shall establish
and maintain in its name, as part of the Supplemental Interest Trust, a separate non-interest bearing
trust account for the benefit of the Swap Counterparty (the "Credit Support Annex Account"). Such
account shall be an Eligible Account, and collateral or any amounts credited thereto 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.
Collateral or any amounts received by the Supplemental Interest Trust Trustee from the
Swap Counterparty under the credit support annex of the Swap Agreement shall be credited to the Credit
Support Annex Account. Collateral or any amounts credited to the Credit Support Annex Account shall be
distributed in accordance with the credit support annex of the Swap Agreement.
Collateral or any amounts credited to the Credit Support Annex Account shall be
invested in Permitted Investments. The Swap Counterparty shall be the beneficial owner of the Credit
Support Annex Account for federal income tax purposes and shall direct the Supplemental Interest Trust
Trustee as to the investment of collateral or any amounts credited thereto. In the absence of written
instructions from the Swap Counterparty regarding the investment of collateral or any amounts credited
to the Credit Support Annex Account, such collateral or amounts shall be invested in subparagraph (ix) of
the definition of Permitted Investments. All income and gain earned upon such investment shall be
deposited into the Credit Support Annex Account and returned to the Swap Counterparty in accordance with
the terms of the credit support annex of the Swap Agreement. Neither the Trustee nor the Supplemental
Interest Trust Trustee shall be liable for the selection of investments or any losses incurred on such
investments.
Upon termination of the Trust Fund, collateral or any amounts credited to the Credit
Support Annex Account shall be distributed in accordance with the credit support annex of the Swap
Agreement.
SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date based solely on information provided by the Servicers
(which information is not required to include any prediction of future performance as to which such
report relates), the Trustee shall prepare and make available on its website located at
"▇▇▇.▇▇▇▇▇▇.▇▇▇/▇▇▇" to each Holder of a Class of Certificates of the Trust Fund, the Servicers, the
Swap Counterparty, the Rating Agencies and the Depositor a statement setting forth for the
Certificates:
(i) the date of such Distribution Date and the Determination Date for such Distribution Date;
(ii) for each Class, the applicable Record Date and Accrual Period;
(iii) the amount of the related distribution to Holders of each Class allocable to principal,
separately identifying (A) the aggregate amount of any Principal Prepayments included therein, (B) the
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aggregate of all scheduled payments of principal included therein, (C) the Extra Principal Distribution
Amount, if any, and (D) the aggregate amount of Prepayment Charges, if any;
(iv) the amount of such distribution to Holders of each Class allocable to interest, together with
any Non-Supported Interest Shortfalls allocated to each Class;
(v) the Class Certificate Principal Balance of each Class after giving effect (i) to all
distributions allocable to principal on such Distribution Date and (ii) the allocation of any Applied
Realized Loss Amounts for such Distribution Date;
(vi) the Pool Stated Principal Balance for such Distribution Date;
(vii) the amount of the Servicing Fee paid to or retained by the Servicers, the amount of the Trustee
Fee paid to or retained by the Trustee and any amounts constituting reimbursement or indemnification of
the Servicers or Trustee;
(viii) the amount of the Trustee Fee retained by the Trustee with respect to such Distribution Date;
(ix) the Pass-Through Rate for each Class of Certificates for such Distribution Date;
(x) the amount of Advances included in the distribution on such Distribution Date, the aggregate
amount of Advances outstanding as of the close of business on such Distribution Date and the amount of
Advances reimbursed since the previous Distribution Date;
(xi) the amount of Servicing Advances made since the previous Distribution Date and the aggregate
amount of Servicing Advances outstanding as of the close of business on such Distribution Date;
(xii) the number and aggregate Stated Principal Balance of the Mortgage Loans, the Net Rate, the
weighted average remaining term to maturity of the Mortgage Loans and the cumulative amount of Principal
Prepayments, each as of the close of business on the last day of the calendar month preceding such
Distribution Date;
(xiii) the cumulative amount of (A) Realized Losses and (B) Applied Realized Loss Amounts to date, in
the aggregate;
(xiv) the amount of (A) Realized Losses and (B) Applied Realized Loss Amounts with respect to such
Distribution Date, in the aggregate;
(xv) the number and aggregate principal amounts of Mortgage Loans (A) Delinquent (exclusive of
Mortgage Loans in foreclosure) in 30-day increments until foreclosure or other disposition and (B) in
foreclosure, (C) in bankruptcy and (D) that are REO Properties, in each case as of the close of business
on the last day of the calendar month preceding such Distribution Date, in the aggregate;
(xvi) with respect to any Mortgage Loan that became an REO Property during the preceding calendar
month, the loan number and Stated Principal Balance of such Mortgage Loan as of the close of business on
the last day of the calendar month preceding such Distribution Date and the date of acquisition thereof,
in the aggregate and with respect to the Mortgage Loans;
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(xvii) the total number and principal balance of any REO Properties as of the close of business on the
last day of the calendar month preceding such Distribution Date, in the aggregate;
(xviii) the aggregate Stated Principal Balance of all Liquidated Loans as of the preceding Distribution
Date, in the aggregate;
(xix) whether a Stepdown Trigger Event has occurred and is in effect;
(xx) with respect to each Class of Certificates, any Interest Carry Forward Amount with respect to
such Distribution Date for each such Class, any Interest Carry Forward Amount paid for each such Class
and any remaining Interest Carry Forward Amount for each such Class;
(xxi) the number and Stated Principal Balance (as of the preceding Distribution Date) of any Mortgage
Loans which were purchased or repurchased during the preceding Due Period and since the Cut-off Date;
(xxii) the number of Mortgage Loans for which Prepayment Charges were received during the related
Prepayment Period and, for each such Mortgage Loan, the amount of Prepayment Charges received during the
related Prepayment Period and in the aggregate of such amounts for all such Mortgage Loans since the
Cut-off Date;
(xxiii) the amount and purpose of any withdrawal from the Servicer Collection Accounts pursuant to
Section 3.08(a)(viii);
(xxiv) the amount of any payments to each Class of Certificates that are treated as payments received
in respect of a REMIC "regular interest" or REMIC "residual interest" and the amount of any payments to
each Class of Certificates that are not treated as payments received in respect of a REMIC "regular
interest" or REMIC "residual interest";
(xxv) as of each Distribution Date, the amount, if any, to be deposited in the Supplemental Interest
Trust pursuant to the Swap Agreement as described in Section 4.04(k) and the amount thereof to be paid
to the Offered Certificates as described in Section 4.04(k) hereof;
(xxvi) any expenses or indemnification amounts paid by the Trust, the specific purpose of each payment
and the parties to whom such payments were made;
(xxvii) any material modifications, extensions or waivers as to Mortgage Loan terms, fees, penalties or
payments since the previous Distribution Date and cumulatively since the Cut-off Date;
(xxviii) unless such information is set forth in the Form 10-D relating to such Distribution Date or an
appropriate Form 8-K, and provided the Trustee is reasonably able to include such information on the
statement, any material breaches of representations and warranties relating to the Mortgage Loans and
any material breach of covenants hereunder; and
(xxix) the number and aggregate principal balance of any Mortgage Loans repurchased by the Depositor
from the Trust since the previous Distribution Date.
(b) The Trustee will make the Monthly Statement (and, at its option, any additional files
containing the same information in an alternative format) available each month to Certificateholders,
other parties to this Agreement and any other interested parties via the Trustee's Internet website.
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The Trustee's Internet website shall initially be located at "▇▇▇.▇▇▇▇▇▇.▇▇▇/▇▇▇". Assistance in
using the website can be obtained by calling the Trustee's customer service desk at 1-800-934-6802.
Parties that are unable to use the website are entitled to have a paper copy mailed to them via first
class mail by calling the customer service desk and indicating such. The Trustee shall have the right
to change the way the monthly statements to Certificateholders are distributed in order to make such
distribution more convenient and/or more accessible to the above parties, and the Trustee shall
provide timely and adequate notification to all above parties regarding any such changes.
The Trustee shall also be entitled to rely on but shall not be responsible for the content or
accuracy of any information provided by third parties for purposes of preparing the monthly statement
and may affix thereto any disclaimer it deems appropriate in its reasonable discretion (without
suggesting liability on the part of any other party hereto).
As a condition to access the Trustee's internet website, the Trustee may require registration
and the acceptance of a disclaimer. The Trustee will not be liable for the dissemination of information
in accordance with this Agreement.
(c) [Reserved].
(d) If so requested in writing within a reasonable period of time after the end of each calendar
year, the Trustee shall make available on its website or cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder of record, a statement containing the
information set forth in clauses (a)(i) without regard to subclauses (A)-(D) thereof and (a)(ii) of
this Section 4.05 aggregated for such calendar year or applicable portion thereof during which such
Person was a Certificateholder. Such obligation of the Trustee shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the Trustee pursuant to
any requirements of the Code as are from time to time in effect.
(e) Upon filing with the Internal Revenue Service, the Trustee shall furnish to the Holder of the
Class R Certificate each Form 1066 and each Form 1066Q, upon written request, and shall respond
promptly to written requests made not more frequently than quarterly by any Holder of a Class R
Certificate with respect to the following matters:
(i) The original projected principal and interest cash flows on the Closing Date on each Class of
regular and residual interests created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows as of the end of any calendar quarter
with respect to each Class of regular and residual interests created hereunder and the Mortgage Loans,
based on the Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate assumptions used in determining the projected
principal and interest cash flows described above;
(iv) The original issue discount (or, in the case of the Mortgage Loans, market discount) or premium
accrued or amortized through the end of such calendar quarter with respect to each Class of regular or
residual interests created hereunder and to the Mortgage Loans, together with each constant yield to
maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage Loans or the regular interests
created hereunder, including the timing and amount of any cancellation of indebtedness income of the
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REMICs with respect to such regular interests or bad debt deductions claimed with respect to the
Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the REMICs; and
(vii) Any taxes (including penalties and interest) imposed on the REMICs, including, without
limitation, taxes on "prohibited transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall be provided by the
Depositor pursuant to Section 8.12.
(f) Based solely on information provided by the Servicers, the Trustee shall prepare and make
available a monthly statement to each of Bloomberg L.P., Intex Solutions, Inc., and LoanPerformance,
Inc. containing such mortgage loan data elements as are reasonably available to the Trustee, in such
data format as may be reasonably requested by such services.
SECTION 4.06. Class P Reserve Account.
(a) On or before the Closing Date, the Trustee shall establish a Class P Reserve Account
on behalf of the Holders of the Class P Certificates. The Class P Reserve Account must be an Eligible
Account. The Class P Reserve Account shall be entitled "Class P Reserve Account, U.S. Bank National
Association as Trustee for the benefit of holders of Wachovia Mortgage Loan Trust, Asset-Backed
Certificates, Series 2006-ALT1" (the "Class P Reserve Account"). On the Closing Date, the Depositor
will cause, on behalf of the Trust, the Class P Reserve Amount to be deposited into the Class P Reserve
Account. In addition, all amounts received by a Servicer in connection with Prepayment Charges on the
Prepayment Charge Loans shall be remitted by the applicable Servicer on the Servicer Remittance Date to
the Trustee and shall be deposited by the Trustee into the Class P Reserve Account, at the direction of
the Servicer, upon receipt thereof. Funds on deposit in the Class P Reserve Account shall remain
uninvested and shall be held in trust by the Trustee for the holder of the Class P Certificates.
(b) On the Business Day prior to each Distribution Date, the Trustee shall withdraw the
amount then on deposit in the Class P Reserve Account representing Prepayment Charges in respect of the
Prepayment Charge Loans received during the related Prepayment Period and deposit such amount into the
Certificate Account to be distributed to the Holders of the Class P Certificates in accordance with
Section 4.04(n).
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as exhibits. The
Certificates shall be issuable in registered form, in the minimum dollar denominations, integral dollar
multiples in excess thereof (except that one Certificate of each Class may be issued in a different
amount which must be in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
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Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
________________________________________________________________________________________________________________
A-1 $25,000.00 $1000.00 $236,585,000
A-2 $25,000.00 $1000.00 $87,995,000
A-3 $25,000.00 $1000.00 $109,376,000
M-1 $25,000.00 $1000.00 $7,355,000
M-2 $25,000.00 $1000.00 $3,677,000
M-3 $25,000.00 $1000.00 $4,367,000
M-4 $25,000.00 $1000.00 $2,068,000
B-1 $25,000.00 $1000.00 $2,758,000
B-2 $25,000.00 $1000.00 $2,528,000
X (1) (1) $2,992,870.24
R (2) (2) (2)
P (3) (3) $100.00
___________________
(1) The Class X Certificates shall not have minimum dollar denominations and shall be issued in a
minimum percentage interest of 5%, with additional amounts issued in increments of 1%.
(2) The Class R Certificate shall not have minimum dollar denominations or a certificate notional
balance and shall be issued in a minimum percentage interest of 100%.
(3) The Class P Certificates shall not have minimum dollar denominations and shall be issued in a
minimum percentage interest of 5%, with additional amounts issued in increments of 1%.
The Certificates shall be executed by manual or facsimile signature on behalf of the Trustee by
an authorized officer. Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased to be so authorized
prior to the authentication and delivery of such Certificates or did not hold such offices at the date
of such authentication and delivery. 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 set forth as attached hereto executed by the Trustee by manual
signature, and such certificate of authentication upon any Certificate shall be conclusive evidence, and
the only evidence, that such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. On the Closing Date, the Trustee shall
authenticate the Certificates to be issued at the written direction of the Depositor, or any Affiliate
thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance with the provisions of
Section 5.09 hereof, a Certificate Register for the Trust Fund in which, subject to the provisions of
subsections (b) and (c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and exchanges of Certificates as
herein provided. Upon surrender for registration of Transfer of any Certificate, the Trustee shall
authenticate and deliver, in the name of the designated transferee or transferees, one or more new
Certificates of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for other Certificates of
the same Class in authorized denominations and evidencing the same aggregate Percentage Interest upon
surrender of the Certificates to be exchanged at the office or agency of the Trustee. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute, authenticate and deliver the
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Certificates that the Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the holder thereof or his
attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any registration of Transfer or
exchange of Certificates, but payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be canceled and subsequently
destroyed by the Trustee in accordance with the Trustee's customary procedures.
(b) No Transfer of a Class X, Class P or Class R Certificate shall be made unless such Transfer is
made pursuant to an effective registration statement under the Securities Act and any applicable state
securities laws or is exempt from the registration requirements under the Securities Act and such
state securities laws. In the event that a Transfer is to be made in reliance upon an exemption from
the Securities Act and such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such Transfer and such Certificateholder's prospective
transferee shall (except with respect to the initial transfer of a Class X or Class P Certificate by
Wachovia Capital Markets, LLC) each certify to the Trustee in writing the facts surrounding the
Transfer in substantially the form set forth in Exhibit F (the "Transferor Certificate") and (i)
deliver a letter in substantially the form of either Exhibit G (the "Investment Letter"), Exhibit H
(the "Rule 144A Letter") or Exhibit J (the "Regulation S Letter") or (ii) there shall be delivered to
the Trustee an Opinion of Counsel that such Transfer may be made pursuant to an exemption from the
Securities Act, which Opinion of Counsel shall not be an expense of the Depositor or the Trustee. The
Depositor shall provide to any Holder of a Class X, Class P or Class R Certificate and any prospective
transferee designated by any such Holder, information regarding the related Certificates and the
Mortgage Loans and such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) for Transfer of any such Certificate without registration
thereof under the Securities Act pursuant to the registration exemption provided by Rule 144A or
Regulation S. The Trustee shall cooperate with the Depositor in providing the Rule 144A or Regulation
S information referenced in the preceding sentence, including providing to the Depositor such
information in the possession of the Trustee regarding the Certificates, the Mortgage Loans and other
matters regarding the Trust Fund as the Depositor shall reasonably request to meet its obligation
under the preceding sentence. Each Holder of a Class X, Class P or Class R Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Depositor and the Trustee against
any liability that may result if the Transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of an Restricted Certificate that is a Class R Certificate may be made to any
Person that is an employee benefit plan subject to Title I of ERISA, a plan subject to Section 4975 of
the Code or a plan subject to any state, local, federal, non-U.S. or other law substantively similar to
the foregoing provisions of ERISA or the Code ("Similar Law") (collectively, a "Plan"), or to any Person
directly or indirectly acquiring such Certificate for, on behalf of, or with any assets of any such
Plan. Each Person to whom a Class R Certificate is to be transferred shall be required or deemed to
represent that it is not a Plan.
No transfer of an ERISA-Restricted Certificate (other than the Class R Certificate) shall be
made to any Person unless the Trustee has received (A) a representation that such transferee is not a
Plan and is not directly or indirectly acquiring the Certificate for, on behalf of, or with the assets
of any such Plan, (B) if the Certificate has been the subject of an ERISA-Qualifying Underwriting, a
representation that such transferee is an insurance company that is acquiring the Certificate with
assets contained in an "insurance company general account," as defined in Section V(e) of Prohibited
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Transaction Class Exemption ("PTCE") 95-60, and the acquisition and holding of the Certificate are
covered and exempt under Sections I and III of PTCE 95-60, or (C) solely in the case of a Definitive
Certificate, an Opinion of Counsel satisfactory to the Trustee, and upon which the Trustee shall be
entitled to rely, to the effect that the acquisition and holding of such Certificate will not constitute
or result in a nonexempt prohibited transaction under Title I of ERISA or Section 4975 of the Code, or a
violation of Similar Law, and will not subject the Trustee, the Servicers or the Depositor to any
obligation in addition to those expressly undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Servicers or the Depositor.
Except in the case of Definitive Certificates, for purposes of the two immediately preceding
paragraphs of this Subsection 5.02(b), other than clause (C) in the immediately preceding paragraph, the
representations as set forth therein shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA Restricted Certificate (or the acceptance by a Certificate Owner of
the beneficial interest in any Class of ERISA Restricted Certificates).
Notwithstanding any other provision herein to the contrary, any purported transfer of an ERISA
Restricted Certificate to or on behalf of a Plan without the delivery to the Trustee of a representation
or an Opinion of Counsel satisfactory to the Trustee as described above shall be void and of no effect.
The Trustee shall not be under any liability to any Person for any registration or transfer of any ERISA
Restricted Certificate that is in fact not permitted by this Section 5.02(b), nor shall the Trustee be
under any liability for 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 Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA Restricted Certificate that was in
fact a Plan and that held such Certificate in violation of this Section 5.02(b) all payments made on
such ERISA Restricted Certificate at and after the time it commenced such holding. Any such payments so
recovered shall be paid and delivered to the last preceding Holder of such Certificate that is not a
Plan.
(c) Each Person who has or who acquires any Ownership Interest in a Class R Certificate shall be
deemed by the acceptance or acquisition of such Ownership Interest to have agreed to be bound by the
following provisions, and the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class R Certificate shall be a
Permitted Transferee and shall promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be purchased, transferred or sold, directly
or indirectly, except in accordance with the provisions hereof. No Ownership Interest in a Class R
Certificate may be registered on the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Class R Certificate unless, in addition to the certificates required to be
delivered to the Trustee under subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed transferee in the form attached
hereto as Exhibit E-1 and an affidavit of the proposed transferor in the form attached hereto as Exhibit
E-2. In the absence of a contrary instruction from the transferor of a Class R Certificate, declaration
(11) in Appendix A of the Transfer Affidavit may be left blank. If the transferor requests by written
notice to the Trustee prior to the date of the proposed transfer that one of the two other forms of
declaration (11) in Appendix A of the Transfer Affidavit be used, then the requirements of this Section
5.02(c)(ii) shall not have been satisfied unless the Transfer Affidavit includes such other form of
declaration.
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(iii) Each Person holding or acquiring any Ownership Interest in a Class R Certificate shall agree
(A) to obtain a Transfer Affidavit from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit from any Person for whom
such Person is acting as nominee, trustee or agent in connection with any Transfer of a Class R
Certificate and (C) not to Transfer its Ownership Interest in a Class R Certificate or to cause the
Transfer of an Ownership Interest in a Class R Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee. Further, no transfer, sale or other
disposition of any Ownership Interest in a Class R Certificate may be made to a person who is not a U.S.
Person (within the meaning of Section 7701 of the Code) unless such person furnishes the transferor and
the Trustee with a duly completed and effective Internal Revenue Service Form W-8ECI (or any successor
thereto) and the Trustee consents to such transfer, sale or other disposition in writing.
(iv) Any attempted or purported Transfer of any Ownership Interest in a Class R Certificate in
violation of the provisions of this Section 5.02(c) shall be absolutely null and void and shall vest no
rights in the purported Transferee. If any purported transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Class R Certificate that is in fact not permitted by Section 5.02(b) and
this Section 5.02(c) or for 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 after receipt of the related Transfer Affidavit. The Trustee shall be entitled
but not obligated to recover from any Holder of a Class R Certificate that was in fact not a Permitted
Transferee at the time it became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at and after either such time. Any
such payments so recovered by the Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
The restrictions on Transfers of a Class R Certificate set forth in this Section 5.02(c) shall
cease to apply (and the applicable portions of the legend on a Class R Certificate may be deleted) with
respect to Transfers occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion of
Counsel shall not be an expense of the Trustee or the Depositor, to the effect that the elimination of
such restrictions will not cause any of the REMICs provided for herein to fail to qualify as a REMIC at
any time that the Certificates are outstanding or result in the imposition of any tax on the Trust Fund,
any REMIC provided for herein, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class R Certificate hereby consents to any amendment of this Agreement that,
based on an Opinion of Counsel furnished to the Trustee, is reasonably necessary (a) to ensure that the
record ownership of, or any beneficial interest in, a Class R Certificate is not transferred, directly
or indirectly, to a Person that is not a Permitted Transferee and (b) to provide for a means to compel
the Transfer of a Class R Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
(d) The transferor of the Class R Certificate shall notify the Trustee in writing upon the transfer
of the Class R Certificate.
(e) The preparation and delivery of all certificates, opinions and other writings referred to above
in this Section 5.02 shall not be an expense of the Trust Fund, the Depositor or the Trustee.
(f) Each Holder of an Offered Certificate or any interest therein shall be deemed to have
represented, by its acquisition or holding of such Offered Certificate or any interest therein, that
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as of any date prior to the termination of the Swap Agreement, at least one of PTCE 84-14, 90-1,
91-38, 95-60, 96-23 or other applicable exemption applies to such Holder's right to receive payments
from the Supplemental Interest Trust.
