HSI ASSET SECURITIZATION CORPORATION, Depositor, CITIMORTGAGE, INC., Master Servicer, CITIBANK, N.A., Securities Administrator WELLS FARGO BANK, N.A., Custodian, DEUTSCHE BANK NATIONAL TRUST COMPANY, Trustee and OFFICETIGER GLOBAL REAL ESTATE SERVICES...
HSI
ASSET
SECURITIZATION CORPORATION,
Depositor,
CITIMORTGAGE,
INC.,
Master
Servicer,
CITIBANK,
N.A.,
Securities
Administrator
XXXXX
FARGO BANK, N.A.,
Custodian,
DEUTSCHE
BANK NATIONAL TRUST COMPANY,
Trustee
and
OFFICETIGER
GLOBAL REAL ESTATE SERVICES INC.,
Credit
Risk Manager
Dated
as
of November 1, 2006
HSI
ASSET SECURITIZATION CORPORATION TRUST 2006-HE2
MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 2006-HE2
TABLE
OF
CONTENTS
Page
|
ARTICLE
I
|
||
|
DEFINITIONS
|
||
|
ARTICLE
II
|
||
|
CONVEYANCE
OF MORTGAGE LOANS;
|
||
|
REPRESENTATIONS
AND WARRANTIES
|
||
|
Section
2.01
|
Conveyance
of Mortgage Loans
|
51
|
|
Section
2.02
|
Acceptance
by the Custodian of the Mortgage Loans
|
54
|
|
Section
2.03
|
Remedies
for Breaches of Representations and Warranties with Respect to
the
Mortgage Loans
|
55
|
|
Section
2.04
|
Execution
and Delivery of Certificates
|
57
|
|
Section
2.05
|
REMIC
Matters
|
57
|
|
Section
2.06
|
Representations
and Warranties of the Depositor
|
57
|
|
ARTICLE
III
|
||
|
ADMINISTRATION
AND SERVICING
|
||
|
OF
MORTGAGE LOANS
|
||
|
Section
3.01
|
Establishment
of Certain Accounts
|
58
|
|
Section
3.02
|
Investment
of Funds in the Distribution Account and the Master Servicing
Account
|
60
|
|
Section
3.03
|
Report
on Assessment of Compliance with Relevant Servicing
Criteria.
|
60
|
|
Section
3.04
|
Report
on Attestation of Compliance with Relevant Servicing
Criteria.
|
61
|
|
Section
3.05
|
Annual
Officer’s Certificates.
|
62
|
|
Section
3.06
|
Indemnification.
|
63
|
|
Section
3.07
|
Advances
|
64
|
|
ARTICLE
IV
|
||
|
DISTRIBUTIONS
|
||
|
Section
4.01
|
The
Distribution Account
|
65
|
|
Section
4.02
|
Priorities
of Distribution
|
65
|
|
Section
4.03
|
Monthly
Statements to Certificateholders
|
72
|
|
Section
4.04
|
Certain
Matters Relating to the Determination of LIBOR
|
75
|
|
Section
4.05
|
Allocation
of Applied Realized Loss Amounts
|
75
|
|
Section
4.06
|
Supplemental
Interest Trust.
|
75
|
|
Section
4.07
|
Rights
of the Swap Counterparty.
|
77
|
|
Section
4.08
|
Termination
Receipts.
|
78
|
|
Section
4.09
|
Final
Maturity Reserve Trust.
|
79
|
|
ARTICLE
V
|
||
|
THE
CERTIFICATES
|
||
|
Section
5.01
|
The
Certificates
|
80
|
|
Section
5.02
|
Certificate
Register; Registration of Transfer and Exchange of
Certificates
|
81
|
|
Section
5.03
|
Mutilated,
Destroyed, Lost or Stolen Certificates
|
87
|
|
Section
5.04
|
Persons
Deemed Owners
|
88
|
|
Section
5.05
|
Access
to List of Certificateholders’ Names and Addresses
|
88
|
|
Section
5.06
|
Maintenance
of Office or Agency
|
88
|
|
ARTICLE
VI
|
||
|
THE
DEPOSITOR
|
||
|
Section
6.01
|
Liabilities
of the Depositor
|
88
|
|
Section
6.02
|
Merger
or Consolidation of the Depositor
|
88
|
|
Section
6.03
|
Limitation
on Liability of the Depositor and Others.