(g) Notwithstanding anything to the contrary contained herein, the Trustee shall
not permit the transfer of a beneficial interest in a Class X Certificate unless the transferee executes
and delivers to the Trustee any certification that is required pursuant to Section 8.12(c) prior to
transfer.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Certificate and of the ownership thereof
and (b) there is delivered to the Trustee such security or indemnity as may be required by it to save it
harmless, then, in the absence of notice to the Trustee that such Certificate has been acquired by a
bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor and
Percentage Interest. In connection with the issuance of any new Certificate under this Section 5.03,
the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of the
Trustee and its counsel) connected therewith. Any replacement Certificate issued pursuant to this
Section 5.03 shall constitute complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time.
All Certificates surrendered to the Trustee under the terms of this Section 5.03 shall be canceled and
destroyed by the Trustee in accordance with its standard procedures without liability on its part.
SECTION 5.04. Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving distributions as provided in
this Agreement and for all other purposes whatsoever, and neither the Trustee, nor any agent of the
Trustee, shall be affected by any notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing from the Trustee,
(b) state that such Certificateholders desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit, or if the Depositor shall request such
information in writing from the Trustee, then the Trustee shall, within ten Business Days after the
receipt of such request, provide the Depositor or such Certificateholders at such recipients' expense
the most recent list of the Certificateholders of the Trust Fund held by the Trustee, if any. The
Depositor and every Certificateholder, by receiving and holding a Certificate, agree that the Trustee
shall not be held accountable by reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such information was derived.
SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the form of one or more
typewritten Certificates representing the Book-Entry Certificates, to be delivered to the Depository by
or on behalf of the Depositor. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no Certificate Owner of a
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Book-Entry Certificate will receive a definitive certificate representing such Certificate Owner's
interest in such Certificates, except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the Certificate Owners of the
Book-Entry Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor and the Trustee may deal with the Depository and the Depository Participants for
all purposes (including the making of distributions) as the authorized representative of the
respective Certificate Owners of the Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred by the Trustee except to
another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry Certificates shall be
exercised only through the Depository and the Depository Participants and shall be limited to those
established by law and agreements between the Owners of the Book-Entry Certificates and the Depository
and/or the Depository Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 5.08, the Depository will make book-entry transfers among
the Depository Participants and receive and transmit distributions of principal and interest on the
related Certificates to such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges and expenses from its
Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants; and
(g) to the extent that the provisions of this Section conflict with any other provisions of this
Agreement, the provisions of this Section shall control.
For purposes of any provision of this Agreement requiring or permitting actions with the
consent of, or at the direction of, Certificateholders evidencing a specified percentage of the
aggregate unpaid principal amount of any Class of Certificates, such direction or consent may be given
by Certificate Owners (acting through the Depository and the Depository Participants) owning Book-Entry
Certificates evidencing the requisite percentage of principal amount of such Class of Certificates.
SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to Certificateholders of the
Class with respect to which Book-Entry Certificates have been issued, unless and until Definitive
Certificates shall have been issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any Certificates, (a) the
Depository or the Depositor advises the Trustee that the Depository is no longer willing, qualified or
able to discharge properly its responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor, (b) the Depositor notifies the
Trustee of its intent to terminate the book-entry system through the Depository and, upon receipt of
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notice of such intent from the Depository, the Certificate Owners of the Book-Entry Certificates agree
to initiate such termination or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of the Voting Rights
evidenced by any Class of Book-Entry Certificates advise the Trustee and the Depository in writing
through the Depository Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no longer in the best interests
of the Certificate Owners of such Class, then the Trustee shall notify all Certificate Owners of such
Book-Entry Certificates, through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners of such Class requesting the same. The
Depositor shall provide the Trustee with an adequate inventory of certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon surrender to the Trustee of any such
Certificates by the Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall authenticate and deliver such Definitive Certificates. Neither the
Depositor nor the Trustee shall be liable for any delay in delivery of such instructions and each may
conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of
such Definitive Certificates, all references herein to obligations imposed upon or to be performed by
the Depository shall be deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates, and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an office or offices or
agency or agencies where Certificates may be surrendered for registration of transfer or exchange. The
Trustee initially designates its offices at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Transfer Unit/WMLT 2006-ALT1 as offices for such purposes. The Trustee will give prompt
written notice to the Certificateholders of any change in such location of any such office or agency.
ARTICLE VI
THE DEPOSITOR, THE SERVICERS AND THE CUSTODIAN
SECTION 6.01. Respective Liabilities of the Depositor, the Servicers and the Custodian.
The Depositor, the Servicers and the Custodian shall each be liable in accordance herewith only
to the extent of the obligations specifically and respectively imposed upon and undertaken by them
herein. By way of illustration and not limitation, the Depositor is not liable for the servicing and
administration of the Mortgage Loans, nor is it obligated by Section 7.01 to assume any obligations of
the Servicers or to appoint a designee to assume such obligations, nor is it liable for any other
obligation hereunder that it may, but it is not obligated to, assume unless it elects to assume such
obligation in accordance herewith.
SECTION 6.02. Merger or Consolidation of the Depositor, the Servicers or the Custodian.
Except as provided in the next paragraph, the Depositor, the Servicers or the Custodian will
each keep in full effect its existence, rights and franchises as a corporation or banking association
under the laws of the United States or under the laws of one of the States thereof and will each obtain
and preserve its qualification to do business as a foreign corporation in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and enforceability of this
Agreement, or any of the Mortgage Loans and to perform its respective duties under this Agreement.
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Any Person into which the Depositor, the Servicers or the Custodian may be merged or
consolidated, or any Person resulting from any merger or consolidation to which the Depositor, the
Servicers or the Custodian shall be a party, or any Person succeeding to the business of the Depositor,
the Servicers or the Custodian, shall be the successor of the Depositor, the Servicers or the Custodian,
as the case may be, hereunder, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary notwithstanding (except for the
execution of an assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be qualified to service
mortgage loans on behalf of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer, the Custodian and Others.
None of the Depositor, the Servicers or the Custodian nor any of the directors, officers,
employees or agents of the Depositor, the Servicers or the Custodian shall be under any liability to the
Trust Fund or the Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Servicers or the Custodian against any breach of
representations or warranties made by it herein or protect the Depositor, the Servicers or the Custodian
from any liability that would otherwise be imposed by reasons of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of obligations and duties
hereunder. The Depositor, the Servicers or the Custodian and any director, officer, employee or agent
of the Depositor, the Servicers or the Custodian 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
Depositor, the Servicer, the Custodian and any director, officer, employee or agent of the Depositor,
the Servicers or the Custodian shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense, incurred in connection with the performance of their duties under this
agreement or incurred in connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement or the Certificates, other
than any loss, liability or expense (i) incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless disregard of obligations and
duties hereunder or (ii) which does not constitute an "unanticipated expense" within the meaning of
Treasury Regulation Section 1.860G-1(b)(3)(ii). None of the Depositor, the Servicers nor the Custodian
shall be under any obligation to appear in, prosecute or defend any legal action that is not incidental
to its respective duties hereunder and that in its opinion may involve it in any expense or liability;
provided, however, that any of the Depositor, the Servicers or the Custodian in its discretion may
undertake any such action that it may deem necessary or desirable in respect of this Agreement and the
rights and duties of the parties hereto and the interests of the Trustee and 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 Depositor, the Servicers
and the Custodian shall be entitled to be reimbursed therefor out of the Servicers Collection Account as
provided by Section 3.08 hereof.
The provisions of this Section 6.03 shall survive any termination of this Agreement and the
resignation or removal of the Custodian.
SECTION 6.04. Limitation on Resignation of Servicer.
A Servicer shall not resign from the obligations and duties hereby imposed on it except upon
determination that its duties hereunder are no longer permissible under applicable law. Any such
determination permitting the resignation of a Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Trustee. No such resignation shall become effective until a successor
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servicer is appointed and has assumed the Servicer's responsibilities, duties, liabilities and
obligations hereunder. Any such resignation shall not relieve the Servicer of any of the obligations
specified in Section 7.01 and 7.02 as obligations that survive the resignation or termination of a
Servicer.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
Each Servicer shall, for so long as it acts as servicer under this Agreement, obtain and
maintain in force (a) a policy or policies of insurance covering errors and omissions in the performance
of its obligations as servicer hereunder, and (b) a fidelity bond in respect of its officers, employees
and agents. Each such policy or policies and bond shall, together, comply with the requirements from
time to time of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac for Persons performing servicing for mortgage loans purchased
by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac unless the Servicer has obtained a waiver of such requirements from ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac. Each Servicer shall provide the Trustee, upon request and reasonable notice, with
copies of such policies and fidelity bond or a certification from the insurance provider evidencing such
policies and fidelity bond. In the event that any such policy or bond ceases to be in effect, the
Servicer shall use its reasonable best efforts to obtain a comparable replacement policy or bond from an
insurer or issuer meeting the requirements set forth above as of the date of such replacement. Any such
policy or fidelity bond shall by its terms not be cancelable without thirty days' prior written notice
to the Trustee. A Servicer shall be deemed to have complied with this provision if an Affiliate of the
Servicer has such errors and omissions and fidelity bond coverage and, by the terms of such insurance
policy or fidelity bond, the coverage afforded thereunder extends to the Servicer.
ARTICLE VII
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following events:
(i) any failure by a Servicer to make any Advance, to deposit in the Servicer Collection Account or
the Certificate Account or remit to the Trustee any payment (excluding a payment required to be made
under Section 4.01 hereof) required to be made under the terms of this Agreement, which failure shall
continue unremedied for three Business Days and, with respect to a payment required to be made under
Section 4.01 hereof, for one Business Day, after the date on which written notice of such failure shall
have been given to the Servicer by the Trustee or the Depositor, or to the Trustee and the Servicer by
the Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the
Certificates; or
(ii) any failure by a Servicer to observe or perform in any material respect any other of the
covenants or agreements on the part of the Servicer contained in this Agreement or any representation or
warranty shall prove to be untrue in any material respect, which failure or breach shall continue
unremedied for a period of 60 days after the date on which written notice of such failure shall have
been given to the Servicer by the Trustee or the Depositor, or to the Trustee and the Depositor by the
Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates;
or
(iii) a decree or order of a court or agency or supervisory authority having jurisdiction for the
appointment of a receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have
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been entered against a Servicer and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 consecutive days; or
(iv) consent by a Servicer to the appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to the
Servicer or all or substantially all of the property of the Servicer; or
(v) admission by a Servicer in writing of its inability to pay its debts generally as they become
due, file a petition to take advantage of, or commence a voluntary case under, any applicable insolvency
or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations or
(vi) any failure by a Servicer to duly perform, within the required time period, its obligations
under Article XII of this Agreement.
If an Event of Default shall occur with respect to a Servicer, then, and in each and every such
case, so long as such Event of Default shall not have been remedied within the applicable grace period,
the Trustee shall, by notice in writing to such Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Servicer under this Agreement and in and to the Mortgage Loans
and the proceeds thereof, other than its rights as a Certificateholder hereunder. On or after the
receipt by the Servicer of such written notice, all authority and power of the Servicer hereunder,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee or a
successor servicer. To the extent the Event of Default resulted from the failure of a Servicer to make
a required Advance, the Trustee shall thereupon make any Advance described in Section 4.01 hereof
subject to Section 3.04 hereof. The Trustee is hereby authorized and empowered to execute and deliver,
on behalf of a 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. Unless expressly provided in such written notice, no such
termination shall affect any obligation of a Servicer to pay amounts owed pursuant to Article VIII.
Each Servicer agrees to cooperate with the Trustee in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the transfer to the Trustee of all
cash amounts which shall at the time be credited to the applicable Servicer Collection Account, or
thereafter be received with respect to the Mortgage Loans. The Trustee shall promptly notify the Rating
Agencies of the occurrence of an Event of Default or an event that, with notice, passage of time, other
action or any combination of the foregoing would be an Event of Default, such notice to be provided in
any event within two Business Days of such occurrence.
Notwithstanding any termination of the activities of a Servicer hereunder, the Servicer shall
be entitled to receive, out of any late collection of a Scheduled Payment on a Mortgage Loan it serviced
that was due prior to the notice terminating the Servicer's rights and obligations as Servicer hereunder
and received after such notice, that portion thereof to which the Servicer would have been entitled
pursuant to Sections 3.08(a)(i) through (viii), and any other amounts payable to the Servicer hereunder
the entitlement to which arose prior to the termination of its activities hereunder. Notwithstanding
anything herein to the contrary, upon termination of a Servicer hereunder, any liabilities of the
Servicer which accrued prior to such termination shall survive such termination.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time a Servicer receives a notice of termination pursuant to Section 7.01
hereof, the Trustee shall, to the extent provided in Section 3.04, be the successor to the Servicer in
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its capacity as servicer under this Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof and applicable law, including the obligation to make
advances pursuant to Section 4.01; provided, however, that the Trustee, acting in its capacity as
successor to the Servicer shall have no obligation to make Advances, to advance, expend or risk its own
funds or otherwise incur any financial liability in the performance of its duties if it shall have
reasonable grounds for believing that such funds are non-recoverable. As compensation therefor, subject
to the last paragraph of Section 7.01, the Trustee shall be entitled to all fees, costs and expenses
relating to the Mortgage Loans that the Servicer would have been entitled to if the Servicer had
continued to act hereunder. Notwithstanding the foregoing, if the Trustee has become the successor to a
Servicer in accordance with Section 7.01 hereof, the Trustee may, if it shall be unwilling to so act, or
shall, if it is prohibited by applicable law from making Advances pursuant to Section 4.01 hereof or if
it is otherwise unable to so act, appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution, the appointment of which successor shall not adversely
affect the then current rating of the Certificates by each Rating Agency, as the successor to a Servicer
hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. Any successor servicer shall be an institution that is a ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac
approved seller/servicer in good standing, that has a net worth of at least $15,000,000, and that is
willing to service the Mortgage Loans and executes and delivers to the Depositor and the Trustee an
agreement accepting such delegation and assignment, that contains an assumption by such Person of the
rights, powers, duties, responsibilities, obligations and liabilities of a Servicer (other than
liabilities of the Servicer under Section 6.03 hereof incurred prior to termination of the Servicer
under Section 7.01), with like effect as if originally named as a party to this Agreement; and provided
further that each Rating Agency acknowledges that its rating of the Certificates in effect immediately
prior to such assignment and delegation will not be qualified or reduced as a result of such assignment
and delegation. No appointment of a successor to a Servicer hereunder shall be effective until the
Trustee shall have consented thereto and written notice of such proposed appointment shall have been
provided by the Trustee to each Certificateholder. The Trustee shall not resign as servicer until a
successor servicer has been appointed and has accepted such appointment; provided, however, that the
Trustee may, if it shall become unwilling to continue to so act as servicer, or shall, if it shall
become prohibited by applicable law from making Advances pursuant to Section 4.01 hereof or if it is
otherwise unable to continue to so act, appoint, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution, the appointment of which successor shall
not adversely affect the then current rating of the Certificates by each Rating Agency, as the successor
to a Servicer hereunder in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder. Pending appointment of a successor to a Servicer hereunder, the
Trustee, unless the Trustee is prohibited by law from so acting, shall, subject to Section 3.04 hereof,
act in such capacity as hereinabove provided. 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 a Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such succession. Neither the
Trustee nor any other successor 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 or any
failure to perform, or any delay in performing, any duties or responsibilities hereunder, in either case
caused by the failure of a Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
Any successor to a Servicer as servicer shall give notice to the Mortgagors of such change of
servicer and shall, during the term of its service as servicer maintain in force the policy or policies
that the Servicer is required to maintain pursuant to Section 6.05.
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SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to a Servicer, the Trustee shall give
prompt written notice thereof to Certificateholders, the Depositor, any other Servicer, the Swap
Counterparty and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the Trustee shall transmit by mail
to all Certificateholders notice of each such Event of Default hereunder known to the Trustee, unless
such Event of Default shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of the Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events
of Default that may have occurred, each shall undertake to perform such duties and only such duties as
are specifically set forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it by this Agreement and use
the same degree of care and skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. In case an Event of Default or other default
by a Servicer or the Depositor hereunder shall occur and be continuing, the Trustee shall, at the
direction of the majority of the Certificateholders, or may, proceed to protect and enforce its rights
and the rights of the Certificateholders under this Agreement by a suit, action or proceeding in equity
or at law or otherwise, whether for the specific performance of any covenant or agreement contained in
this agreement or in aid of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by counsel and subject to
the foregoing, shall deem most effectual to protect and enforce any of the rights of the Trustee and the
Certificateholders.
The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports,
documents, orders or other instruments furnished to the Trustee that are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by the Servicers or the Depositor hereunder. If
any such instrument is found not to conform to the requirements of this Agreement in a material manner,
the Trustee shall take such action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to its satisfaction, the Trustee will provide notice to the
Certificateholders and take such further action as directed in writing by the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act or its own misconduct, its negligent failure to
perform its obligations in compliance with this Agreement, or any liability that would be imposed by
reason of its willful misfeasance or bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee
shall have actual knowledge, and after the curing of all such Events of Default that may have occurred,
the duties and obligations of the Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable, individually or as Trustee, except for the performance of
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such duties and obligations as are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee, and the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the requirements of this Agreement
that it reasonably believed in good faith to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(ii) the Trustee shall not, individually or as Trustee, be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee unless the Trustee was
negligent or acted in bad faith or with willful misfeasance;
(iii) the Trustee shall not be liable, individually or as Trustee, with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with the direction of the Holders in
accordance with this Agreement relating to 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;
(iv) the Trustee shall not be charged with knowledge of any default or Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Corporate Trust Office obtains actual
knowledge of such default or Event of Default or any officer of the Trustee receives written notice of
such default or Event of Default at its Corporate Trust Office. In the absence of such notice or actual
knowledge, the Trustee may conclusively assume that there is no default or Event of Default;
(v) the Trustee shall not have a 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 rerecording, refilling or
redepositing, as applicable, thereof, (B) to see to any insurance or (C) to see to the payment or
discharge of any tax, assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Fund; and
(vi) no provision in this Agreement shall require the Trustee to expend or risk its own funds
(including, without limitation, the making of any Advance by the Trustee as a successor Servicer) or
otherwise incur any personal financial liability in the performance of any of its duties as Trustee
hereunder, or in the exercise of any of its rights or powers, if the Trustee shall have reasonable
grounds for believing that repayment of funds or adequate indemnity against such risk of liability is
not reasonably assured to it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner or performance of, any of the
obligations of a Servicer under this Agreement, except, with respect to the Trustee, during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights, duties, powers and
privileges of, a predecessor Servicer in accordance with the terms of this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and conclusively rely upon and shall be fully protected in acting or
refraining from acting upon any resolution, Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or presented by the proper
party or parties;
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(ii) the Trustee may consult with counsel of its choice and any advice or Opinion of Counsel shall
be full and complete authorization and protection in respect of any action taken or suffered or omitted
by it hereunder in good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith
and believed by it to be authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder and after the curing of all Events of
Default that may have occurred, the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless requested in writing so to do
by the Holders of each Class of Certificates evidencing not less than 25% of the Voting Rights of such
Class;
(v) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, custodians, accountants or attorneys or independent
contractors, and the Trustee will not be responsible for any misconduct or negligence on the part of any
agent, custodian, accountant, attorney or independent contractor appointed with due care by it hereunder;
(vi) the Trustee shall not be required to expend its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such liability is not assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee, for any loss on any investment of
funds pursuant to this Agreement (other than as issuer of the investment security);
(viii) the Trustee shall not be charged with knowledge of any default or Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Corporate Trust Office obtains actual
knowledge of such default or Event of Default or any officer of the Trustee receives written notice of
such default or Event of Default at its Corporate Trust Office. In the absence of such notice or actual
knowledge, the Trustee may conclusively assume that there is no default or Event of Default;
(ix) [Reserved];
(x) the Trustee shall not be under any obligation to exercise any of the trusts or powers vested in
it by this Agreement or to make any investigation of matters arising hereunder or to institute, conduct
or defend any litigation hereunder or in relation hereto 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 reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby;
(xi) the right of the Trustee to perform any discretionary act enumerated in this Agreement shall
not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act;
(xii) if requested by a Servicer, the Trustee shall appoint the Servicer as the trustee's
attorney-in-fact in order to carry out and perform certain activities that are necessary or appropriate
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for the servicing and administration of the Mortgage Loans pursuant to this Agreement. Such appointment
shall be evidenced by a power of attorney in such form as may be agreed to by the Trustee and the
Servicer. The Trustee shall have no liability for any action or inaction of the Servicer in connection
with such power of attorney and the Trustee shall be indemnified by the Servicer for all liabilities,
costs, expenses incurred by the Trustee in connection with the Servicer's use or misuse of such powers
of attorney; and
(xiii) the Trustee shall not be required to give any bond or surety in respect of the execution of the
Trust created hereby or the powers granted hereunder.
(b) All rights of action under this Agreement or under any of the Certificates, enforceable by the
Trustee, may be enforced by the Trustee without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the benefit of all the Holders
of the Certificates, subject to the provisions of this Agreement. The Trustee shall not have a 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 rerecording, refilling or redepositing, as applicable, thereof, (B) to see
to any insurance or (C) to see to the payment or discharge of any tax, assessment, or other
governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Fund.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein shall be taken as the statements of the Depositor or the
Servicer, as the case may be, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representation as to the validity or sufficiency of this Agreement, of any Mortgage
Loan, or any related document other than with respect to the execution and authentication of the
Certificates, if it so executed or authorized the Certificates. The Trustee shall not be accountable
for the use or application by the Depositor or a Servicer of any funds paid to the Depositor or the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the Servicer Collection
Account or the Certificate Account by the Depositor or a Servicer.
The Trustee shall not at any time have any responsibility or liability for or with respect to
the legality, validity and enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority or for or with respect
to the sufficiency of the assets of the Trust Fund or its ability to generate the payments to be
distributed to Certificateholders under this Agreement, including, without limitation: the existence,
condition and ownership of any Mortgaged Property; the existence and enforceability of any hazard
insurance thereon (other than if the Trustee shall assume the duties of a predecessor Servicer pursuant
to Section 7.02 and thereupon only for the acts or omissions of the Trustee as successor Servicer); the
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validity of the assignment of any Mortgage Loan to the Trustee or of any intervening assignment; the
completeness of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other than if
the Trustee shall assume the duties of a predecessor Servicer pursuant to Section 7.02 and thereupon
only for the acts or omissions of the Trustee as successor Servicer); the compliance by the Depositor or
the Servicers with any warranty or representation made under this Agreement or in any related document
or the accuracy of any such warranty or representation; any investment of monies by or at the direction
of a Servicer or any loss resulting therefrom, it being understood that the Trustee shall remain
responsible for any part of the Trust Estate that either party may hold in its individual capacity; the
acts or omissions of any of the Depositor, any Servicer (other than if the Trustee shall assume the
duties of a predecessor Servicer pursuant to Section 7.02 and thereupon only for the acts or omissions
of the Trustee as successor Servicer), any subservicer or any Mortgagor; any action of any Servicer
(other than if the Trustee shall assume the duties of a predecessor Servicer pursuant to Section 7.02
and thereupon only for the acts or omissions of the Trustee as successor Servicer) or any subservicer
taken in the name of the Trustee; the failure of any Servicer or any subservicer to act or perform any
duties required of it as agent of the Trustee hereunder; or any action by the Trustee taken at the
instruction of a Servicer (other than if the Trustee shall assume the duties of a predecessor Servicer
pursuant to Section 7.02 and thereupon only for the acts or omissions of the Trustee as successor
Servicer); provided, however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights as it would have if it was not the Trustee.
SECTION 8.05. Trustee's Fees and Expenses. The Trustee will be entitled to the Trustee Fee for the
performance of its activities hereunder. In addition, the Trustee will be entitled to all income and
gain realized from any investment of funds in the Certificate Account, pursuant to Section 3.05(f), for
the performance of its activities hereunder.
SECTION 8.06. Indemnification and Expenses of Trustee.
(a) The Trustee and its respective directors, officers, employees and agents shall be entitled to
indemnification from the Trust Fund for any loss, liability or expense incurred in connection with any
legal proceeding or 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, including any applicable fees and expenses
payable hereunder, and 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:
(i) with respect to any such claim, the Trustee shall have given the Depositor and the Holders
written notice thereof promptly after the Trustee shall have knowledge thereof; provided that failure to
so notify shall not relieve the Trust Fund of the obligation to indemnify the Trustee; however, any
reasonable delay by the Trustee to provide written notice to the Depositor and the Holders promptly
after the Trustee shall have obtained knowledge of a claim shall not relieve the Trust Fund of the
obligation to indemnify the Trustee under this Section 8.06;
(ii) while maintaining control over its own defense, the Trustee shall cooperate and consult fully
with the Depositor in preparing such defense;
(iii) notwithstanding anything to the contrary in this Section 8.06, the Trust Fund shall not be
liable for settlement of any such claim by the Trustee entered into without the prior consent of the
Depositor, which consent shall not be unreasonably withheld; and
(iv) any such loss, liability or expense to be indemnified by the Trust Fund must constitute an
"unanticipated expense" of the Trust Fund within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii).
The provisions of this Section 8.06 shall survive any termination of this Agreement and the
resignation or removal of the Trustee and shall be construed to include, but not be limited to any loss,
liability or expense under any environmental law.
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(b) The Trustee shall be entitled to all reasonable expenses, disbursements and advancements
incurred or made by the Trustee in accordance with this Agreement (including fees and expenses of its
counsel and all persons not regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful misconduct or (ii) do not
constitute "unanticipated expenses" within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii).
SECTION 8.07. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or association organized and doing
business under the laws of a state or the United States of America, authorized under such laws to
exercise corporate trust powers having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit rating that would not
cause any of the Rating Agencies to reduce their respective ratings of any Class of Certificates below
the ratings issued on the Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or 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 8.07 the combined capital and surplus of such
corporation or 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 the provisions of this Section 8.07, the Trustee shall resign immediately in
the manner and with the effect specified in Section 8.08 hereof. The corporation or national banking
association serving as Trustee may have normal banking and trust relationships with the Depositor and
its Affiliates; provided, however, that such corporation cannot be an Affiliate of the Servicer, other
than the Trustee in its role as successor to the Servicer.
SECTION 8.08. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby created by (1)
giving written notice of resignation to the Depositor and the Servicers by mailing notice of resignation
by first class mail, postage prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the date specified in such
notice when, subject to Section 8.09, such resignation is to take effect, and (2) acceptance of
appointment by a successor trustee in accordance with Section 8.09 and meeting the qualifications set
forth in Section 8.07. If no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice or resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance with the provisions of
Section 8.07 hereof and shall fail to resign after written request thereto by the Depositor or (ii) the
Trustee shall become incapable of acting, or shall be adjudged as bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, (iii)(A) a tax is imposed with respect to the Trust Fund by any state in which the Trustee
or the Trust Fund is located, (B) the imposition of such tax would be avoided by the appointment of a
different trustee and (C) the Trustee fails to indemnify the Trust Fund against such tax, or (iv) the
Trustee fails to timely comply with Article XI hereof, then the Depositor may remove the Trustee, and
the Depositor shall promptly appoint a successor trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the Trustee and one copy of which shall be delivered to the
successor trustee.
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The Holders evidencing at least 51% of the Voting Rights of all Classes of Certificates may at
any time remove the Trustee, and the Depositor shall appoint a successor trustee by written instrument
or instruments, in triplicate, signed by such Holders or their attorneys-in-fact duly authorized, one
complete set of which instruments shall be delivered by the successor Trustee to the Servicer, one
complete set to the Trustee so removed and one complete set to the successor so appointed. Notice of
any removal of the Trustee shall be given to each Rating Agency by the successor trustee.
Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to
any of the provisions of this Section 8.08 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 8.09 hereof.
SECTION 8.09. Successor Trustee.
Any successor trustee appointed as provided in Section 8.08 hereof shall execute, acknowledge
and deliver to the Depositor and to its predecessor trustee an instrument accepting such appointment
hereunder and thereupon the resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein.
No successor trustee shall accept appointment as provided in this Section 8.09 unless at the
time of such acceptance such successor trustee shall be eligible under the provisions of Section 8.07
hereof and its appointment shall not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this Section 8.09, the
Depositor shall mail notice of the succession of such trustee hereunder to all Holders of Certificates.
If the Depositor fails to mail such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 8.10. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 8.07 hereof without the execution or
filing of any paper or further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding (except for the execution of an assumption agreement where such succession is
not effected by operation of law).
SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting
any legal requirements of any jurisdiction in which any part of the Trust Fund or property securing any
Mortgage Note may at the time be located, the applicable Servicer and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this Section 8.11, such
powers, duties, obligations, rights and trusts as the applicable Servicer and the Trustee may consider
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necessary or desirable. Any such co-trustee or separate trustee shall be subject to the written
approval of the applicable Servicer. The Trustee shall not be liable for the actions of any co-trustee;
provided the appointment of a co-trustee shall not relieve the Trustee of its obligations hereunder. If
a Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request
to do so, or in the case an Event of Default shall have occurred and be continuing, the Trustee alone
shall have the power to make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section 8.07 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee shall be required under
Section 8.09.
Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and
act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed upon the Trustee except for the
obligation of the Trustee under this Agreement to advance funds on behalf of the Servicers shall be
conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed (whether as Trustee hereunder or as
successor to a Servicer hereunder), the Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations (including the holding of title to
the Trust Fund or any portion thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of any act or omission of any
other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed to have been given to
each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the
conditions of this Article VIII. Each separate trustee and co-trustee, upon its acceptance of the
trusts conferred, shall be vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all
the provisions of this Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such
instrument shall be filed with the Trustee and a copy thereof given to the Servicers and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the Trustee its agent or
attorney-in-fact, with full power and authority, to the extent not prohibited by law, to do any lawful
act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
SECTION 8.12. Tax Matters.
(a) It is intended that each of the REMICs provided for herein shall constitute a REMIC, and that
the affairs of the Trust Fund shall be conducted so as to allow each such REMIC to qualify as, a "real
estate mortgage investment conduit" as defined in and in accordance with the REMIC Provisions. In
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furtherance of such intention, the Trustee covenants and agrees that it shall act as agent (and the
Trustee is hereby appointed to act as agent) on behalf of each of the REMICs provided for herein and
that in such capacity it shall: (a) prepare and file, or cause to be prepared and filed, in a timely
manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax Return (Form 1066 or any successor
form adopted by the Internal Revenue Service) and prepare and file or cause to be prepared and filed
with the Internal Revenue Service and applicable state or local tax authorities income tax or
information returns for each taxable year with respect to each of the REMICs provided for herein,
containing such information and at the times and in the manner as may be required by the Code or state
or local tax laws, regulations, or rules, and furnish or cause to be furnished to Certificateholders
the schedules, statements or information at such times and in such manner as may be required thereby;
(b) within thirty days of the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact for tax information
relating thereto, together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code for each of the REMICs
provided for herein; (c) make or cause to be made elections, on behalf of each of the REMICs provided
for herein to be treated as a REMIC on the federal tax return of such REMICs for their first taxable
years (and, if necessary, under applicable state law); (d) prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders and to the Internal Revenue Service and, if
necessary, state tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e) provide information
necessary for the computation of tax imposed on the transfer of a Class R Certificate to a Person that
is not a Permitted Transferee, or an agent (including a broker, nominee or other middleman) of a
Person that is not a Permitted Transferee, or a pass through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of computing and
furnishing such information may be charged to the Person liable for such tax); (f) to the extent that
they are under its control conduct the affairs of each of the REMICs provided for herein at all times
that any Certificates are outstanding so as to maintain the status of each of the REMICs provided for
herein as a REMIC under the REMIC Provisions; (g) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC status of any of the REMICs
provided for herein or result in the imposition of tax upon any such REMIC; (h) pay, from the sources
specified in the last paragraph of this Section 8.12, the amount of any federal, state and local
taxes, including prohibited transaction taxes as described below, imposed on each of the REMICs
provided for herein prior to the termination of the Trust Fund when and as the same shall be due and
payable (but such obligation shall not prevent the Trustee or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall not prevent the Trustee from withholding
payment of such tax, if permitted by law, pending the outcome of such proceedings); (i) sign or cause
to be signed federal, state or local income tax or information returns; (j) maintain records relating
to each of the REMICs provided for herein, including but not limited to the income, expenses, assets
and liabilities of each of the REMICs provided for herein, and the fair market value and adjusted
basis of the Trust Fund property determined at such intervals as may be required by the Code, as may
be necessary to prepare the foregoing returns, schedules, statements or information; and (k) as and
when necessary and appropriate, represent each of the REMICs provided for herein in any administrative
or judicial proceedings relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to any taxable year of any of the REMICs provided for herein,
enter into settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of any of the REMICs provided for herein, and otherwise act on
behalf of each of the REMICs provided for herein in relation to any tax matter involving any of such
REMICs or any controversy involving the Trust Fund.
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It is intended that the Supplemental Interest Trust be classified for federal income tax
purposes as a grantor trust under Subpart E, part I of subchapter J of chapter 1 of the Code, of which
the Class X Certificateholders are owners, rather than a partnership, an association taxable as a
corporation or a taxable mortgage pool; and the powers granted and obligations undertaken in this
Agreement shall be construed so as to further such intent. The Supplemental Interest Trust Trustee
shall prepare and file, or cause to be prepared and filed, in a timely manner, all of the Tax Returns
that it determines are required with respect to the Supplemental Interest Trust.
In order to enable the Trustee and the Supplemental Interest Trust Trustee to perform their
duties as set forth herein, the Depositor shall provide, or cause to be provided, to the Trustee within
10 days after the Closing Date all information or data that the Trustee and the Supplemental Interest
Trust Trustee requests in writing and determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flows of the Certificates and the Mortgage Loans. Thereafter, the
Depositor shall provide to the Trustee and the Supplemental Interest Trust Trustee promptly upon written
request therefor, any such additional information or data that the Trustee or the Supplemental Interest
Trust Trustee may, from time to time, request in order to enable the Trustee and the Supplemental
Interest Trust Trustee to perform its duties as set forth herein. The Depositor hereby agrees to
indemnify the Trustee and the Supplemental Interest Trust Trustee for any losses, liabilities, damages,
claims or expenses of the Trustee or the Supplemental Interest Trust Trustee arising from any errors or
miscalculations of the Trustee or the Supplemental Interest Trust Trustee that result from any failure
of the Depositor to provide, or to cause to be provided, accurate information or data to the Trustee and
the Supplemental Interest Trust Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of any of the REMICs provided
for herein as defined in Section 860F(a)(2) of the Code, on the "net income from foreclosure property"
of the any of such REMICs as defined in Section 860G(c) of the Code, on any contribution to the Trust
Fund after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax is imposed, if not
paid as otherwise provided for herein, such tax shall be paid by (i) the Trustee, if any such other tax
arises out of or results from a breach by the Trustee of any of its obligations under this Agreement or
as a result of the location of the Trustee, (ii) any party hereto (other than the Trustee) to the extent
any such other tax arises out of or results from a breach by such other party of any of its obligations
under this Agreement or as a result of the location of such other party or (iii) in all other cases, or
in the event that any liable party here fails to honor its obligations under the preceding clauses (i)
or (ii), any such tax will be paid first with amounts (other than amounts derived by the Supplemental
Interest Trust from a payment on the Swap Agreement) otherwise to be distributed to the Class R
Certificateholders (pro rata) pursuant to Section 4.04, and second with amounts (other than amounts
derived by the Trust Fund from a payment on the Swap Agreement) otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class X Certificates (pro rata),
second, to the Class B-2 Certificates (pro rata), third, to the Class B-1 Certificates (pro rata),
fourth, to the Class M-4 Certificates (pro rata), fifth, to the Class M-3 Certificates (pro rata),
sixth, to the Class M-2 Certificates (pro rata), seventh, to the Class M-1 Certificates (pro rata),
eighth, to the Class A and Class R Certificates (pro rata). Notwithstanding anything to the contrary
contained herein, to the extent that such tax is payable by the Class R Certificate, the Trustee is
hereby authorized pursuant to such instruction to retain on any Distribution Date, from the Holders of
the Class R Certificate (and, if necessary, from the Holders of all other Certificates in the priority
specified in the preceding sentence), funds otherwise distributable to such Holders in an amount
sufficient to pay such tax. The Trustee agrees to promptly notify in writing the party liable for any
such tax of the amount thereof and the due date for the payment thereof.
(b) Each of the Depositor, the Trustee and the Supplemental Interest Trust Trustee agrees not to
take or omit to take knowingly or intentionally, any action or omit to take any action that would
cause the termination of the REMIC status of any of the REMICs provided for herein or the grantor
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trust status of the Supplemental Interest Trust or result in the imposition of a tax upon any of the
REMICs provided for herein or the Supplemental Interest Trust.
(c) Each Class X Certificateholder shall provide the appropriate tax certification acceptable to
the Trustee to enable the Trust to make payments on the Class X Certificates without withholding or
backup withholding taxes. Each Class X Certificateholder agrees to update or replace such form or
certification in accordance with its terms or its subsequent amendments and consents to the delivery
by the Supplemental Interest Trust Trustee to the Swap Counterparty of any such certification. Such
certification may include Form W-8BEN, Form W-8IMY, Form W-9 or Form W-8ECI or any successors to such
IRS forms. Any purported sales or transfers of any Class X Certificate to a transferee which does not
comply with these requirements shall be deemed null and void under this Agreement. If the Trust Fund
becomes subject to deduction, withholding, or other charge or assessment from, or with respect to,
payments to any Class X Certificateholder for any present or future tax, duty, assessment, or
governmental charge, then the Trustee shall indicate the amount withheld to such Class X
Certificateholders. Such amounts shall be deemed to have been distributed to such Class X
Certificateholders for all purposes of this Agreement.
(d) The Supplemental Interest Trust Trustee, on behalf of the Supplemental
Interest Trust, (i) shall authorize, execute and deliver a United States Internal Revenue Service Form
W-9 or successor applicable form, or other appropriate United States tax forms as may be required to
prevent withholding or backup withholding taxes on payments to the Supplemental Interest Trust under the
Swap Agreement, to the Swap Counterparty on or before the first payment date under the Swap Agreement
and thereafter prior to the expiration or obsolescence of such previously delivered form and (ii) shall,
if requested by the Swap Counterparty, deliver to the Swap Counterparty promptly upon receipt each
certification received from any Class X Certificateholders pursuant to Section 8.12(c).
SECTION 8.13. X-AMB Swap Agreement.
The Supplemental Interest Trust Trustee is hereby authorized and directed to, and agrees that
it shall enter into, the X-AMB Swap Agreement on behalf of (i) the Class A, Class M and Class B
Certificates on the one hand, and (ii) the Class X Certificateholders on the other hand.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage Loans.
(a) Subject to Section 9.03, the obligations and responsibilities of the Depositor, the Servicers,
the Custodian and the Trustee created hereby with respect to the Trust Fund shall terminate upon the
earlier of (a) an Optional Termination with respect to all of the Mortgage Loans in the Trust Fund and
(b) the later of (i) the maturity or other liquidation of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all REO Property and (ii) the distribution to Certificateholders of
all amounts required to be distributed to them pursuant to this Agreement, as applicable. In no event
shall the trusts created hereby continue beyond the earlier of (i) the expiration of 21 years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the
United States to the Court of St. James's, living on the date hereof and (ii) the Latest Possible
Maturity Date.
(b) On or before the Determination Date following the Optional Termination Date, National City may,
at its option, purchase all of the National City Mortgage Loans and related REO Properties, and ▇▇▇▇▇
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Fargo may, at its option, purchase all of the ▇▇▇▇▇ Fargo Mortgage Loans and related REO Properties,
at a price equal to the Optional Termination Price. Upon purchase of all remaining Mortgage Loans in
the Trust Fund, the Trust Fund will terminate. In the event National City and ▇▇▇▇▇ Fargo exercise
their respective rights on the same day and the Trust Fund is terminated, National City and ▇▇▇▇▇
Fargo shall each pay a pro rata portion of any Swap Termination Payment, such payment to be allocated
in accordance with the ratio that their respective Mortgage Loans bear to the aggregate of the
Mortgage Loans remaining in the Trust Fund on such date. In connection with such termination, the
Optional Termination Price shall be delivered to the Trustee no later than the Business Day
immediately preceding the related Distribution Date. Notwithstanding anything to the contrary herein,
the Optional Termination Amount paid to the Trustee by the Servicers shall be deposited by the Trustee
directly into the Certificate Account immediately upon receipt. Upon any termination of the Trust
Fund pursuant to this Section 9.01(b), out of the Optional Termination Amount deposited into the
Certificate Account, the Supplemental Interest Trust Trustee shall pay to the Swap Counterparty any
Swap Termination Payment, and the Trustee shall pay to the Trustee and the Servicers, as applicable,
the aggregate amount of any unreimbursed out-of-pocket costs and expenses owed to the Trustee or the
Servicers and any unpaid or unreimbursed Servicing Fees, Trustee Fees, Advances and Servicing Advances.
Notwithstanding anything to the contrary in this Article IX, the parties hereto intend that the
portion of any amount received upon an Optional Termination that is attributable to clause (D) of the
definition of Optional Termination Price shall be treated for federal income tax purposes as having been
paid by the Servicers directly to the Swap Counterparty (rather than having been paid to any REMIC)
pursuant to the Swap Agreement.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Trustee determines based on information provided in
writing by the Servicers that there are no Outstanding Mortgage Loans and no other funds or assets in
the Trust Fund other than the funds in the Servicer Collection Accounts, the Trustee shall send a final
distribution notice promptly to each Certificateholder or (ii) the Trustee determines that a Class of
Certificates shall be retired after a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made on the immediately
following Distribution Date. Any final distribution made pursuant to the immediately preceding sentence
will be made only upon presentation and surrender of the Certificates at the office of the Trustee
specified in such notice.
Notice of any termination of the Trust Fund, specifying the Distribution Date on which
Certificateholders may surrender their Certificates for payment of the final distribution and
cancellation, shall be given promptly by the Trustee by letter to Certificateholders mailed no later
than the last calendar day of the month immediately preceding the month of such final distribution. Any
such notice shall specify (a) the Distribution Date upon which final distribution on the Certificates
will be made upon presentation and surrender of Certificates at the office therein designated, (b) the
location of the office or agency at which such presentation and surrender must be made, and (c) that the
Record Date otherwise applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of the Certificates at the office therein specified. The Trustee
will give such notice to each Rating Agency at the time such notice is given to Certificateholders.
In the event such notice is given, the Trustee shall cause all funds in the Servicer Collection
Accounts to be deposited in the Certificate Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of the Certificates. Upon
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such final deposit with respect to the Trust Fund, certification to the Custodian that such required
amount has been deposited in the Trust Fund and the receipt by the Custodian of a Request for Release
therefor, the Custodian shall promptly release to the Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed
to Certificateholders of each Class the amounts allocable to such Certificates held in the Certificate
Account in the order and priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender Certificates for
cancellation within six months after the date specified in the above mentioned written notice, the
Trustee shall give a second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect thereto. If within six
months after the second notice all the applicable Certificates shall not have been surrendered for
cancellation, the Trustee may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of the Trust Fund. If within
one year after the second notice all Certificates shall not have been surrendered for cancellation, the
Class R Certificateholders shall be entitled to all unclaimed funds and other assets of the Trust Fund
that remain subject hereto. Upon payment to the Class R Certificateholders of such funds and assets, the
Trustee shall have no further duties or obligations with respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Servicers complete an Optional Termination as provided in Section 9.01, and
all of the Mortgage Loans are purchased, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been supplied with an Opinion of Counsel, at
the expense of the Servicers, to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" of any of the REMICs provided for herein as defined in Section 860F of the Code, or (ii)
cause any of the REMICs provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(i) The Depositor shall establish a 90-day liquidation period and notify the Trustee thereof, and
the Trustee shall in turn specify the first day of such period in a statement attached to the final tax
returns of each of the REMICs provided for herein pursuant to Treasury Regulation Section 1.860F-1. The
Depositor shall satisfy all the requirements of a qualified liquidation under Section 860F of the Code
and any regulations thereunder, as evidenced by an Opinion of Counsel obtained at the expense of the
Servicers;
(ii) During such 90-day liquidation period, and at or prior to the time of making the final payment
on the Certificates, the Depositor as agent of the Trustee shall sell all of the assets of the Trust
Fund for cash; and
(iii) At the time of the making of the final payment on the Certificates, the Trustee shall
distribute or credit, or cause to be distributed or credited, to the Class R Certificateholders all cash
on hand (other than cash retained to meet outstanding claims), and the Trust Fund shall terminate at
that time, whereupon the Trustee shall have no further duties or obligations with respect to sums
distributed or credited to the Class R Certificateholders.
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(b) By their acceptance of the Certificates, the Holders thereof hereby authorize the Depositor to
specify the 90-day liquidation period for the Trust Fund, which authorization shall be binding upon
all successor Certificateholders.
(c) Upon the written request of the Depositor, the Trustee as agent for each REMIC hereby agrees to
adopt and sign such a plan of complete liquidation as provided to it by the Depositor. The Trustee's
obligation to adopt and sign such plan of complete liquidation is subject to the Trustee's receipt of
the Opinion of Counsel referred to in Section 9.03(a)(i). In addition, the Trustee shall take such
other action in connection therewith as may be reasonably requested by the Depositor.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the Servicers and the
Trustee, without the consent of any of the Certificateholders to
(i) to cure any ambiguity or correct any mistake,
(ii) to correct, modify or supplement any provision herein which may be inconsistent with any other
provision herein or 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
Prospectus or Private Placement Memorandum related to ay of the Certificates,
(iii) to add any other provisions with respect to matters or questions arising under this Agreement,
(iv) to modify, alter, amend, add to or rescind any of the terms or provisions contained in this
Agreement, provided, however, that, in the case of clauses (iii) and (iv), such amendment will not, as
evidenced by an Opinion of Counsel addressed to the Trustee to such effect, adversely affect in any
material respect the interests of any Holder; provided, further, however, that such amendment will be
deemed to not adversely affect in any material respect the interest of any Holder if the Person
requesting such amendment obtains a letter from each Rating Agency stating that such amendment will not
result in a reduction or withdrawal of its rating of any Class of the Certificates, it being understood
and agreed that any such letter in and of itself will not represent a determination as to the
materiality of any such amendment and will represent a determination only as to the credit issues
affecting any such rating, or
(v) to comply with Regulation AB.
Notwithstanding the foregoing, without the consent of the Certificateholders, the Depositor,
the Servicers and the Trustee may at any time and from time to time amend this Agreement to modify,
eliminate or add to any of its provisions to such extent as shall be necessary or appropriate to
maintain the qualification of any of the REMICs provided for herein as REMICs under the Code or to avoid
or minimize the risk of the imposition of any tax on the Trust Fund or any of the REMICs provided for
herein pursuant to the Code that would be a claim against the Trust Fund at any time prior to the final
redemption of the Certificates, provided that the Trustee shall have been provided an Opinion of Counsel
addressed to the Trustee, which opinion shall be an expense of the party requesting such amendment but
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in any case shall not be an expense of the Trustee, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of the imposition of such a
tax.
This Agreement may also be amended from time to time by the Depositor, the Servicers and the
Trustee and the Holders of the Certificates affected thereby evidencing not less than 66% of the Voting
Rights for the purpose of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any manner the amount of, or delay the
timing of, payments required to be distributed on any Certificate without the consent of the Holder of
such Certificate or (ii) reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of all such Certificates
then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee shall not consent to any
amendment to this Agreement unless it shall have first received an Opinion of Counsel addressed to the
Trustee, which opinion shall be an expense of the party requesting such amendment but in any case shall
not be an expense of the Trustee, to the effect that such amendment is permitted hereunder and will not
cause the imposition of any tax on the Trust Fund, any of the REMICs provided for herein or the
Certificateholders or cause any of the REMICs provided for herein to fail to qualify as a REMIC at any
time that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement requiring the consent of
Certificateholders, the Trustee shall furnish written notification of the substance of such amendment to
each Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this Section 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 Certificateholders shall be subject to such reasonable regulations as the Trustee
may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an amendment without
receiving an Opinion of Counsel, satisfactory to the Trustee that (i) such amendment is permitted and is
not prohibited by this Agreement and that all requirements for amending this Agreement have been
complied with; and (ii) either (A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the immediately preceding clause
(A) is not required to be reached pursuant to this Section 10.01.
The Trustee may, but shall not be obligated to, enter into any supplement, modification or
waiver which affects its rights, duties or obligations hereunder.
Notwithstanding the foregoing, the Swap Counterparty's written consent will be required for any
amendment with respect to payments to the Supplemental Interest Trust or that otherwise would have a
material adverse affect on the rights and interests of the Swap Counterparty (provided that such consent
shall not be unreasonably withheld).
SECTION 10.02. Counterparts.
This Agreement may be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the
same instrument.
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SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the Mortgage Notes,
Mortgages, assignments of Mortgages, title insurance policies and any modifications, extensions and/or
assumption agreements and private mortgage insurance policies relating to the Mortgage Loans and all
other assets of the Trust Fund by the Depositor to the Trustee be, and be construed as, an absolute sale
thereof to the Trustee. It is, further, not the intention of the parties that such conveyance be deemed
a pledge thereof by the Depositor to the Trustee. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Depositor, or if for any other
reason this Agreement is held or deemed to create a security interest in such assets, then (i) this
Agreement shall be deemed to be a security agreement within the meaning of the Uniform Commercial Code
of the State of New York and (ii) the conveyance provided for in this Agreement shall be deemed to be an
assignment and a grant by the Depositor to the Trustee, for the benefit of the Certificateholders, of,
and the Depositor hereby grants to the Trustee, a security interest in (A) all of the assets that
constitute the Trust Fund, whether now owned or hereafter acquired, (B) all accounts, chattel paper,
deposit accounts, documents, general intangibles, goods, instruments, investment property,
letter-of-credit rights, letters of credit, money, and oil, gas, and other minerals, consisting of,
arising from, or relating to, any of the foregoing, and (C) all proceeds of the foregoing.
The Depositor for the benefit of the Certificateholders shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the assets of the Trust Fund, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will be maintained as such
throughout the term of the Agreement. The Depositor shall arrange for filing any Uniform Commercial
Code continuation statements in connection with any security interest granted or assigned to the Trustee
for the benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to each Rating Agency with
respect to each of the following of which it has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Trustee or the Servicers and the appointment of any
successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to Sections 2.02, 2.03 and 3.12;
(v) The final payment to Certificateholders; and
(vi) Any change in the location of the Certificate Account.
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(b) The Trustee shall promptly furnish or make available to each Rating Agency copies of the
following:
(i) Each report to Certificateholders described in Section 4.05;
(ii) Each annual statement as to compliance described in Section 3.17; and
(iii) Each annual independent public accountants' servicing report described in Section 3.18.
(c) All notices, statements, reports or certificates required by this Agreement to be sent or made
available to any other party hereto, to the Rating Agencies or to the Certificateholders (including,
without limitation, the statements, certificates and reports described in Sections 4.05, 7.03 and this
Section 10.05) shall also be sent or made available to the Swap Counterparty in the same manner and at
the same time as they are sent or made available to the Rating Agencies or Certificateholders, as the
case may be.
All directions, demands and notices hereunder shall be in writing and shall be deemed to have been duly
given when delivered to (a) in the case of the Depositor, Wachovia Mortgage Loan Trust, LLC, ▇▇▇ ▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel and Chief
Financial Officer; (b) in the case of the Rating Agencies, (i) Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and (ii) ▇▇▇▇▇'▇
Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (c) in the case of ▇▇▇▇▇
Fargo, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, MAC
X2302-033, with a copy to General Counsel, MAC X2401-06T; (d) in the case of National City, National
City Mortgage Co., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, (e) in the
case of the Trustee, U.S. Bank National Association, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇, ▇▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Structured Finance/WMLT 2006-ALT1; and (f) in the case of the Swap
Counterparty, Wachovia Bank National Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, and in the case of any of the foregoing persons, such other
addresses as may hereafter be furnished by any such persons to the other parties to this Agreement.
Notices to Certificateholders shall be deemed given when mailed, first class postage prepaid, to their
respective addresses appearing in the Certificate Register.
SECTION 10.06. 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 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as provided pursuant to
Section 6.02, this Agreement may not be assigned by the Servicers without the prior written consent of
the Trustee and Depositor.
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SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to terminate this Agreement
or the Trust Fund, nor entitle such Certificateholder's legal representative or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a petition or winding up of
the Trust Fund, or otherwise affect the rights, obligations and liabilities of the parties hereto or any
of them.
No Certificateholder shall have any right to vote (except as provided herein) or in any manner
otherwise control 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 party by reason of any action taken
by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself of any provisions of
this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with
respect to this Agreement, unless such Holder previously shall have given to the Trustee a written
notice of an Event of Default and of the continuance thereof, as hereinbefore provided, the Holders of
Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates shall also
have made written request to the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby, and the Trustee, for 60
days after its receipt of such notice, request and offer of indemnity shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and the Trustee, that no one or
more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself
or themselves of any provisions of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of the 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 common benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 10.08, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
Each Servicer agrees that, on reasonable prior notice, it will permit any representative of the
Depositor or the Trustee, during the Servicer's normal business hours, to examine all the books of
account, records, reports and other papers of the Servicer relating to the Mortgage Loans, to make
copies and extracts therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor or the Trustee and to discuss its affairs, finances and accounts
relating to the Mortgage Loans with its officers, employees, agents, counsel and independent public
accountants (and by this provision the Servicer hereby authorizes such accountants to discuss with such
representative such affairs, finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any out-of-pocket expense incident to the exercise by the Depositor or the
Trustee of any right under this Section 10.09 shall be borne by the party requesting such inspection;
all other such expenses shall be borne by the applicable Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be personally liable for
obligations of the Trust Fund, that the interests in the Trust Fund represented by the Certificates
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shall be nonassessable for any reason whatsoever, and that the Certificates, upon due authentication
thereof by the Trustee pursuant to this Agreement, are and shall be deemed fully paid.
SECTION 10.11. Third Party Beneficiary. The Swap Counterparty shall be an express third-party
beneficiary of this Agreement to the extent of its express rights to receive any payments under this
Agreement, and its express rights with respect to amendments and notices as set forth in Sections 10.01
and 10.05, respectively, of this Agreement and shall have the right to enforce the related provisions
under this Agreement as if it were a party.
ARTICLE XI
1934 ACT REPORTING
SECTION 11.01. Commission Reporting.
(a) The Trustee and the Servicers shall reasonably cooperate with the Depositor in connection with
the Trust's satisfying the reporting requirements under the 1934 Act. The Trustee shall prepare on
behalf of the Depositor any Forms 8-K, 10-D and 10-K customary for similar securities as required by
the 1934 Act, and the Depositor shall sign and the Trustee shall file (via ▇▇▇▇▇) such forms on behalf
of the Depositor.
(b) Failure of a Servicer to timely comply with this Article XI (including with respect to the time
frames required in this Article) shall be deemed an Event of Default, and the Trustee, at the
direction of the Depositor, shall, in addition to whatever rights the Trustee may have under this
Agreement and at law or equity or to damages, including injunctive relief and specific performance,
upon notice immediately terminate all the rights and obligations of a Servicer under this Agreement
and in and to the Mortgage Loans it services and the proceeds thereof without compensating the
Servicer for the same, and the Depositor shall, in accordance with Sections 7.01 and 8.08, thereupon
appoint a successor Servicer. This paragraph shall supercede any other provision in this Agreement or
any other agreement to the contrary.
(c) Failure of the Trustee to timely comply with this Article XI (including with respect to the
time frames required in this Article) shall be deemed an Event of Default, and the Depositor, shall,
in addition to whatever rights the Depositor may have under this Agreement and at law or equity or to
damages, including injunctive relief and specific performance, upon notice immediately terminate all
the rights and obligations of the Trustee under this Agreement and in and to the Mortgage Loans and
the proceeds thereof without compensating the Trustee for the same, and the Depositor shall, in
accordance with Sections 7.01 and 8.08, appoint a successor Trustee. This paragraph shall supercede
any other provision in this Agreement or any other agreement to the contrary.
(d) [Reserved].
(e) Each of the parties acknowledges and agrees that the purpose of Article XI is to facilitate
compliance by the Depositor with the provisions of Regulation AB. Therefore, each of the parties
agrees that (i) the obligations of the parties hereunder shall be interpreted in such a manner as to
accomplish that purpose, (ii) the parties' obligations hereunder will be supplemented and modified in
writing, as agreed to and executed by the parties hereto, as necessary to be consistent with any such
amendments, interpretive advice or guidance, convention or consensus among active participants in the
asset-backed securities markets or otherwise in respect of the requirements of Regulation AB, (iii)
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the parties shall comply with reasonable requests made by the Depositor or the Trustee for delivery of
additional information as the Depositor or the Trustee may reasonably determine is necessary to comply
with the provisions of Regulation AB, and (iv) no amendment of this Agreement shall be required to
effect any such changes in the parties' obligations as are necessary to accommodate evolving
interpretations of the provisions of Regulation AB.
SECTION 11.02. Form 10-D Reporting. Within 15 days after each Distribution Date (subject to
permitted extensions under the 1934 Act), the Trustee shall prepare and file on behalf of the Trust any
Form 10-D required by the 1934 Act, in form and substance as required by the 1934 Act. The Trustee
shall file each such Form 10-D with a copy of the related Monthly Statement attached thereto. Any
disclosure in addition to the Monthly Statement that is required to be included on Form 10-D
("Additional Form 10-D Disclosure") shall be reported by the parties set forth on Exhibit P to the
Depositor and Trustee and directed and approved by the Depositor pursuant to the following paragraph,
and the Trustee will have no duty or liability for any failure hereunder to determine or prepare any
Additional Form 10-D Disclosure, except as set forth in the next paragraph.
As set forth on Exhibit P hereto, within two calendar days after each Distribution
Date for which a Form 10-D is required to be filed, (i) the parties set forth thereon shall be required
to provide to the Trustee and the Depositor, to the extent known by a responsible person thereof, in
▇▇▇▇▇-compatible form, or in such other form as otherwise agreed upon by the Trustee and such party, the
form and substance of any Additional Form 10-D Disclosure together with an additional disclosure
notification in the form of Exhibit R hereto (an "Additional Disclosure Notification") and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the case may be, the inclusion of
the Additional Form 10-D Disclosure on the related Form 10-D. The Depositor will be responsible for any
reasonable fees and expenses assessed or incurred by the Trustee in connection with including any
Additional Form 10-D Disclosure on Form 10-D pursuant to this paragraph.
At least eight calendar days prior to the date a Form 10-D is due to be filed with the
Commission (the "10-D Filing Deadline"), the Trustee shall forward electronically a draft copy of the
Form 10-D to the Depositor for review. Within two calendar days of receipt, but in no event no later
than the sixth calendar day prior to the 10-D Filing Deadline, the Depositor shall notify the Trustee of
any changes to or approval of such Form 10-D. In the absence of receipt of any written changes or
approval, the Trustee shall be entitled to assume that such Form 10-D is in final form, and the Trustee
shall deliver the Form 10-D to the Depositor for execution. No later than five calendar days prior to
the 10-D Filing Deadline, a duly authorized representative of the Depositor shall sign the Form 10-D.
If a Form 10-D cannot be filed on time or if a previously filed Form 10-D needs to be amended, the
Trustee will follow the procedures set forth in Section 11.05. Promptly (but no later than one Business
Day) after filing with the Commission, the Trustee will make available on its internet website a final
executed copy of each Form 10-D prepared and filed by the Trustee. Each party to this Agreement
acknowledges that the performance by the Depositor and the Trustee of their duties under this Section
11.02 related to the timely preparation, execution and filing of Form 10-D is contingent upon such
parties strictly observing all applicable deadlines in the performance of their duties under this
Section 11.02. Neither the Trustee nor the Depositor shall have any liability for any loss, expense,
damage or claim arising out of or with respect to any failure to properly prepare, timely execute and/or
timely file such Form 10-D, where such failure results from the Trustee's inability or failure to obtain
or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange
for execution or file such Form 10-D, not resulting from its own negligence, bad faith or willful
misconduct.
SECTION 11.03. Form 10-K Reporting. On or prior to March 1 of each year in which a Form 10-K must be
filed with respect to the Trust, the Depositor will provide to the Trustee a draft of the first page of
a Form 10-K that includes the information regarding the Depositor and the Trust as approved by the
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Depositor for inclusion in the Form 10-K to be prepared by the Trustee pursuant to this Section 11.03.
Within 90 days after the end of each fiscal year of the Trust or such earlier date as may be required by
the 1934 Act (the "10-K Filing Deadline") (it being understood that the fiscal year for the Trust ends
on December 31st of each year) in which a Form 10-K is required by the 1934 Act to be filed with respect
to the Trust, commencing in March 2007, the Trustee shall prepare and file on behalf of the Trust a Form
10-K, in form and substance as required by the 1934 Act. Each such Form 10-K shall include the
following items, in each case to the extent they have been delivered to the Trustee within the
applicable time frames set forth in this Agreement and the related Custodial Agreement, (i) the Item
1123 Certificate for each Servicer and each Additional Servicer (each, a "Reporting Servicer") as
described under Section 11.06, (ii)(A) the Assessment of Compliance with servicing criteria for each
Reporting Servicer and any Servicing Function Participant as described under Section 11.07, and (B) if
any Reporting Servicer's or any Servicing Function Participant's Assessment of Compliance identifies any
material instance of noncompliance, disclosure identifying such instance of noncompliance, or if any
Reporting Servicer's or any Servicing Function Participant's Assessment of Compliance is not included as
an exhibit to such Form 10-K, disclosure that such report is not included and an explanation why such
report is not included, (iii)(A) the Accountant's Attestation for each Reporting Servicer and any
Servicing Function Participant, as described under Section 12.08, and (B) if any Accountant's
Attestation identifies any material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if any such Accountant's Attestation is not included as an exhibit to such Form 10-K,
disclosure that such report is not included and an explanation why such report is not included, and (iv)
a ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification as described in Section 11.09 (provided, however, that the Trustee, at
its discretion, may omit from the Form 10-K any Item 1123 Certificate, Assessment of Compliance of
Accountants Attestation that is not required to be filed with such Form 10-K pursuant to Regulation
AB). Any disclosure or information in addition to (i) through (iv) above that is required to be
included on Form 10-K ("Additional Form 10-K Disclosure") shall be reported by the parties set forth on
Exhibit S to the Depositor and the Trustee and directed and approved by the Depositor pursuant to the
following paragraph, and the Trustee will have no duty or liability for any failure hereunder to
determine or prepare any Additional Form 10-K Disclosure, except as set forth in the next paragraph.
As set forth on Exhibit S hereto, no later than March 1 of each year that the Trust is
subject to the 1934 Act reporting requirements, commencing in 2007 (or March 15 with respect to the
Trustee), (i) the parties set forth on Exhibit S shall be required to provide to the Trustee and the
Depositor, to the extent known by a responsible officer thereof, in ▇▇▇▇▇-compatible form, or in such
other form as otherwise agreed upon by the Trustee and such party, the form and substance of any
Additional Form 10-K Disclosure, if applicable, together with an Additional Disclosure Notification and
(ii) the Depositor will approve, as to form and substance, or disapprove, as the case may be, the
inclusion of the Additional Form 10-K Disclosure on Form 10-K. The Depositor will be responsible for
any reasonable fees and expenses assessed or incurred by the Trustee in connection with including any
Additional Form 10-K Disclosure on Form 10-K pursuant to this paragraph.
After preparing the Form 10-K, the Trustee shall forward electronically a draft copy
of the Form 10-K to the Depositor for review. Within three Business Days of receipt, but in no event
later than March 25, the Depositor shall notify the Trustee in writing (which may be furnished
electronically) of any changes to or approval of such Form 10-K. In the absence of receipt of any
written changes or approval the Trustee shall be entitled to assume that such Form 10-K is in final
form. No later than the close of business on the 4th Business Day prior to the 10-K Filing Deadline,
the Depositor shall sign the Form 10-K and return an electronic or fax copy of such signed Form 10-K
(with an original executed hard copy to follow by overnight mail) to the Trustee. If a Form 10-K cannot
be filed on time or if a previously filed Form 10-K needs to be amended, the Trustee will follow the
procedures set forth in Section 12.05. Promptly (but no later than one (1) Business Day) after filing
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with the Commission, the Trustee will make available on its internet website a final executed copy of
each Form 10-K prepared and filed by the Trustee. The parties to this Agreement acknowledge that the
performance by the Trustee of its duties under this Section 11.03 related to the timely preparation and
filing of Form 10-K is contingent upon such party (and the Custodian, Servicer and any Additional
Servicer or Servicing Function Participant) strictly observing all applicable deadlines in the
performance of their duties under Article XI. The Trustee shall have no liability for any loss,
expense, damage, claim arising out of or with respect to any failure to properly prepare and/or timely
file such Form 10-K, where such failure results from the Trustee's inability or failure to obtain or
receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for
execution or file such Form 10-K, not resulting from its own negligence, bad faith or willful misconduct.
SECTION 11.04. Form 8-K Reporting. Within four (4) Business Days after the occurrence of an event
requiring disclosure on Form 8-K (each such event, a "Reportable Event"), and if requested by the
Depositor, the Trustee shall prepare and file on behalf of the Trust any Form 8-K, as required by the
1934 Act, provided that the Depositor shall file the initial Form 8-K in connection with the issuance of
the Certificates. Any disclosure or information related to a Reportable Event or that is otherwise
required to be included on Form 8-K ("Form 8-K Disclosure Information") shall be reported by the parties
set forth on Exhibit R to the Depositor and the Trustee and directed and approved by the Depositor
pursuant to the following paragraph, and the Trustee will have no duty or liability for any failure
hereunder to determine or prepare any Form 8-K Disclosure Information or any Form 8-K, except as set
forth in the next paragraph.
As set forth on Exhibit R hereto, for so long as the Trust is subject to the 1934 Act
reporting requirements, no later than the end of business (New York City time) on the 2nd Business Day
after the occurrence of a Reportable Event (i) the parties to this transaction shall be required to
provide to the Trustee and the Depositor, to the extent known by a responsible officer thereof, in
▇▇▇▇▇-compatible form, or in such other form as otherwise agreed upon by the Trustee and such party, the
form and substance of any Form 8-K Disclosure Information, if applicable, together with an Additional
Disclosure Notification and (ii) the Depositor will approve, as to form and substance, or disapprove, as
the case may be, the inclusion of the Form 8-K Disclosure Information. The Depositor will be
responsible for any reasonable fees and expenses assessed or incurred by the Trustee in connection with
including any Form 8-K Disclosure Information on Form 8-K pursuant to this paragraph.
After preparing the Form 8-K, the Trustee shall forward electronically a draft copy of
the Form 8-K to the Depositor for review. Promptly, but no later than the close of business on the 3rd
Business Day after the Reportable Event, the Depositor shall notify the Trustee in writing of any
changes to or approval of such Form 8-K. In the absence of receipt of any written changes or approval,
the Trustee shall be entitled to assume that such Form 8-K is in final form and a duly authorized
representative of the Trustee may proceed with the execution and filing of the Form 8-K. A duly
authorized representative of a Servicer shall sign the Form 8-K. If a Form 8-K cannot be filed on time
or if a previously filed Form 8-K needs to be amended, the Trustee will follow the procedures set forth
in Section 11.05. Promptly (but no later than one (1) Business Day) after filing with the Commission,
the Trustee will make available on its internet website a final executed copy of each Form 8-K prepared
and filed by the Trustee. The parties to this Agreement acknowledge that the performance by the Trustee
and a Servicer of its duties under this Section 11.04 related to the timely preparation and filing of
Form 8-K is contingent upon such parties strictly observing all applicable deadlines in the performance
of their duties under this Section 11.04. Neither a Servicer nor the Trustee shall have any liability
for any loss, expense, damage or claim arising out of or with respect to any failure to properly prepare
and/or timely file such Form 8-K, where such failure results from the Trustee's inability or failure to
obtain or receive, on a timely basis, any information from any other party hereto needed to prepare,
arrange for execution or file such Form 8-K, not resulting from its own negligence, bad faith or willful
misconduct.
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SECTION 11.05. Delisting; Amendment; Late Filing of Reports. On or before January 30 of the first
year in which the Trustee is able to do so under applicable law, the Trustee shall prepare and file a
Form 15 Suspension Notification relating to the automatic suspension of reporting in respect of the
Trust under the 1934 Act.
In the event that the Trustee is unable to timely file with the Commission all or any
required portion of any Form 8-K, 10-D or 10-K required to be filed by this Agreement because required
disclosure information was either not delivered to it or delivered to it after the delivery deadlines
set forth in this Agreement or for any other reason, the Trustee shall promptly notify electronically
the Depositor. In the case of Form 10-D and 10-K, the parties to this Agreement shall cooperate to
prepare and file a Form 12b-25 and a 10-D/A and 10-K/A as applicable, pursuant to Rule 12b-25 of the
1934 Act. In the case of Form 8-K, the Trustee will, upon receipt of all required Form 8-K Disclosure
Information and upon the approval and direction of the Depositor, include such disclosure information on
the next Form 10-D. In the event that any previously filed Form 8-K, 10-D or 10-K needs to be amended
in connection with any Additional Form 10-D Disclosure, the Trustee shall electronically notify the
Depositor and such parties will cooperate to prepare any necessary Form 8-K/A, 10-D/A or 10-K/A. Any
Form 15, Form 12b-25 or any amendment to Form 8-K or 10-D shall be signed by a duly authorized
representative of the Servicer. Any amendment to Form 10-K shall be signed by the Depositor. The
parties to this Agreement acknowledge that the performance by the Trustee and the Servicers of their
duties under this Section 12.05 related to the timely preparation and filing of Form 15, a Form 12b-25
or any amendment to Form 8-K, 10-D or 10-K is contingent upon each such party performing its duties
under this Section. Neither the Trustee nor the Servicers shall have any liability for any loss,
expense, damage or claim arising out of or with respect to any failure to properly prepare and/or timely
file any such Form 15, Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, where such failure
results from the Trustee's inability or failure to obtain or receive, on a timely basis, any information
from any other party hereto needed to prepare, arrange for execution or file such Form 15, Form 12b-25
or any amendments to Forms 8-K, 10-D or 10-K, not resulting from its own negligence, bad faith or
willful misconduct.
SECTION 11.06. Annual Statements of Compliance. Each Servicer shall deliver or otherwise make
available (and each Servicer shall cause any Additional Servicer engaged by it to deliver or otherwise
make available) to the Trustee on or before March 1 of each year, commencing in March 2007, an Officer's
Certificate (an "Item 1123 Certificate") stating, as to the signer thereof, that (A) a review of such
party's activities during the preceding calendar year or applicable portion thereof and of such party's
performance under this Agreement, or such other applicable agreement in the case of an Additional
Servicer, has been made under such officer's supervision and (B) to the best of such officer's
knowledge, based on such review, such party has fulfilled all its obligations under this Agreement, or
such other applicable agreement in the case of an Additional Servicer, in all material respects
throughout such year or applicable portion thereof, or, if there has been a failure to fulfill any such
obligation in any material respect, specifying each such failure known to such officer and the nature
and status thereof. Promptly after receipt of each such Item 1123 Certificate, the Depositor shall
review such Item 1123 Certificate and, if applicable, consult with each such party, as applicable, as to
the nature of any failures by such party, in the fulfillment of any of such party's obligations
hereunder or, in the case of an Additional Servicer, under such other applicable agreement.
Each Servicer shall include all annual statements of compliance received by it from
each Subservicer with its own annual statement of compliance to be submitted to the Trustee pursuant to
this Section.
In the event the Servicers or any Additional Servicer engaged by any such party is
terminated or resigns pursuant to the terms of this Agreement, or any applicable agreement in the case
of a Additional Servicer, as the case may be, such party shall provide an Item 1123 Certificate pursuant
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to this Section 11.06 or to such applicable agreement, as the case may be, notwithstanding any such
termination, assignment or resignation.
The Trustee shall enforce any obligation of the Custodian, to the extent set forth in
the Custodial Agreement, to deliver to the Servicer an Item 1123 Certificate as may be required pursuant
to the Custodial Agreement. Each Servicer shall include such Item 1123 Certificate with its own Item
1123 Certificate to be submitted to the Depositor and the Trustee pursuant to this Section.
SECTION 11.07. Annual Assessments of Compliance. By March 1 of each year (or with respect to the
Trustee, March 15 of each year), commencing in March 2007, each Servicer and the Trustee, each at its
own expense, shall furnish or otherwise make available to the Depositor, and each such party shall cause
any Servicing Function Participant engaged by it to furnish or otherwise make available, each at its own
expense, to the Depositor, a report on an assessment of compliance with the Relevant Servicing Criteria
(an "Assessment of Compliance") that contains (A) a statement by such party of its responsibility for
assessing compliance with the Relevant Servicing Criteria for each party as set forth on Exhibit O, (B)
a statement that such party used the Relevant Servicing Criteria to assess compliance with the Relevant
Servicing Criteria, (C) such party's assessment of compliance with the Relevant Servicing Criteria as of
and for the fiscal year covered by the Form 10-K required to be filed pursuant to Section 11.03,
including, if there has been any material instance of noncompliance with the Relevant Servicing
Criteria, a discussion of each such failure and the nature and status thereof, and (D) a statement that
a registered public accounting firm has issued an Accountant's Attestation on such party's Assessment of
Compliance with the Relevant Servicing Criteria as of and for such period.
No later than the end of each fiscal year for the Trust for which a 10-K is required
to be filed, each Servicer shall forward to the Depositor the name of each Servicing Function
Participant engaged by it and what Relevant Servicing Criteria will be addressed in the Assessment of
Compliance prepared by such Servicing Function Participant. When a Servicer (or any Servicing Function
Participant engaged by them) submit their Assessments of Compliance to the Depositor, such parties will
also at such time include the Assessments of Compliance (and Accountant's Attestation) pursuant to
Section 11.08 of each Servicing Function Participant engaged by it.
Promptly after receipt of each Assessment of Compliance, the Depositor shall review
each such report and, if applicable, consult with the applicable Servicer, the Trustee and any Servicing Function
Participant engaged by such parties as to the nature of any material instance of noncompliance with the
Relevant Servicing Criteria by each such party. Notwithstanding the foregoing, none of such parties (with the
exception of the Trustee) will be required to deliver any Assessment of Compliance until April 15 in any given year
so long as it has received written confirmation from the Depositor that a Form 10-K is not required to be filed in respect
of the Trust for the preceeding calendar year, and the Trustee will not be required to deliver any Assessment of Compliance in
any given year so long as it has received written confirmation from the Depositor that a Form 10-K is not required to be filed in
respect of the Trust for the preceding calendar year.
Each Servicer shall include all Assessments of Compliance received by it from a
Servicing Function Participant with its own Assessment of Compliance to be submitted to the Trustee
pursuant to this Section.
In the event a Servicer, the Trustee or any Servicing Function Participant engaged by
any such party is terminated, assigns its rights and obligations under, or resigns pursuant to, the
terms of this Agreement, or any other applicable agreement, as the case may be, such party shall provide
an Assessment of Compliance pursuant to this Section 11.07, or such other applicable agreement,
notwithstanding any such termination, assignment of resignation.
The Trustee shall enforce any obligation of the Custodian, to the extent set forth in
the Custodial Agreement, to deliver to the Servicers an Assessment of Compliance within the time frame
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set forth in, and in such form and substance as may be required pursuant to the Custodial Agreement.
The Servicers shall include such Assessment of Compliance with its own Assessment of Compliance to be
submitted to the Depositor pursuant to this Section.
SECTION 11.08. Accountant's Attestation. By March 1 of each year (or with respect to the Trustee,
March 15 of each year), commencing in 2007, each Servicer and the Trustee, each at its own expense,
shall cause, and each such party shall cause any Servicing Function Participant engaged by it to cause,
each at its own expense, a registered public accounting firm (which may also render other services to
the Servicer, the Trustee or such other Servicing Function Participants, as the case may be) and that is
a member of the American Institute of Certified Public Accountants to furnish a report (the
"Accountant's Attestation") to the Depositor, to the effect that (i) it has obtained a representation
regarding certain matters from the management of such party, which includes an assertion that such party
has complied with the Relevant Servicing Criteria, and (ii) on the basis of an examination conducted by
such firm in accordance with standards for attestation engagements issued or adopted by the PCAOB, it is
expressing an opinion as to whether such party's compliance with the Relevant Servicing Criteria was
fairly stated in all material respects, or it cannot express an overall opinion regarding such party's
assessment of compliance with the Relevant Servicing Criteria. In the event that an overall opinion
cannot be expressed, such registered public accounting firm shall state in such report why it was unable
to express such an opinion. Such report must be available for general use and not contain restricted
use language.
Promptly after receipt of such Accountant's Attestations from each Servicer, the
Custodian, the Trustee or any Servicing Function Participant engaged by such parties, (i) the Depositor
shall review the reports and, if applicable, consult with such parties as to the nature of any defaults
by such parties, in the fulfillment of any of each such party's obligations hereunder or under any other
applicable agreement, and (ii) the Trustee shall confirm that each Assessment of Compliance is coupled
with an Accountant's Attestation meeting the requirements of this Section and notify the Depositor of
any exceptions. Notwithstanding the foregoing, none of such parties shall be required to deliver any
such assessments until April 15 in any given year so long as it has received written confirmation from
the Depositor that a Form 10-K is not required to be filed in respect of the Trust for the preceding
calendar year.
In the event a Servicer, the Trustee, the Custodian or any Servicing Function
Participant engaged by any such party, is terminated, assigns its rights and duties under, or resigns
pursuant to the terms of, this Agreement, or any applicable Custodial Agreement or any applicable
Subservicing Agreement, as the case may be, such party shall, at its sole expense, cause a registered
public accounting firm to provide an attestation pursuant to this Section 11.08, or such other
applicable agreement, notwithstanding any such termination, assignment or resignation.
The Trustee shall enforce any obligation of the Custodian, to the extent set forth in
the Custodial Agreement to deliver to the Servicers an attestation as may be required pursuant to the
Custodial Agreement. The Servicers shall include each such attestation with its own Accountant's
Attestation to be submitted to the Depositor pursuant to this Section.
SECTION 11.09. ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification. Each Form 10-K shall include a certification (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification") required to be included therewith pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
Each Servicer and the Trustee shall provide, and the Servicers and the Trustee shall cause any Servicing
Function Participant engaged by it to, provide to the Person who signs the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification
(the "Certifying Person"), by March 1 of each year (or with respect to the Trustee, March 15 of each
year) in which the Trust is subject to the reporting requirements of the 1934 Act and otherwise within a
reasonable period of time upon request, a certification (each, a "Back-Up Certification"), in the form
attached hereto as Exhibit N, upon which the Certifying Person, the entity for which the Certifying
142
Person acts as an officer, and such entity's officers, directors and Affiliates (collectively with the
Certifying Person, "Certification Parties") can reasonably rely. The Depositor shall serve as the
Certifying Person on behalf of the Trust. In the event the Servicer, the Trustee or any Servicing
Function Participant engaged by such party is terminated or resigns pursuant to the terms of this
Agreement, or any applicable Subservicing Agreement, as the case may be, such party shall provide a
Back-Up Certification to the Certifying Person pursuant to this Section 12.09 with respect to the period
of time it was subject to this Agreement or any applicable Subservicing Agreement, as the case may be.
SECTION 11.10. Indemnification. Each party required to deliver an Assessment of Compliance and an
Accountant's Attestation and/or an Item 1123 Certificate under Article XI (each, a "Responsible Party")
shall indemnify and hold harmless the Trustee, the Servicers and the Depositor and each of their
directors, officers, employees, agents, and affiliates from and against any and all claims, losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments and other
costs and expenses arising out of or based upon (a) any breach by such Responsible Party of any if its
obligations under this Article XI, including particularly its obligation to provide any Assessment of
Compliance and an Accountant's Attestation and/or an Item 1123 Certificate or any information, data or
material required to be included in any 1934 Act report, (b) any misstatement or omission in any
information, data or materials provided by such Responsible Party (or, in the case of the Trustee or any
Servicer, any material misstatement of material omission in (i) any Item 1123 Certificate, Assessment of
Compliance or Attestation report delivered by it, or by any Servicing Function Participant engaged by
it, pursuant to this Agreement, or (ii) any Additional Form 10-D Disclosure, Additional Form 10-K
Disclosure concerning the Servicers or the Trustee), or (c) the negligence, bad faith or willful
misconduct of such Responsible Party in connection with the performance of any if its obligations
hereunder. If the indemnification provided for herein is unavailable or insufficient to hold harmless
the Servicers, the Trustee or the Depositor, then each Responsible Party agrees that it shall contribute
to the amount paid or payable by the Servicers, the Trustee or the Depositor, as applicable, as a result
of any claims, losses, damages or liabilities incurred by the Servicers, the Trustee or the Depositor,
as applicable, in such proportion as is appropriate to reflect the relative fault of the Servicers, the
Trustee or the Depositor, as applicable, on the one hand and such Responsible Party, on the other. This
indemnification shall survive the termination of this Agreement or the termination of any party to this
Agreement. Notwithstanding the foregoing, none of the Responsible Parties shall be liable for
consequential, indirect or punitive damages.
Each Servicer agrees to indemnify and hold harmless each of the Depositor, any other
Servicer and the Trustee and each Person, if any, who "controls" the Depositor or the Trustee within the
meaning of the 1933 Act and their respective officers, directors and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and other costs and expenses that such Person may sustain arising out of third party claims
based on (i) the failure of any Subservicer or Subcontractor related to such Servicer to deliver or
cause to be delivered when required any Assessment of Compliance or Accountant's Attestation required
pursuant to Section 11.08, or (ii) any material misstatement or omission contained in any Assessment of
Compliance provided by any such Subservicer or Subcontractor pursuant to Section 11.08. This
indemnification shall survive the termination of this Agreement or the termination of any party to this
Agreement. Notwithstanding the foregoing, no such Servicer, Subservicer or Subcontractor shall be
liable for any consequential, special or punitive damages.
143
IN WITNESS WHEREOF, the Depositor, the Trustee, the Servicers and the Custodian have caused
their names to be signed hereto by their respective officers thereunto duly authorized as of the day and
year first above written.
WACHOVIA MORTGAGE LOAN TRUST, LLC,
as Depositor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ FARGO BANK, N.A.,
as a Servicer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
NATIONAL CITY MORTGAGE CO.,
as a Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Assistant Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Custodian
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Supplemental Interest Trust Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
EXHIBIT A
FORMS OF CERTIFICATES
[INTENTIONALLY OMITTED]
A-1
EXHIBIT B
MORTGAGE LOAN SCHEDULE
[INTENTIONALLY OMITTED]
B-1
EXHIBIT C
[RESERVED]
C-1
EXHIBIT D
FORM OF CUSTODIAN CERTIFICATION
[DATE]
Wachovia Mortgage Loan Trust, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Wachovia Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 28288
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Structured Finance / WMLT 2006-ALT1
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, MAC K3214-030
National City Mortgage Co.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Re: Wachovia Mortgage Loan Trust, Asset-Backed Certificates,
Series 2006-ALT1
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing Agreement dated as of December 27,
2006 among Wachovia Mortgage Loan Trust, LLC, as depositor, U.S. Bank National Association, as trustee,
supplemental interest trust trustee and custodian, ▇▇▇▇▇ Fargo Bank, N.A., as a servicer and National
City Mortgage Co., as a servicer (the "Pooling and Servicing Agreement"), the undersigned, as custodian,
hereby certifies that [, except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in full or listed on the
attachment hereto) it has reviewed the Mortgage File and the Mortgage Loan Schedule and has determined
that:
(i) All documents in the Mortgage File required to be delivered to the Custodian pursuant
to Section 2.01 of the Pooling and Servicing Agreement are in its possession;
(ii) In connection with each Mortgage Loan or Assignment thereof as to which documentary
evidence of recording was not received on the Closing Date, it has received evidence of such recording;
and
D-1
(iii) Such documents have been reviewed by it and appear regular on their face and relate to
such Mortgage Loan.
The custodian has made no independent examination of any documents contained in each Mortgage
File beyond confirming (i) that the Mortgage Loan number, the name of the Mortgagor, the street address
(excluding zip code), the mortgage interest rate at origination, the gross margin (if applicable), the
lifetime rate cap (if applicable), the periodic rate cap (if applicable), the original principal
balance, the first payment due date and the original maturity date in each Mortgage File conform to the
respective Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the existence in
each Mortgage File of each of the documents listed in subparagraphs (i)(A) through (F), inclusive, or
(ii)(A) through (K), inclusive, as applicable, of Section 2.01 in the Agreement. The custodian makes no
representations or warranties as to the validity, legality, recordability, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage Loan or the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective meanings assigned to them
in the above-referenced Pooling and Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION
as Custodian
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
D-2
EXHIBIT E-1
FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
[DATE]
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Transfer Unit / WMLT 2006-ALT1
Ladies and Gentlemen:
We propose to purchase Wachovia Mortgage Loan Trust, Asset-Backed Certificates, Series
2006-ALT1, Class R, described in the Prospectus Supplement, dated December 19, 2006, and Prospectus,
dated May 23, 2006. Capitalized terms used but not defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated December 27, 2006 relating to the issuance of the
Wachovia Mortgage Loan Trust, Asset-Backed Certificates, Series 2006-ALT1 (the "Pooling and Servicing
Agreement").
1. We certify that (a) we are not a disqualified organization and (b) we are not
purchasing such Class R Certificate on behalf of a disqualified organization; for this purpose the term
"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 (except any entity treated as other than an instrumentality of the foregoing for purposes of
Section 168(h)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code")), any organization
(other than a cooperative described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any organization that is
described in Section 1381(a)(2)(C) of the Code. We understand that any breach by us of this
certification may cause us to be liable for an excise tax imposed upon transfers to disqualified
organizations.
2. We certify that (a) we have historically paid our debts as they became due, (b) we
intend, and believe that we will be able, to continue to pay our debts as they become due in the future,
(c) we understand that, as beneficial owner of the Class R Certificate, we may incur tax liabilities in
excess of any cash flows generated by the Class R Certificate, and (d) we intend to pay any taxes
associated with holding the Class R Certificate as they become due and (e) we will not cause income from
the Class R Certificate to be attributable to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of ours or another U.S. taxpayer.
3. We acknowledge that we will be the beneficial owner of the Class R Certificate and:(1)
_____ The Class R Certificate will be registered in our name.
_____ The Class R Certificate will be held in the name of our nominee, _________________,
which is not a disqualified organization.
____________________________
(1) Check appropriate box and if necessary fill in the name of the Transferee's nominee.
E-1-1
4. We certify that we are not an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), a plan subject to Section 4975 of the Code
or a plan subject to federal, state, local, non-U.S. or other law substantively similar to the foregoing
provisions of ERISA or the Code (each, a "Plan"), and are not directly or indirectly acquiring the Class
R Certificate on behalf of or with any assets of a Plan.
5. We certify that (i) we are a U.S. person or (ii) we will hold the Class R Certificate
in connection with the conduct of a trade or business within the United States and have furnished the
transferor and the Trustee with a duly completed and effective Internal Revenue Service Form W-8ECI or
successor form at the time and in the manner required by the Code; for this purpose the term "U.S.
person" means a citizen or resident of the United States, a corporation, or partnership (unless, in the
case of a partnership, Treasury regulations are adopted that provide otherwise) created or organized in
or under the laws of the United States, any State thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes, an estate whose income
is subject to United States federal income tax regardless of the source of its income, or 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 such U.S. persons have the authority to control all substantial decisions of the
trust (or, to the extent provided in applicable Treasury regulations, certain trusts in existence on
August 20, 1996 which are eligible to elect to be treated as U.S. Persons. We agree that any breach by
us of this certification shall render the transfer of any interest in the Class R Certificate to us
absolutely null and void and shall cause no rights in the Class R Certificate to vest in us.
6. We agree that in the event that at some future time we wish to transfer any interest
in the Class R Certificate, we will transfer such interest in the Class R Certificate only (a) to a
transferee that (i) is not a disqualified organization and is not purchasing such interest in the Class
R Certificate on behalf of a disqualified organization, (ii) is a U.S. person or will hold the Class R
Certificate in connection with the conduct of a trade or business within the United States and will
furnish us and the Trustee with a duly completed and effective Internal Revenue Service Form W-8ECI or
successor form at the time and in the manner required by the Code and (iii) has delivered to the Trustee
a letter in the form of this letter (including the affidavit appended hereto) and, we will provide the
Trustee a written statement substantially in the form of Exhibit E-2 to the Pooling and Servicing
Agreement.
7. We hereby designate _______________________ as our fiduciary to act as the tax matters
person for each of the REMICs provided for in the Pooling and Servicing Agreement.
Very truly yours,
[PURCHASER]
By:___________________________________________
Name:
Title:
Accepted as of __________ __, 200__
WACHOVIA MORTGAGE LOAN TRUST, LLC
By: ___________________________________________
Name:
Title:
E-1-2
APPENDIX A
Affidavit pursuant to (i) Section 860E(e)(4) of the
Internal Revenue Code of 1986, as amended, and (ii)
certain provisions of the Pooling and Servicing
Agreement
Under penalties of perjury, the undersigned declares that the following is true:
1. He or she is an officer of _________________________ (the "Transferee"),
2. the Transferee's Employer Identification number is __________,
3. the Transferee is not a "disqualified organization" (as defined below), has no
plan or intention of becoming a disqualified organization, and is not
acquiring any of its interest in the Wachovia Mortgage Loan Trust,
Asset-Backed Certificates, Series 2006-ALT1, Class R Certificate on behalf of
a disqualified organization or any other entity,
4. unless Wachovia Mortgage Loan Trust, LLC ("WMLT") has consented to the
transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is affixed as
Appendix A, the Transferee is a "U.S. person" (as defined below),
5. that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
6. the Transferee has historically paid its debts as they became due,
7. the Transferee intends, and believes that it will be able, to continue to pay
its debts as they become due in the future,
8. the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificate,
9. the Transferee intends to pay any taxes associated with holding the Class R
Certificate as they become due,
10. the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by WMLT (upon advice of counsel) to
constitute a reasonable arrangement to ensure that the Class R Certificate
will not be owned directly or indirectly by a disqualified organization, and
11. IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the transfer is
not a direct or indirect transfer of the Class R Certificate to a foreign
permanent establishment or fixed base (within the meaning of an applicable
income tax treaty) of the Transferee, and as to each of the residual interests
represented by the Class R Certificate, the present value of the anticipated
tax liabilities associated with holding such residual interest does not exceed
the sum of:
E-1-4
A. the present value of any consideration given to the Transferee to
acquire such residual interest;
B. the present value of the expected future distributions on such
residual interest; and
C. the present value of the anticipated tax savings associated with
holding such residual interest as the related REMIC generates losses.
For purposes of this declaration, (i) the Transferee is assumed to pay tax at a rate equal to
the highest rate of tax specified in Section 11(b)(1) of the Code, but the tax rate specified
in Section 55(b)(1)(B) of the Code may be used in lieu of the highest rate specified in Section
11(b)(1) of the Code if the Transferee has been subject to the alternative minimum tax under
Section 55 of the Code in the preceding two years and will compute its taxable income in the
current taxable year using the alternative minimum tax rate, and (ii) present values are
computed using a discount rate equal to the Federal short-term rate prescribed by Section
1274(d) of the Code for the month of the transfer and the compounding period used by the
Transferee;]
[(11) (A) at the time of the transfer, and at the close of each of the Transferee's two fiscal
years preceding the Transferee's fiscal year of transfer, the Transferee's gross
assets for financial reporting purposes exceed $100 million and its net assets for
financial reporting purposes exceed $10 million; and
(B) the Transferee is an eligible corporation as defined in Treasury regulations Section
1.860E-1(c)(6)(i) and has agreed in writing that any subsequent transfer of the Class
R Certificate will be to another eligible corporation in a transaction that satisfies
Treasury regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be a direct or
indirect transfer to a foreign permanent establishment (within the meaning of an
applicable income tax treaty) of a domestic corporation.
For purposes of this declaration, the gross and net assets of the Transferee do not include any
obligation of any related person as defined in Treasury regulation Section 1.860E-1(c)(6)(ii) or any
other asset if a principal purpose for holding or acquiring the other asset is to permit the Transferee
to make this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]
(12) The Transferee will not cause income from the Class R Certificate to be attributable to a
foreign permanent establishment or fixed base (within the meaning of an applicable income tax treaty) of
the Transferee or another U.S. taxpayer.
E-1-5
For purpose of this affidavit, the term "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 (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"Code")), any organization (other than a cooperative described in Section 521 of the Code) that is
exempt from taxation under the Code (unless such organization is subject to tax on excess inclusions)
and any organization that is described in Section 1381(a)(2)(C) of the Code and the term "U.S. Person"
means a citizen or resident of the United States, a corporation or partnership (unless, in the case of a
partnership, Treasury regulations are adopted that provide otherwise) created or organized in or under
the laws of the United States, any state thereof or the District of Columbia, including an entity
treated as a corporation or partnership for federal income tax purposes, an estate whose income is
subject to Unites States federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions of such trust, (or, to
the extent provided in applicable Treasury regulations, certain trusts in existence on August 20, 1996
which are eligible to elect to be treated as U.S. Persons).
__________________________________________________________________________
By:
_________________________________________________________________
_________________________________________________________________
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
__________________________________________________
, Secretary
__________________________________________________
E-1-6
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 to
me 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 ,
200_ .
_____________________________________________________
Notary Public
County of____________________________________________
State of_____________________________________________
My commission expires the ________ day of ______________
By:
Name:_______________________________________
Title: _____________________________________
Dated: _______________
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF TRANSFEROR'S AFFIDAVIT
[DATE]
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Transfer Unit / WMLT 2006-ALT1
Re: Wachovia Mortgage Loan Trust, Asset-Backed Certificates,
Series 2006-ALT1
_______________________ (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 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 the Class R
Certificate referred to in the attached affidavit. 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:
E-2-1
EXHIBIT F
FORM OF TRANSFEROR CERTIFICATE
[DATE]
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Transfer Unit / WMLT 2006-ALT1
RE: Wachovia Mortgage Loan Trust, Asset-Backed Certificates, Series 2006-ALT1
Ladies and Gentlemen:
In connection with our disposition of the Class [____] Certificate, we certify that (a) we
understand that the Certificates have not been registered under the Securities Act of 1933, as amended
(the "Act"), and are being disposed by us in a transaction that is exempt from the registration
requirements of the Act and (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated with any person with
respect thereto, in a manner that would be deemed, or taken any other action that would result in, a
violation of Section 5 of the Act. All capitalized terms used herein but not defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement dated as of December 27, 2006,
among Wachovia Mortgage Loan Trust, LLC, as depositor, U.S. Bank National Association, as trustee,
supplemental interest trust trustee and custodian, ▇▇▇▇▇ Fargo Bank, N.A., as a servicer and National
City Mortgage Co., as a servicer.
Very truly yours,
____________________________________________
Name of Transferor
By:_________________________________________
Name:
Title
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER
(Accredited Investor)
[DATE]
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Transfer Unit / WMLT 2006-ALT1
Re: Wachovia Mortgage Loan Trust, Asset-Backed Certificates,
Series 2006-ALT1
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________ (the "Transferor")
$_______ by original principal balance (the "Transferred Certificates") of Wachovia Mortgage Loan Trust,
Asset-Backed Certificates, Series 2006-ALT1, Class [____] (the "Certificates"), issued pursuant to a
Pooling and Servicing Agreement, dated as of December 27, 2006 (the "Pooling and Servicing Agreement"),
among Wachovia Mortgage Loan Trust, LLC, as depositor (the "Depositor"), U.S. Bank National Association,
as trustee (in its capacity as trustee, the "Trustee"), supplemental interest trust trustee (in its
capacity as supplemental interest trust trustee, the "Supplemental Interest Trust Trustee") and
custodian (in its capacity as custodian, the "Custodian"), ▇▇▇▇▇ Fargo Bank, N.A., as a servicer and
National City Mortgage Co., as a servicer (together with ▇▇▇▇▇ Fargo Bank, N.A., the "Servicers"). [The
Purchaser intends to register the Transferred Certificate in the name of ____________________, as
nominee for _________________.] All terms used and not otherwise defined herein shall have the meanings
set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Purchaser certifies, represents and warrants to, and covenants with, the Depositor and
the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been registered or
qualified under the Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of
any state, (b) neither the Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold unless (i) they are
registered and qualified under the Securities Act and the applicable state securities laws or (ii) an
exemption from registration and qualification is available and (d) the Pooling and Servicing Agreement
contains restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "1940 ACT") OR ANY STATE SECURITIES
OR "BLUE SKY" LAWS, AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR
OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940
G-1
ACT AND ANY APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS
CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRUSTEE (A) AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B)
REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE CERTIFICATES. EACH
HOLDER OF THIS CERTIFICATE IS DEEMED TO REPRESENT THAT AS OF ANY DATE PRIOR TO THE TERMINATION
OF THE SWAP AGREEMENT, AT LEAST ONE OF U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTIONS 84-14, 90-1, 91-38, 95-60, 96-23 OR OTHER APPLICABLE EXEMPTION APPLIES TO SUCH
HOLDER'S RIGHT TO RECEIVE PAYMENTS FROM THE SUPPLEMENTAL INTEREST TRUST.
3. The ERISA Restricted Certificates (other than the Class R Certificates) will bear a
legend to the following effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE HAS RECEIVED (A) A
REPRESENTATION THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR A PLAN SUBJECT TO
STATE, LOCAL, FEDERAL, NON-U.S. OR OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS
OF ERISA OR THE CODE ("SIMILAR LAW"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS
CERTIFICATE BY, ON BEHALF OF, OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF THE CERTIFICATE HAS
BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A REPRESENTATION THAT SUCH TRANSFEREE IS
AN INSURANCE COMPANY THAT IS ACQUIRING THE CERTIFICATE WITH ASSETS OF AN "INSURANCE COMPANY
GENERAL ACCOUNT" AS DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE")
95-60 AND THE ACQUISITION AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT UNDER SECTIONS
I AND III OF PTCE 95-60, OR (C) SOLELY IN THE CASE OF A DEFINITIVE CERTIFICATE, AN OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE, AND UPON WHICH THE TRUSTEE SHALL BE ENTITLED TO RELY, TO
THE EFFECT THAT THE ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE
WILL NOT CONSTITUTE OR RESULT IN A NONEXEMPT PROHIBITED TRANSACTION UNDER TITLE I OF ERISA OR
SECTION 4975 OF THE CODE OR A VIOLATION OF SIMILAR LAW AND WILL NOT SUBJECT THE TRUSTEE, THE
SERVICERS 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, THE SERVICERS OR THE DEPOSITOR. IF THE CERTIFICATE IS NOT A DEFINITIVE CERTIFICATE,
THE TRANSFEREE IS DEEMED TO HAVE MADE THE REPRESENTATION IN (A) OR (B) ABOVE.
4. The Class R Certificate will bear a legend to the following effect:
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE TRANSFEREE PROVIDES
THE TRUSTEE WITH A REPRESENTATION THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), A PLAN
G-2
SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO STATE, LOCAL, FEDERAL, NON-U.S. OR
OTHER LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR
LAW"), AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS CERTIFICATE BY, ON BEHALF OF, OR WITH
ANY ASSETS OF ANY SUCH PLAN.
5. The Purchaser is acquiring the Transferred Certificates for its own account [for
investment only]* and not with a view to or for sale or other transfer in connection with any
distribution of the Transferred Certificates in any manner that would violate the Securities Act or any
applicable state securities laws, subject, nevertheless, to the understanding that disposition of the
Purchaser's property shall at all times be and remain within its control.
6. The Purchaser (a) is a substantial, sophisticated institutional investor having such
knowledge and experience in financial and business matters, and in particular in such matters related to
securities similar to the Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such an investment and (c) is
an "accredited investor" within the meaning of Rule 501(a) promulgated pursuant to the Securities Act.
7. The Purchaser will not nor has it authorized nor will it authorize any person to (a)
offer, pledge, sell, dispose of or otherwise transfer any Certificate, any interest in any Certificate
or any other similar security to any person in any manner, (b) solicit any offer to buy or to accept a
pledge, disposition or other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other similar security with any person in any
manner, (d) make any general solicitation by means of general advertising or in any other manner, or (e)
take any other action, that would constitute a distribution of any Certificate under the Securities Act
or the Investment Company Act of 1940, as amended (the "1940 Act"), that would render the disposition of
any Certificate a violation of Section 5 of the Securities Act or any state securities law, or that
would require registration or qualification pursuant thereto. Neither the Purchaser nor anyone acting on
its behalf has offered the Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The Purchaser will not sell or
otherwise transfer any of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
8. The Purchaser of an ERISA Restricted Certificate (other than the Class R Certificate)
(A) is not an employee benefit plan subject to Title I of ERISA, a plan subject to Section 4975 of the
Code, a plan subject to any state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law") and is not directly or indirectly acquiring
such Certificates by, on behalf of, or with any assets of any such plan, or (B) if the Certificate has
been the subject of an ERISA-Qualifying Underwriting, is an insurance company that is acquiring the
Certificate with assets of an "insurance company general account," as defined in Section V(e) of
Prohibited Transaction Class Exemption ("PTCE") 95-60, and the acquisition and holding of the
Certificate are covered and exempt under Sections I and III of PTCE 95-60, or (C) solely in the event
the Certificate is a Definitive Certificate, herewith delivers an Opinion of Counsel satisfactory to the
Trustee, and upon which the Trustee shall be entitled to rely, to the effect that the acquisition and
holding of the Certificate will not constitute or result in a nonexempt prohibited transaction under
Title I of ERISA or Section 4975 of the Code, or a violation of Similar Law, and will not subject the
Trustee, the Servicers or the Depositor to any obligation in addition to those expressly undertaken in
_____________________
* Not required of a broker/dealer purchaser.
G-3
the Pooling and Servicing Agreement, which Opinion of Counsel shall not be an expense of the Trustee,
the Servicers or the Depositor.
9. The Purchaser of a Class R Certificate is not an employee benefit plan subject to
Title I of ERISA, a plan subject to Section 4975 of the Code, a plan subject to any state, local,
federal, non-U.S. or other law substantively similar to the foregoing provisions of ERISA or the Code
("Similar Law"), or a Person directly or indirectly acquiring such Certificate by, on behalf of, or with
any assets of any such plan.
10. With respect to Certificates other than ERISA Restricted Certificates, the Purchaser
represents that as of any date prior to the termination of the Swap Agreement, at least one of U.S.
Department of Labor Prohibited Transaction Class Exemptions 84-14, 90-1, 91-38, 95-60, 96-23 or other
applicable exemption applies to the Purchaser's right to receive payments from the Supplemental Interest
Trust.
11. Prior to the sale or transfer by the Purchaser of any of the Certificates, the
Purchaser will obtain from any subsequent purchaser substantially the same certifications,
representations, warranties and covenants contained in the foregoing paragraphs and in this letter or a
letter substantially in the form of Exhibit H to the Pooling and Servicing Agreement.
12. The Purchaser agrees to indemnify the Trustee, the Servicers and the Depositor against
any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:__________________________________________________
Name:
Title:
G-4
EXHIBIT H
FORM OF RULE 144A INVESTMENT LETTER
(Qualified Institutional Buyer)
[DATE]
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Transfer Unit / WMLT 2006-ALT1
Re: Wachovia Mortgage Loan Trust, Asset-Backed Certificates,
Series 2006-ALT1
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from ________________ (the "Transferor")
$_______ by original principal balance (the "Transferred Certificates") of Wachovia Mortgage Loan Trust,
Asset-Backed Certificates, Series 2006-ALT1, Class [____] (the "Certificates"), issued pursuant to a
Pooling and Servicing Agreement, dated as of December 27, 2006 (the "Pooling and Servicing Agreement"),
among Wachovia Mortgage Loan Trust, LLC, as depositor (the "Depositor"), U.S. Bank National Association,
as trustee (in its capacity as trustee, the "Trustee"), supplemental interest trust trustee (in its
capacity as supplemental interest trust trustee, the "Supplemental Interest Trust Trustee") and
custodian (in its capacity as custodian, the "Custodian"), ▇▇▇▇▇ Fargo Bank, N.A., as a servicer and
National City Mortgage Co., as a servicer (together with ▇▇▇▇▇ Fargo Bank, N.A., the "Servicers"). [The
Purchaser intends to register the Transferred Certificate in the name of ____________________, as
nominee for _________________.] All terms used and not otherwise defined herein shall have the meanings
set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Purchaser certifies, represents and warrants to, and covenants with, the Depositor and
the Trustee that:
In connection with our acquisition of the above Transferred Certificates we certify that (a) we
understand that the Certificates are not being registered under the Securities Act of 1933, as amended
(the "Act"), or any state securities laws and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b) we have such knowledge and
experience in financial and business matters that we are capable of evaluating the merits and risks of
investments in the Certificates, (c) we have had the opportunity to ask questions of and receive answers
from the Depositor concerning the purchase of the Transferred Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to purchase the Transferred
Certificates, (d)(A) solely with respect to ERISA Restricted Certificates, we are not an employee
benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
a plan subject to any state, local, federal, non-U.S. or other law substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law"), or Persons directly or indirectly acting on
behalf of or using any assets of any such plan, or (B) solely with respect to ERISA Restricted
Certificates (other than the Class R Certificates), if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, we are an insurance company that is acquiring the Certificate with assets
of an "insurance company general account," as defined in Section V(e) of Prohibited Transaction Class
H-1
Exemption ("PTCE") 95-60, and the acquisition and holding of the Certificate are covered and exempt
under Sections I and III of PTCE 95-60, or (C) solely in the event the Certificate is an ERISA
Restricted Certificate (other than a Class R Certificate) and also a Definitive Certificate, we will
herewith deliver an Opinion of Counsel satisfactory to the Trustee, and upon which the Trustee shall be
entitled to rely, to the effect that the acquisition and holding of the Certificate will not constitute
or result in a nonexempt prohibited transaction under Title I of ERISA or Section 4975 of the Code, or a
violation of Similar Law, and will not subject the Trustee, the Servicers or the Depositor to any
obligation in addition to those expressly undertaken in the Pooling and Servicing Agreement, which
Opinion of Counsel shall not be an expense of the Trustee, the Servicers or the Depositor, (e) we have
not, nor has anyone acting on our behalf offered, transferred, pledged, sold or otherwise disposed of
the Certificates, any interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or negotiated with respect to
the Certificates, any interest in the Certificates or any other similar security with, any person in any
manner, or made any general solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the Certificates under the Securities
Act or that would render the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized or will authorize any
person to act, in such manner with respect to the Certificates, (f) we are a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act and have completed one of the forms
of certification to that effect attached hereto as Annex 1 or Annex 2. We are aware that the sale of
the Transferred Certificates to us is being made in reliance on Rule 144A. We are acquiring the
Transferred Certificates for our own account or for resale pursuant to Rule 144A and further understand
that such Certificates may be resold, pledged or transferred only (i) to a person reasonably believed by
us, based upon certifications of such purchaser or information we have in our possession, to be a
qualified institutional buyer that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from registration under the Securities
Act. With respect to Certificates other than ERISA Restricted Certificates, as of any date prior to the
termination of the Swap Agreement, at least one of PTCE 84-14, 90-1, 91-38, 95-60, 96-23 or other
applicable exemption applies to our right to receive payments from the Supplemental Interest Trust.
We agree to indemnify the Trustee, the Servicers and the Depositor against any liability that
may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By: _________________________________________________
Name:
Title:
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties listed in the Rule
144A Transferee Certificate to which this certification relates with respect to the Certificates
described therein:
1. As indicated below, the undersigned is the President, Chief Financial Officer, Senior
Vice President or other executive officer of the Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act of 1933, as amended ("Rule 144A")
because (i) the Buyer owned and/or invested on a discretionary basis $____________* in securities
(except for the excluded securities referred to below) as of the end of the Buyer's most recent fiscal
year (such amount being calculated in accordance with Rule 144A) and (ii) the Buyer satisfies the
criteria in the category marked below.
__________ Corporation, etc. The Buyer is a corporation (other than a bank, savings and loan
association or similar institution), Massachusetts or similar business trust,
partnership, or charitable organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
__________ Bank. The Buyer (a) is a national bank or banking institution organized under the
laws of any State, territory or the District of Columbia, the business of which is
substantially confined to banking and is supervised by Federal, State or territorial
banking commission or similar official or is a foreign bank or equivalent institution,
and (b) has an audited net worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
__________ Savings and Loan. The Buyer (a) is a savings and loan association, building and loan
association, cooperative bank, homestead association or similar institution, which is
supervised and examined by a State or Federal authority having supervision over such
institution or is a foreign savings and loan association or equivalent institution and
(b) has an audited net worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
__________ Broker-dealer. The Buyer is a dealer registered pursuant to Section 15 of the
_______________________
* Buyer must own and/or invest on a discretionary basis at least $100,000,000 in securities unless Buyer
is a dealer, and, in that case, Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
H-3
Securities Exchange Act of 1934, as amended.
__________ Insurance Company. The Buyer is an insurance company whose primary and predominant
business activity is the writing of insurance or the reinsuring of risks underwritten
by insurance companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of the State, territory or the District
of Columbia.
__________ State or Local Plan. The Buyer is a plan established and maintained by a State, its
political subdivisions, or any agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
__________ ERISA Plan. The Buyer is an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended.
Investment Advisor. The Buyer is an investment advisor registered under the
Investment Advisors Act of 1940, as amended.
__________ Small Business Investment Company. Buyer is a small business investment company
licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958, as amended.
__________ Business Development Company. Buyer is a business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the dollar amount in
paragraph 2 excludes: (i) securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer, (iii)
securities issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank deposit notes and
certificates of deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned and/or invested
on a discretionary basis by the Buyer, the Buyer used the cost of such securities to the Buyer and did
not include any of the securities referred to in the preceding paragraph, except (i) where the Buyer
reports its securities holdings in its financial statements on the basis of their market value, and (ii)
no current information with respect to the cost of those securities has been published. If clause (ii)
in the preceding sentence applies, the securities may be valued at market. Further, in determining such
aggregate amount, the Buyer may have included securities owned by subsidiaries of the Buyer, but only if
such subsidiaries are consolidated with the Buyer in its financial statements prepared in accordance
with generally accepted accounting principles and if the investments of such subsidiaries are managed
under the Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is not itself a reporting
company under the Securities Exchange Act of 1934, as amended.
H-4
5. The Buyer acknowledges that it is familiar with Rule 144A and understands that the
seller to it and other parties related to the Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer will notify each of
the parties to which this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.
By:___________________________________________________________
Name:
Title:
Date:_________________________________________________________
H-5
ANNEX 2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties listed in the Rule
144A Transferee Certificate to which this certification relates with respect to the Certificates
described therein:
1._______As indicated below, the undersigned is the President, Chief Financial Officer or
Senior Vice President of the Buyer or, if the Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933, as amended ("Rule 144A"), because Buyer is part
of a Family of Investment Companies (as defined below), is such an officer of the Adviser.
2._______In connection with purchases by Buyer, the Buyer is a "qualified institutional buyer"
as defined in Rule 144A because (i) the Buyer is an investment company registered under the Investment
Company Act of 1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For purposes of determining
the amount of securities owned by the Buyer or the Buyer's Family of Investment Companies, the cost of
such securities was used, except (i) where the Buyer or the Buyer's Family of Investment Companies
reports its securities holdings in its financial statements on the basis of their market value, and (ii)
no current information with respect to the cost of those securities has been published. If clause (ii)
in the preceding sentence applies, the securities may be valued at market.
__________ The Buyer owned $___________ in securities (other than the excluded securities referred to
below) as of the end of the Buyer's most recent fiscal year (such amount being calculated in
__________ The Buyer is part of a Family of Investment Companies which owned in the aggregate $__________
in securities (other than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or more registered
investment companies (or series thereof) that have the same investment adviser or investment advisers
that are affiliated (by virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of issuers that
are affiliated with the Buyer or are part of the Buyer's Family of Investment Companies, (ii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the parties listed in the
Rule 144A Transferee Certificate to which this certification relates are relying and will continue to
rely on the statements made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
H-6
6. Until the date of purchase of the Certificates, the undersigned will notify the
parties listed in the Rule 144A Transferee Certificate to which this certification relates of any
changes in the information and conclusions herein. Until such notice is given, the Buyer's purchase of
the Certificates will constitute a reaffirmation of this certification by the undersigned as of the date
of such purchase.
By:__________________________________________________
Name:
Title:
IF AN ADVISER:
_____________________________________________________
Print Name of Buyer
Date:________________________________________________
H-7
EXHIBIT I
FORM OF REQUEST FOR RELEASE
[DATE]
To: U.S. Bank National Association
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Document Collateral Servicers / WMLT 2006-ALT1
Re: Wachovia Mortgage Loan Trust, Asset-Backed Certificates,
Series 2006-ALT1
In connection with the administration of the Mortgage Loans held by you, as Trustee, pursuant
to the Pooling and Servicing Agreement dated as of December 27, 2006 among Wachovia Mortgage Loan Trust,
LLC, as depositor, U.S. Bank National Association, as trustee, supplemental interest trust trustee and
custodian, ▇▇▇▇▇ Fargo Bank, N.A., as a servicer and National City Mortgage Co., as a servicer (together
with ▇▇▇▇▇ Fargo Bank, N.A., the "Servicers") (the "Pooling and Servicing Agreement"), we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage Loan described below, for
the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_____________ 1. Mortgage Paid in Full
_____________ 2. Foreclosure
_____________ 3. Substitution
_____________ 4. Other Liquidation (Repurchases, etc.)
_____________ 5. Nonliquidation
_____________
Address to which the Custodian should deliver the Mortgage File:
By:__________________________________________________
(authorized signer)
Address:_____________________________________________
Date:________________________________________________
I-1
If box 1 or 2 above is checked, and if all or part of the Mortgage File was previously released to us,
please release to us our previous receipt on file with you, as well as any additional documents in your
possession relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above documents to you as Trustee,
please acknowledge your receipt by signing in the space indicated below, and returning this form.
Please acknowledge the execution of the above request by your signature and date below:
U.S. BANK NATIONAL ASSOCIATION
as Custodian
By:
_____________________________________________ ____________________________________________________
Signature Date
Documents returned to Custodian:
By:
_____________________________________________ ____________________________________________________
Signature Date
I-2
EXHIBIT J
FORM OF TRANSFEROR REPRESENTATION LETTER
FOR TRANSFER TO REGULATION S NOTE
Date:________________
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Transfer Unit /WMLT 2006-ALT1
RE: Wachovia Mortgage Loan Trust, Series 2006-ALT1, Class [X][P]
Ladies and Gentlemen:
In connection with our disposition of the above Notes and to effect the transfer
pursuant to Regulation S under the Securities Act of 1933, as amended ("Regulation S") of the above
Notes we hereby certify that such transfer has been effected in accordance with (i) the transfer
restrictions set forth in the Pooling and Servicing Agreement, dated December 27, 2006 among Wachovia
Mortgage Loan Trust, LLC, as depositor, U.S. Bank National Association, as trustee, supplemental
interest trust trustee and as custodian, ▇▇▇▇▇ Fargo Bank, N.A., as a servicer and National City
Mortgage Co., as a servicer, and in the Certificates and (ii) in accordance with Regulation S, and that:
a. the offer of the Certificates was not made to a person in the United States;
b. at the time the buy order was originated, the transferee was outside the
United States or we and any person acting on our behalf reasonably believed that the transferee was
outside the United States;
c. no directed selling efforts have been made in contravention of the
requirements of Rule 903 or 904 of Regulation S, as applicable;
d. the transaction is not part of a plan or scheme to evade the registration
requirements of the United States Securities Act of 1933, as amended; and
e. the transferee is not a U.S. Person (as defined by Regulation S).
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 proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
J-1
Very truly yours,
___________________________________________________
Print Name of Transferor
By:________________________________________________
Authorized Officer
J-2
EXHIBIT K
[RESERVED]
K-1
EXHIBIT L
[RESERVED]
L-1
EXHIBIT M
FORM OF SWAP AGREEMENT
[INTENTIONALLY OMITTED]
M-1
EXHIBIT N
FORM OF 10-K CERTIFICATION
Re: The Pooling and Servicing Agreement, dated as of December 27, 2006 (the "Pooling and
Servicing Agreement"), among Wachovia Mortgage Loan Trust, LLC, as depositor (the
"Depositor"), U.S. Bank National Association, as trustee (in its capacity as trustee,
the "Trustee"), supplemental interest trust trustee (in its capacity as supplemental
interest trust trustee, the "Supplemental Interest Trust Trustee") and custodian (in
its capacity as custodian, the "Custodian"), ▇▇▇▇▇ Fargo Bank, N.A., as a servicer and
National City Mortgage Co., as a servicer (together with ▇▇▇▇▇ Fargo Bank, N.A., the
"Servicers").
I, _______________________, the ________________________ of [NAME OF COMPANY] (the "Company"),
certify to the Depositor, the Servicers, the Trustee, and their officers, with the knowledge and intent
that they will rely upon this certification, that:
(1) I have reviewed (i) the servicer compliance statement of the Company provided in
accordance with Section 11.06 of the Pooling and Servicing Agreement (the "Item 1123 Certificate"),
(ii) the report on assessment of the Company's compliance with the servicing criteria provided in
accordance with Section 11.07 of the Pooling and Servicing Agreement, (iii) the registered public
accounting firm's attestation report provided in accordance with Section 11.08 of the Pooling and
Servicing Agreement (the "Accountant's Attestation"), and all servicing reports, officer's certificates
and other information relating to the servicing of the Mortgage Loans by the Company during 200[ ] that
were delivered by the Company to the Trustee pursuant to the Agreement (collectively, the "Company
Servicing Information");
(2) Based, on my knowledge, the Company Servicing Information, 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 the light of the circumstances under which such statements were made, not misleading
with respect to the period of time covered by the Company Servicing Information;
(3) Based on my knowledge, all of the Company Servicing Information required to be
provided by the Company under the Agreement has been provided to the Trustee;
(4) I am responsible for reviewing the activities performed by the Company as services
under the Agreement, and based on my knowledge and the compliance review conducted in preparing the Item
1123 Certificate and except as disclosed in the Item 1123 Certificate, the Assessment of Compliance or
the Accountant's Attestation, the Company has fulfilled its obligations under the Agreement in all
material respects; and
(5) Any material instances of noncompliance described in such reports have been disclosed
to the Trustee and any material instance of noncompliance with the Servicing Criteria has been disclosed
in such reports.
By:_________________________________
Name:
Title
Date: _________________________
N-1
EXHIBIT O
RELEVANT SERVICING CRITERIA
The assessment of compliance to be delivered by the Servicers and the Trustee shall address, at
a minimum, the criteria identified as below as "Applicable Servicing Criteria" with respect to such
party:
Where there are multiple checks for criteria the attesting party will identify in their management
assertion that they are attesting only to the portion of the distribution chain they are responsible for
in the related transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Regulation AB Servicing Criteria Servicer Trustee
Reference
------------------ ----------------------------------------- --------------------------- ----------------------------
General Servicing Considerations
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(1)(i) Policies and procedures are instituted X X
to monitor any performance or other
triggers and events of default in
accordance with the transaction
agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(1)(ii) If any material servicing activities X
are outsourced to third parties,
policies and procedures are instituted
to monitor the third party's
performance and compliance with such
servicing activities.
------------------ ----------------------------------------- --------------------------- ----------------------------
Any requirements in the transaction
agreements to maintain a back-up
servicer for the Pool Assets are
1122(d)(1)(iii) maintained.
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(1)(iv) A fidelity bond and errors and X
omissions policy is in effect on the
party participating in the servicing
function throughout the reporting
period in the amount of coverage
required by and otherwise in accordance
with the terms of the transaction
agreements.
------------------ ----------------------------------------- ------------------ -------------------------------------
Cash Collection and Administration
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(2)(i) Payments on pool assets are deposited X X
into the appropriate custodial bank
accounts and related bank clearing
accounts no more than two business days
following receipt, or such other number
of days specified in the transaction
agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Disbursements made via wire transfer on X X
behalf of an obligor or to an investor
1122(d)(2)(ii) are made only by authorized personnel.
------------------ ----------------------------------------- --------------------------- ----------------------------
Advances of funds or guarantees X
regarding collections, cash flows or
distributions, and any interest or
other fees charged for such advances,
are made, reviewed and approved as
specified in the transaction
1122(d)(2)(iii) agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
The related accounts for the X X
transaction, such as cash reserve
accounts or accounts established as a
form of over collateralization, are
separately maintained (e.g., with
respect to commingling of cash) as set
1122(d)(2)(iv) forth in the transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Each custodial account is maintained at X
a federally insured depository
institution as set forth in the
transaction agreements. For purposes of
this criterion, "federally insured
depository institution" with respect to
a foreign financial institution means a
foreign financial institution that
meets the requirements of Rule
13k-1(b)(1) of the Securities Exchange
1122(d)(2)(v) Act.
------------------ ----------------------------------------- --------------------------- ----------------------------
Q-1
------------------ ----------------------------------------- --------------------------- ----------------------------
Unissued checks are safeguarded so as X
1122(d)(2)(vi) to prevent unauthorized access.
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(2)(vii) Reconciliations are prepared on a X X
monthly basis for all asset-backed
securities related bank accounts,
including custodial accounts and
related bank clearing accounts. These
reconciliations are (A) mathematically
accurate; (B) prepared within 30
calendar days after the bank statement
cutoff date, or such other number of
days specified in the transaction
agreements; (C) reviewed and approved
by someone other than the person who
prepared the reconciliation; and (D)
contain explanations for reconciling
items. These reconciling items are
resolved within 90 calendar days of
their original identification, or such
other number of days specified in the
transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Investor Remittances and Reporting
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(3)(i) Reports to investors, including those X X
to be filed with the Commission, are
maintained in accordance with the
transaction agreements and applicable
Commission requirements. Specifically,
such reports (A) are prepared in
accordance with timeframes and other
terms set forth in the transaction
agreements; (B) provide information
calculated in accordance with the terms
specified in the transaction
agreements; (C) are filed with the
Commission as required by its rules and
regulations; and (D) agree with
investors' or the trustee's records as
to the total unpaid principal balance
and number of Pool Assets serviced by
the Servicer.
------------------ ----------------------------------------- --------------------------- ----------------------------
Amounts due to investors are allocated X X
and remitted in accordance with
timeframes, distribution priority and
other terms set forth in the
1122(d)(3)(ii) transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Disbursements made to an investor are X X
posted within two business days to the
Servicer's investor records, or such
other number of days specified in the
1122(d)(3)(iii) transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Amounts remitted to investors per the X X
investor reports agree with cancelled
checks, or other form of payment, or
1122(d)(3)(iv) custodial bank statements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Pool Asset Administration
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(4)(i) Collateral or security on pool assets X
is maintained as required by the
transaction agreements or related pool
asset documents.
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(4)(ii) Pool assets and related documents are X
safeguarded as required by the
transaction agreements
------------------ ----------------------------------------- --------------------------- ----------------------------
Q-2
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(4)(iii) Any additions, removals or X
substitutions to the asset pool are
made, reviewed and approved in
accordance with any conditions or
requirements in the transaction
agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(4)(iv) Payments on pool assets, including any X
payoffs, made in accordance with the
related pool asset documents are posted
to the Servicer's obligor records
maintained no more than two business
days after receipt, or such other
number of days specified in the
transaction agreements, and allocated
to principal, interest or other items
(e.g., escrow) in accordance with the
related pool asset documents.
------------------ ----------------------------------------- --------------------------- ----------------------------
The Servicer's records regarding the X
pool assets agree with the Servicer's
records with respect to an obligor's
1122(d)(4)(v) unpaid principal balance.
------------------ ----------------------------------------- --------------------------- ----------------------------
Changes with respect to the terms or X
status of an obligor's pool assets
(e.g., loan modifications or re-agings)
are made, reviewed and approved by
authorized personnel in accordance with
the transaction agreements and related
1122(d)(4)(vi) pool asset documents.
------------------ ----------------------------------------- --------------------------- ----------------------------
Loss mitigation or recovery actions X
(e.g., forbearance plans, modifications
and deeds in lieu of foreclosure,
foreclosures and repossessions, as
applicable) are initiated, conducted
and concluded in accordance with the
timeframes or other requirements
established by the transaction
1122(d)(4)(vii) agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(4)(viii) Records documenting collection efforts X
are maintained during the period a pool
asset is delinquent in accordance with
the transaction agreements. Such
records are maintained on at least a
monthly basis, or such other period
specified in the transaction
agreements, and describe the entity's
activities in monitoring delinquent
pool assets including, for example,
phone calls, letters and payment
rescheduling plans in cases where
delinquency is deemed temporary (e.g.,
illness or unemployment).
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(4)(ix) Adjustments to interest rates or rates X
of return for pool assets with variable
rates are computed based on the related
pool asset documents.
------------------ ----------------------------------------- --------------------------- ----------------------------
1122(d)(4)(x) Regarding any funds held in trust for X
an obligor (such as escrow accounts):
(A) such funds are analyzed, in
accordance with the obligor's pool
asset documents, on at least an annual
basis, or such other period specified
in the transaction agreements; (B)
interest on such funds is paid, or
credited, to obligors in accordance
with applicable pool asset documents
and state laws; and (C) such funds are
returned to the obligor within 30
calendar days of full repayment of the
related pool assets, or such other
number of days specified in the
transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Q-3
------------------ ----------------------------------------- --------------------------- ----------------------------
Payments made on behalf of an obligor X
(such as tax or insurance payments) are
made on or before the related penalty
or expiration dates, as indicated on
the appropriate bills or notices for
such payments, provided that such
support has been received by the
servicer at least 30 calendar days
prior to these dates, or such other
number of days specified in the
1122(d)(4)(xi) transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Any late payment penalties in X
connection with any payment to be made
on behalf of an obligor are paid from
the Servicer's funds and not charged to
the obligor, unless the late payment
was due to the obligor's error or
1122(d)(4)(xii) omission.
------------------ ----------------------------------------- --------------------------- ----------------------------
Disbursements made on behalf of an X
obligor are posted within two business
days to the obligor's records
maintained by the servicer, or such
other number of days specified in the
1122(d)(4)(xiii) transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Delinquencies, charge-offs and X
uncollectible accounts are recognized
and recorded in accordance with the
1122(d)(4)(xiv) transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Any external enhancement or other
support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
------------------ ----------------------------------------- --------------------------- ----------------------------
Q-4
EXHIBIT P
ADDITIONAL FORM 10-D DISCLOSURE
-------------------------------------------------------------------------------------------------------------------
ADDITIONAL FORM 10-D DISCLOSURE
---------------------------------------------------------- --------------------------------------------------------
Item on Form 10-D Party Responsible
---------------------------------------------------------- --------------------------------------------------------
Item 1: Distribution and Pool Performance Information
---------------------------------------------------------- --------------------------------------------------------
Information included in the [Monthly Statement] Each Servicer
Trustee
---------------------------------------------------------- --------------------------------------------------------
Any information required by 1121 which is NOT included Depositor
on the [Monthly Statement]
---------------------------------------------------------- --------------------------------------------------------
Item 2: Legal Proceedings
Any legal proceeding pending against the following
entities or their respective property, that is material
to Certificateholders, including any proceeding known to
be contemplated by governmental authorities:
---------------------------------------------------------- --------------------------------------------------------
o Issuing Entity (Trust Fund) Trustee, each Servicer and Depositor
---------------------------------------------------------- --------------------------------------------------------
o Sponsor (Seller) Seller (if a party to the Pooling and Servicing
Agreement) or Depositor
---------------------------------------------------------- --------------------------------------------------------
o Depositor Depositor
---------------------------------------------------------- --------------------------------------------------------
o Trustee Trustee
---------------------------------------------------------- --------------------------------------------------------
o Certificate Administrator N/A
---------------------------------------------------------- --------------------------------------------------------
o Master Servicer N/A
---------------------------------------------------------- --------------------------------------------------------
o Custodian Custodian
---------------------------------------------------------- --------------------------------------------------------
o 1110(b) Originator Depositor
---------------------------------------------------------- --------------------------------------------------------
o Any 1108(a)(2) Servicer Each Servicer
---------------------------------------------------------- --------------------------------------------------------
o Any other party contemplated by 1100(d)(1) Depositor
---------------------------------------------------------- --------------------------------------------------------
Item 3: Sale of Securities and Use of Proceeds Depositor
Information from Item 2(a) of Part II of Form 10-Q:
With respect to any sale of securities by the sponsor,
depositor or issuing entity, that are backed by the same
asset pool or are otherwise issued by the issuing
entity, whether or not registered, provide the sales and
use of proceeds information in Item 701 of Regulation
S-K. Pricing information can be omitted if securities
were not registered.
---------------------------------------------------------- --------------------------------------------------------
Item 4: Defaults Upon Senior Securities Trustee
Information from Item 3 of Part II of Form 10-Q:
Report the occurrence of any Event of Default (after
expiration of any grace period and provision of any
required notice)
---------------------------------------------------------- --------------------------------------------------------
P-1
---------------------------------------------------------- --------------------------------------------------------
Item 5: Submission of Matters to a Vote of Security Trustee
Holders
Information from Item 4 of Part II of Form 10-Q
---------------------------------------------------------- --------------------------------------------------------
Item 6: Significant Obligors of Pool Assets Depositor
Item 1112(b) - Significant Obligor Financial Information*
---------------------------------------------------------- --------------------------------------------------------
*This information need only be reported on the Form 10-D
for the distribution period in which updated information
is required pursuant to the Item.
---------------------------------------------------------- --------------------------------------------------------
Item 7: Significant Enhancement Provider Information
Item 1114(b)(2) - Credit Enhancement Provider Financial
Information*
---------------------------------------------------------- --------------------------------------------------------
o Determining applicable disclosure threshold Depositor
---------------------------------------------------------- --------------------------------------------------------
o Requesting required financial information (including Depositor
any required accountants' consent to the use thereof) or
effecting incorporation by reference
---------------------------------------------------------- --------------------------------------------------------
Item 1115(b) - Derivative Counterparty Financial
Information*
---------------------------------------------------------- --------------------------------------------------------
o Determining current maximum probable exposure Depositor
---------------------------------------------------------- --------------------------------------------------------
o Determining current significance percentage Depositor
---------------------------------------------------------- --------------------------------------------------------
o Requesting required financial information (including Depositor
any required accountants' consent to the use thereof) or
effecting incorporation by reference
---------------------------------------------------------- --------------------------------------------------------
*This information need only be reported on the Form 10-D
for the distribution period in which updated information
is required pursuant to the Items.
---------------------------------------------------------- --------------------------------------------------------
Item 8: Other Information Any party responsible for the applicable Form 8-K
Disclosure item
Disclose any information required to be reported on Form
8-K during the period covered by the Form 10-D but not
reported
---------------------------------------------------------- --------------------------------------------------------
Item 9: Exhibits
---------------------------------------------------------- --------------------------------------------------------
Monthly Statement to Certificateholders Trustee
---------------------------------------------------------- --------------------------------------------------------
Exhibits required by Item 601 of Regulation S-K, such as Depositor
material agreements
---------------------------------------------------------- --------------------------------------------------------
P-2
EXHIBIT Q
FORM OF MONTHLY STATEMENT
Q-1
EXHIBIT R
ADDITIONAL DISCLOSURE NOTIFICATION
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Structured Finance / WMLT 2006-ALT1
Email: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
Wachovia Mortgage Loan Trust, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: **Additional Form [10-D][10-K][8-K] Disclosure** Required
Ladies and Gentlemen:
In accordance with Article XI of the Pooling and Servicing Agreement, dated as of December 27, 2006 (the
"Pooling and Servicing Agreement"), among Wachovia Mortgage Loan Trust, LLC, as depositor, U.S. Bank
National Association, as trustee, supplemental interest trust trustee and custodian, ▇▇▇▇▇ Fargo Bank,
N.A., as a servicer and National City Mortgage Co., as a servicer, the undersigned, as [ ],
hereby notifies you that certain events have come to our attention that [will] [may] need to be
disclosed on Form [10-D] [ 10-K] [8-K].
Description of Additional Form [10-D][10-K][8-K] Disclosure:
R-1
List of any Attachments hereto to be included in the Additional Form [10-D][ 10-K][8-K] Disclosure:
Any inquiries related to this notification should be directed to [ ], phone
number: [ ]; email address: [ ].
[NAME OF PARTY],
as [role]
By:_____________________________________________
Name:
Title:
R-2
EXHIBIT S
ADDITIONAL FORM 10-K DISCLOSURE
------------------------------------------------------------------ ---------------------------------------------------
Item on Form 10-K Party Responsible
------------------------------------------------------------------ ---------------------------------------------------
Item 1B: Unresolved Staff Comments Depositor
------------------------------------------------------------------ ---------------------------------------------------
Item 9B: Other Information Any party responsible for disclosure items on
Form 8-K
------------------------------------------------------------------ ---------------------------------------------------
Item 15: Exhibits, Financial Statement Schedules Depositor
------------------------------------------------------------------ ---------------------------------------------------
Additional Item: (i) All parties to the PSA (as to themselves),
(ii) the Trustee and Servicer as to the issuing
Disclosure per Item 1117 of entity, (iii) the Depositor as to the sponsor,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇://▇▇▇▇▇▇▇/▇▇_▇▇▇▇/▇▇▇▇▇▇▇▇▇/▇ ▇▇ any 1106(b) originator, any 1100(d)(1) party
------------------------------------------------------------------ ---------------------------------------------------
Additional Item: (i) All parties to the Pooling and Servicing
Agreement as to themselves, (ii) the Depositor as
Disclosure per Item 1119 of Reg AB to he sponsor, originator, significant obligor,
enhancement or support provider
------------------------------------------------------------------ ---------------------------------------------------
Additional Item: Depositor/Servicer
Disclosure per Item 1112(b) of Reg AB
------------------------------------------------------------------ ---------------------------------------------------
Additional Item: Depositor
Disclosure per Items 1114(b) and 1115(b) of
Reg AB
------------------------------------------------------------------ ---------------------------------------------------
S-1
EXHIBIT T
FORM 8-K DISCLOSURE INFORMATION
-------------------------------------------------------------------------------------------------------------------
FORM 8-K DISCLOSURE INFORMATION
---------------------------------------------------------- --------------------------------------------------------
Item on Form 8-K Party Responsible
---------------------------------------------------------- --------------------------------------------------------
Item 1.01- Entry into a Material Definitive Agreement All parties
Disclosure is required regarding entry into or amendment
of any definitive agreement that is material to the
securitization, even if depositor is not a party.
Examples: servicing agreement, custodial agreement.
Note: disclosure not required as to definitive
agreements that are fully disclosed in the prospectus
---------------------------------------------------------- --------------------------------------------------------
Item 1.02- Termination of a Material Definitive Agreement All parties
Disclosure is required regarding termination of any
definitive agreement that is material to the
securitization (other than expiration in accordance with
its terms), even if depositor is not a party.
Examples: servicing agreement, custodial agreement.
---------------------------------------------------------- --------------------------------------------------------
Item 1.03- Bankruptcy or Receivership Depositor
Disclosure is required regarding the bankruptcy or
receivership, with respect to any of the following:
---------------------------------------------------------- --------------------------------------------------------
o Sponsor (Seller) Depositor/Sponsor (Seller)
---------------------------------------------------------- --------------------------------------------------------
o Depositor Depositor
---------------------------------------------------------- --------------------------------------------------------
o Master Servicer Master Servicer
---------------------------------------------------------- --------------------------------------------------------
o Affiliated Servicer Servicer
---------------------------------------------------------- --------------------------------------------------------
o Other Servicer servicing 20% or more of the pool Servicer
assets at the time of the report
---------------------------------------------------------- --------------------------------------------------------
o Other material servicers Servicer
---------------------------------------------------------- --------------------------------------------------------
o Trustee Trustee
---------------------------------------------------------- --------------------------------------------------------
o Certificate Administrator Certificate Administrator
---------------------------------------------------------- --------------------------------------------------------
o Significant Obligor Depositor
---------------------------------------------------------- --------------------------------------------------------
o Credit Enhancer (10% or more) Depositor
---------------------------------------------------------- --------------------------------------------------------
o Derivative Counterparty Depositor
---------------------------------------------------------- --------------------------------------------------------
T-1
---------------------------------------------------------- --------------------------------------------------------
o Custodian Custodian
---------------------------------------------------------- --------------------------------------------------------
Item 2.04- Triggering Events that Accelerate or Increase Depositor
a Direct Financial Obligation or an Obligation under an Master Servicer
Off-Balance Sheet Arrangement Certificate Administrator
Includes an early amortization, performance trigger or
other event, including event of default, that would
materially alter the payment priority/distribution of
cash flows/amortization schedule.
Disclosure will be made of events other than waterfall
triggers which are disclosed in the monthly statements
to the certificateholders.
---------------------------------------------------------- --------------------------------------------------------
Item 3.03- Material Modification to Rights of Security Certificate Administrator
Holders Trustee
Depositor
Disclosure is required of any material modification to
documents defining the rights of Certificateholders,
including the Pooling and Servicing Agreement.
---------------------------------------------------------- --------------------------------------------------------
Item 5.03- Amendments of Articles of Incorporation or Depositor
Bylaws; Change of Fiscal Year
Disclosure is required of any amendment "to the
governing documents of the issuing entity".
---------------------------------------------------------- --------------------------------------------------------
Item 6.01- ABS Informational and Computational Material Depositor
---------------------------------------------------------- --------------------------------------------------------
Item 6.02- Change of Servicer or Certificate Master Servicer/Certificate Administrator/Depositor/
Administrator Servicer/Trustee
Requires disclosure of any removal, replacement,
substitution or addition of any master servicer,
affiliated servicer, other servicer servicing 10% or
more of pool assets at time of report, other material
servicers or trustee.
---------------------------------------------------------- --------------------------------------------------------
Reg AB disclosure about any new servicer or master Servicer/Master Servicer/Depositor
servicer is also required.
---------------------------------------------------------- --------------------------------------------------------
Reg AB disclosure about any new Trustee is also required. Trustee
---------------------------------------------------------- --------------------------------------------------------
Item 6.03- Change in Credit Enhancement or External Depositor/Certificate Administrator/Trustee
Support
Covers termination of any enhancement in manner other
than by its terms, the addition of an enhancement, or a
material change in the enhancement provided. Applies to
external credit enhancements as well as derivatives.
---------------------------------------------------------- --------------------------------------------------------
T-2
---------------------------------------------------------- --------------------------------------------------------
Reg AB disclosure about any new enhancement provider is Depositor
also required.
---------------------------------------------------------- --------------------------------------------------------
Item 6.04- Failure to Make a Required Distribution Certificate Administrator
Trustee
---------------------------------------------------------- --------------------------------------------------------
Item 6.05- Securities Act Updating Disclosure Depositor
If any material pool characteristic differs by 5% or
more at the time of issuance of the securities from the
description in the final prospectus, provide updated Reg
AB disclosure about the actual asset pool.
---------------------------------------------------------- --------------------------------------------------------
If there are any new servicers or originators required Depositor
to be disclosed under Regulation AB as a result of the
foregoing, provide the information called for in Items
1108 and 1110 respectively.
---------------------------------------------------------- --------------------------------------------------------
Item 7.01- Reg FD Disclosure All parties
---------------------------------------------------------- --------------------------------------------------------
Item 8.01- Other Events Depositor
Any event, with respect to which information is not
otherwise called for in Form 8-K, that the registrant
deems of importance to certificateholders.
---------------------------------------------------------- --------------------------------------------------------
Item 9.01- Financial Statements and Exhibits Responsible party for reporting/disclosing the
financial statement or exhibit
---------------------------------------------------------- --------------------------------------------------------
T-2
EXHIBIT U
FORM OF SB-AM SWAP AGREEMENT
DATE: December 27, 2006
TO: U.S. Bank National Association, not in its individual capacity
but solely as supplemental interest trust trustee for the
benefit of the Supplemental Interest Trust, acting on behalf of
the Class A Certificateholders, Class M Certificateholders and
Class B Certificateholders under the Pooling and Servicing
Agreement identified below ("Party A")
ATTENTION: WMLT 2006-ALT1 TRUST
FROM: U.S. Bank National Association, not in its individual capacity
but solely as supplemental interest trust trustee for the
benefit of the Supplemental Interest Trust, acting on behalf of
the Class X Certificateholders under the Pooling and Servicing
Agreement identified below ("Party B")
SUBJECT: Payment Swap Confirmation and Agreement
REFERENCE NUMBER
The purpose of this letter agreement (the "Agreement") is to confirm the terms and conditions of the
Transaction entered into on the Trade Date specified below (the "Transaction") between Party A and Party
B. This Agreement, which evidences a complete and binding agreement between you and us to enter into the
Transaction on the terms set forth below, constitutes a "Confirmation" as referred to in the ISDA Form
Master Agreement (as defined below), as well as a "Schedule" as referred to in the ISDA Form Master
Agreement.
o This Agreement is subject to and incorporates the 2000 ISDA Definitions (the "Definitions"), as
published by the International Swaps and Derivatives Association, Inc. ("ISDA"). You and we
have agreed to enter into this Agreement in lieu of negotiating a Schedule to the 1992 ISDA
U-1
Master Agreement (Multicurrency-Cross Border) form (the "ISDA Form Master Agreement") but,
rather, an ISDA Form Master Agreement shall be deemed to have been executed by you and us on
the date we entered into the Transaction. In the event of any inconsistency between the
provisions of this Agreement and the Definitions or the ISDA Form Master Agreement, this
Agreement shall prevail for purposes of the Transaction. Terms used and not otherwise defined
herein, in the ISDA Form Master Agreement or the Definitions shall have the meanings assigned
to them in the Pooling and Servicing Agreement, dated as of December 27, 2006, among Wachovia
Mortgage Loan Trust, LLC, as depositor and U.S. Bank National Association, as trustee,
supplemental interest trust trustee and custodian (the "Pooling and Servicing Agreement"). Each
reference to a "Section" or to a "Section" "of this Agreement" will be construed as a reference
to a Section of the 1992 ISDA Form Master Agreement. Each capitalized term used herein that is
not defined herein or in the 1992 ISDA Form Master Agreement shall have the meaning defined in
the Pooling and Servicing Agreement. Notwithstanding anything herein to the contrary, should
any provision of this Agreement conflict with any provision of the Pooling and Servicing
Agreement, the provision of the Pooling and Servicing Agreement shall apply.
o The terms of the particular Transaction to which this Confirmation relates are as follows:
Trade Date:
Effective Date:
Termination Date: January 25, 2037 subject to adjustment in accordance with the
Business Day Convention.
Business Days: California, Minnesota, Texas, New York, Illinois.
Business Day Convention: Following.
Party A Payments:
Party A Payment Dates: Each Distribution Date under the Pooling and Servicing
Agreement.
Party A Payment Amounts: On each Party A Payment Date, the amount, if any, equal to the
aggregate amount of Net Swap Payments and Swap Termination
Payments (other than Defaulted Swap Termination Payments) owed
to the Swap Counterparty remaining unpaid after application of
the sum of (A) from the REMIC I Available Distribution Amount
(less the amount distributable on such Distribution Date in
respect of REMIC III Regular Interest IO) that would have
remained had the REMIC I Available Distribution Amount (less
the amount distributable on such Distribution Date in respect
of REMIC III Regular Interest IO) been applied on such
U-2
Distribution Date to make the distributions for such
Distribution Date under Section 4.04(b) through Section
4.04(k)(ix) of the Pooling and Servicing Agreement, (I) the
Class X Current Interest, (II) the Class X Interest Carry
Forward Amount, (III) as principal on the Class X Certificates
until the Certificate Principal Balance of the Class X
Certificates has been reduced to zero, (IV) the Class X Unpaid
Realized Loass Amount, (V) the amount of any
Overcollateralization Reduction Amount for such Distribution
Date and (VI) for any Distribution Date after the Certificate
Principal Balance of each Class of Class A, Class M and Class
B Certificates has been reduced to zero, the
Overcollateralization Amount, (B) from prepayment charges on
deposit in the Certificate Amount, any prepayment charges
received on the Mortgage Loans during the related Prepayment
Period and (C) the amount distributable with respect to the
REMIC III Regular Interest IO.
Party B Payments:
Party B Payment Dates: Each Distribution Date under the Pooling and Servicing
Agreement
Party B Payment Amounts: On each Party B Payment Date, an amount equal to the lesser of
(a) the Available Distribution Amount remaining on such
Distribution Date after the distributions on such Distribution
Date under Section 4.04(f) clauses (i) through (iv) of the
Pooling and Servicing Agreement and (b) the aggregate unpaid
Available Funds Cap Carryover allocated to the Class A
Certificateholders and the Class M Certificateholders for such
Distribution Date.
o Additional Provisions: Each party hereto is hereby advised and acknowledges that the other
party has engaged in (or refrained from engaging in) substantial financial transactions and has
taken (or refrained from taking) other material actions in reliance upon the entry by the
parties into the Transaction being entered into on the terms and conditions set forth herein
and in the ISDA Form Master Agreement relating to such Transaction, as applicable.
o Provisions Deemed Incorporated in a Schedule to the ISDA Form Master Agreement:
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o Termination Provisions. For purposes of the ISDA Form Master Agreement:
o "Specified Entity" is not applicable to Party A or Party B for any purpose.
o "Specified Transaction" is not applicable to Party A or Party B for any purpose, and,
accordingly, Section 5(a)(v) shall not apply to Party A or Party B.
o The "Cross Default" provisions of Section 5(a)(vi) shall not apply to Party A or Party B.
o The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not apply to Party A or
Party B.
o With respect to Party A and Party B, the "Bankruptcy" provision of Section 5(a)(vii)(2) of the
ISDA Form Master Agreement will be deleted in its entirety.
o The "Automatic Early Termination" provision of Section 6(a) will not apply to Party A or to
Party B.
o Payments on Early Termination. For the purpose of Section 6(e) of the ISDA Form Master
Agreement:
o Market Quotation will apply.
o The Second Method will apply.
o "Termination Currency" means United States Dollars.
o The provisions of Sections 5(a)(ii), 5(a)(iii) and 5(a)(iv) shall not apply to Party A or Party
B.
o Tax Event. The provisions of Section 2(d)(i)(4) and 2(d)(ii) of the ISDA Form Master Agreement
shall not apply to Party A and Party A shall not be required to pay any additional
amounts referred to therein.
o Tax Representations.
o Payer Representations. For the purpose of Section 3(e) of the ISDA Form Master Agreement, each
of Party A and Party B will make the following representations:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account
of any Tax from any payment (other than interest under Section 2(e),
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6(d)(ii) or 6(e) of the ISDA Form Master Agreement) to be made by it
to the other party under this Agreement. In making this
representation, it may rely on:
o the accuracy of any representations made by the other party pursuant to Section 3(f) of the
ISDA Form Master Agreement;
o the satisfaction of the agreement contained in Sections 4(a)(i) or 4(a)(iii) of the ISDA Form
Master Agreement and the accuracy and effectiveness of any document
provided by the other party pursuant to Sections 4(a)(i) or 4(a)(iii)
of the ISDA Form Master Agreement; and
o the satisfaction of the agreement of the other party contained in Section 4(d) of the ISDA Form
Master Agreement, provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice to its legal or commercial position.
o Payee Representations. For the purpose of Section 3(f) of the ISDA Form Master Agreement, Party
A and Party B make the following representations: None
o Documents to be Delivered. For the purpose of Section 4(a) (i) and 4(a) (iii):
o Tax forms, documents, or certificates to be delivered are:
Party required to Form/Document/ Date by which to
deliver document Certificate Be delivered
Party A and Party B Any documents required or Promptly after the earlier of (i) reasonable
reasonably requested to allow demand by either party or (ii) learning that such
the other party to make form or document is required
payments under this Agreement
without any deduction or
withholding for or on the
account of any Tax or with
such deduction or withholding
at a reduced rate
o Other documents to be delivered are:
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Party required Form/Document/ Date by which to be Covered by
to deliver Certificate delivered Section 3(d)
document Representation
Party A and Party B Any documents required by the Upon execution and Yes
receiving party to evidence the delivery of this
authority of the delivering party Agreement and such
for it to execute and deliver this Confirmation
Agreement, any Confirmation to
which it is a party, and to
evidence the authority of the
delivering party to perform its
obligations under this Agreement
and such Confirmation.
Party A and Party B A certificate of an authorized Upon the execution Yes
officer of the party, as to the and delivery of this
incumbency and authority of the Agreement and such
respective officers of the party Confirmation
signing this Agreement
Miscellaneous. Miscellaneous
o Address for Notices: For the purposes of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address: WMLT 2006-ALT1 Trust
c/o U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: Wachovia Mortgage Loan Trust, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Facsimile:
(For all purposes)
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Address for notices or communications to Party B:
Address: WMLT 2006-ALT1 Trust
c/o U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇-▇▇-▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: Wachovia Mortgage Loan Trust, LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Facsimile No.:
(For all purposes)
o Process Agent. For the purpose of Section 13(c):
Party A: Not Applicable
Party B: Not Applicable
o Offices. The provisions of Section 10(a) will not apply to this Agreement; neither Party A nor
Party B have any Offices other than as set forth in the Notices Section.
o Multibranch Party. For the purpose of Section 10(c) of the ISDA Form Master Agreement, neither
Party A nor Party B is a Multibranch. Party.
o Calculation Agent. The Calculation Agent is Wachovia Bank, N.A..
o Credit Support Document.
Not Applicable
o Credit Support Provider.
Not Applicable
o Governing Law. The parties to this ISDA Agreement hereby agree that the law of the State of New
York shall govern their rights and duties in whole, without regard to the
conflict of law provision thereof, other than New York General Obligations Law
Sections 5-1401 and 5-1402.
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o Non-Petition. Party A and Party B each hereby irrevocably and unconditionally agrees that it
will not institute against, or join any other person in instituting against or
cause any other person to institute against Wachovia Mortgage Loan Trust,
Asset-Backed Certificates, Series 2006-ALT1, or the other party any
bankruptcy, reorganization, arrangement, insolvency, or similar proceeding
under the laws of the United States, or any other jurisdiction for the
non-payment of any amount due hereunder or any other reason until the payment
in full of the Certificates and the expiration of a period of one year plus
ten days (or, if longer, the applicable preference period) following such
payment.
o Severability. If any term, provision, covenant, or condition of this Agreement, or the
application thereof to any party or circumstance, shall be held to be invalid
or unenforceable (in whole or in part) for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force and
effect as if this Agreement had been executed with the invalid or
unenforceable portion eliminated, so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Agreement and the deletion of such
portion of this Agreement will not substantially impair the respective
benefits or expectations of the parties.
The parties shall endeavor to engage in good faith negotiations to replace any
invalid or unenforceable term, provision, covenant or condition with a valid or
enforceable term, provision, covenant or condition, the economic effect of which comes
as close as possible to that of the invalid or unenforceable term, provision, covenant
or condition.
o Each party acknowledges that U.S. Bank National Association, not individually or personally but
solely as Supplemental Interest Trust Trustee, has been directed under the
Pooling and Servicing Agreement to enter into this Agreement.
o Waiver of Jury Trial. Each party to this Agreement respectively waives any right it may have
to a trial by jury in respect of any Proceedings relating to this Agreement or
any Credit Support Document.
o Set-Off. Notwithstanding any provision of this Agreement or any other existing or future
agreement, each party irrevocably waives any and all rights it may have to set
off, net, recoup or otherwise withhold or suspend or condition payment or
performance of any obligation between it and the other party hereunder against
any obligation between it and the other party under any other agreements. The
provisions for Set-off set forth in Section 6(e) of the ISDA Form Master
Agreement shall not apply for purposes of this Transaction.
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o This Agreement may be executed in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.
o Trustee Liability Limitations. It is expressly understood and agreed by the parties hereto that
(a) this Agreement is executed and delivered by U.S. Bank National
Association, not individually or personally but solely as Supplemental
Interest Trust Trustee of Party A and Party B, in the exercise of the powers
and authority conferred and vested in it and that U.S. Bank National
Association shall perform its duties and obligations hereunder in accordance
with the standard of care set forth in Article VIII of the Pooling and
Servicing Agreement, (b) each of the representations, undertakings and
agreements herein made on the part of Party A and Party B is made and intended
not as personal representations, undertakings and agreements by U.S. Bank
National Association but is made and intended for the purpose of binding only
Party A and Party B, (c) nothing herein contained shall be construed as
creating any liability on U.S. Bank National Association, individually or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties
hereto and by any Person claiming by, through or under the parties hereto;
provided that nothing in this paragraph shall relieve U.S. Bank National
Association from performing its duties and obligations hereunder and under the
Pooling and Servicing Agreement in accordance with the standard of care set
forth therein, and (d) under no circumstances shall U.S. Bank National
Association be personally liable for the payment of any indebtedness or
expenses of Party A or Party B or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by Party A
or Party B under this Agreement or any other related documents; provided, that
nothing in this paragraph shall relieve U.S. Bank National Association from
performing its duties and obligations hereunder and under the Pooling and
Servicing Agreement in accordance with the standard of care set forth herein
and therein.
o "Affiliate". Party A and Party B shall be deemed to not have any Affiliates for purposes of
this Agreement, including for purposes of Section 6(b)(ii).
o Section 3 of the ISDA Form Master Agreement is hereby amended by adding at the end thereof the
following subsection (g):
"(g) Relationship Between Parties.
Each party represents to the other party on each date when it enters into a
Transaction that:--
o Nonreliance. (i) It is not relying on any statement or representation of the other party
regarding the Transaction (whether written or oral), other than the representations
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expressly made in this Agreement or the Confirmation in respect of that Transaction
and (ii) it has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent it has deemed necessary, and it has
made its own investment, hedging and trading decisions based upon its own judgment and
upon any advice from such advisors as it has deemed necessary and not upon any view
expressed by the other party.
o Evaluation and Understanding.
o It has the capacity to evaluate (internally or through independent professional advice) the
Transaction and has made its own decision to enter into the Transaction and has been
directed by the Pooling and Servicing Agreement to enter into this Transaction; and
o It understands the terms, conditions and risks of the Transaction and is willing and able to
accept those terms and conditions and to assume those risks, financially and otherwise.
o Purpose. It is entering into the Transaction for the purposes of managing its borrowings or
investments, hedging its underlying assets or liabilities or in connection with a line
of business.
o Status of Parties. The other party is not acting as agent, fiduciary or advisor for it in
respect of the Transaction.
o Eligible Contract Participant. It is an "eligible swap participant" as such term is defined in
Section 35.1(b)(2) of the regulations (17 C.F.R 35) promulgated under, and it
constitutes an "eligible contract participant" as such term is defined in Section
1(a)12 of the Commodity Exchange Act, as amended."
o Account Details and Settlement Information:
Payments to Party A:
Payments to Party A shall be made in the same manner as
provided for in the Pooling and Servicing Agreement with
respect to the Class A Certificateholders, Class M
Certificateholders and Class B Certificateholders.
Payments to Party B:
Payments to Party B shall be made in the same manner as
provided for in the Pooling and Servicing Agreement with
respect to the Class X Certificateholders.
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Please sign and return to us a copy of this Agreement.
Very truly yours,
U.S. BANK NATIONAL ASSOCIATION, not in its
individual capacity but solely as supplemental
interest trust trustee for the benefit of
Supplemental Interest Trust, acting on behalf of
the Class X Certificateholders
By:__________________________________________
Name:
Title:
AGREED AND ACCEPTED AS OF THE TRADE DATE
U.S. BANK NATIONAL ASSOCIATION, not in its
individual capacity but solely as as supplemental
interest trust trustee for the benefit of
Supplemental Interest Trust, acting on behalf of
the Class A Certificateholders, Class M
Certificateholders and Class B Certificateholders
By:__________________________________________
Name:
Title:
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