|
89
|
|
ARTICLE
VII
|
||
|
DEFAULT
|
||
|
Section
7.01
|
Master
Servicer to Act; Appointment of Successor
|
89
|
|
Section
7.02
|
Notification
to Certificateholders
|
92
|
|
ARTICLE
VIII
|
||
|
CONCERNING
THE TRUSTEE
|
||
|
Section
8.01
|
Duties
of the Trustee
|
92
|
|
Section
8.02
|
Certain
Matters Affecting the Trustee
|
93
|
|
Section
8.03
|
Trustee
Not Liable for Certificates or Mortgage Loans
|
94
|
|
Section
8.04
|
Trustee
May Own Certificates
|
95
|
|
Section
8.05
|
Trustee’s
Fees Indemnification and Expenses
|
95
|
|
Section
8.06
|
Eligibility
Requirements for the Trustee
|
96
|
|
Section
8.07
|
Resignation
and Removal of the Trustee
|
96
|
|
Section
8.08
|
Successor
Trustee
|
97
|
|
Section
8.09
|
Merger
or Consolidation of the Trustee
|
98
|
|
Section
8.10
|
Appointment
of Co-Trustee or Separate Trustee
|
98
|
|
Section
8.11
|
Tax
Matters
|
99
|
|
Section
8.12
|
Commission
Reporting
|
103
|
|
Section
8.13
|
Tax
Classification of the Excess Reserve Fund Account and the Supplemental
Interest Trust
|
110
|
-ii-
|
ARTICLE
IX
|
||
|
ADMINISTRATION
OF THE MORTGAGE LOANS
|
||
|
BY
THE MASTER SERVICER
|
||
|
Section
9.01
|
Duties
of the Master Servicer; Enforcement of Servicer’s
Obligations.
|
110
|
|
Section
9.02
|
Provision
to the Securities Administrator of Loan-Level Information.
|
112
|
|
Section
9.03
|
[Reserved]
|
112
|
|
Section
9.04
|
Maintenance
of Fidelity Bond and Errors and Omissions Insurance.
|
112
|
|
Section
9.05
|
Representations
and Warranties of the Master Servicer
|
112
|
|
Section
9.06
|
Master
Servicer Events of Default
|
113
|
|
Section
9.07
|
Waiver
of Default.
|
115
|
|
Section
9.08
|
Successor
to the Master Servicer.
|
115
|
|
Section
9.09
|
[Reserved]
|
116
|
|
Section
9.10
|
Merger
or Consolidation.
|
116
|
|
Section
9.11
|
Resignation
of the Master Servicer.
|
117
|
|
Section
9.12
|
Assignment
or Delegation of Duties by the Master Servicer.
|
117
|
|
Section
9.13
|
Limitation
on Liability of the Master Servicer.
|
117
|
|
Section
9.14
|
Indemnification;
Third Party Claims.
|
118
|
|
Section
9.15
|
Duties
of the Credit Risk Manager.
|
118
|
|
Section
9.16
|
Limitation
Upon Liability of the Credit Risk Manager.
|
119
|
|
Section
9.17
|
Removal
and Resignation of Credit Risk Manager.
|
120
|
|
ARTICLE
X
|
||
|
CONCERNING
THE SECURITIES ADMINISTRATOR
|
||
|
Section
10.01
|
Duties
of Securities Administrator.
|
120
|
|
Section
10.02
|
Certain
Matters Affecting the Securities Administrator.
|
121
|
|
Section
10.03
|
Securities
Administrator Not Liable for Certificates or Mortgage
Loans.
|
123
|
|
Section
10.04
|
Securities
Administrator May Own Certificates.
|
124
|
|
Section
10.05
|
Securities
Administrator’s Fees and Expenses.
|
124
|
|
Section
10.06
|
Eligibility
Requirements for Securities Administrator.
|
125
|
|
Section
10.07
|
Resignation
and Removal of Securities Administrator.
|
125
|
|
Section
10.08
|
Successor
Securities Administrator.
|
126
|
|
Section
10.09
|
Merger
or Consolidation of Securities Administrator.
|
127
|
|
Section
10.10
|
Assignment
or Delegation of Duties by the Securities Administrator.
|
127
|
-iii-
|
ARTICLE
XI
|
||
|
TERMINATION
|
||
|
Section
11.01
|
Termination
upon Liquidation or Purchase of the Mortgage Loans
|
128
|
|
Section
11.02
|
Final
Distribution on the Certificates
|
128
|
|
Section
11.03
|
Additional
Termination Requirements
|
130
|
|
ARTICLE
XII
|
||
|
MISCELLANEOUS
PROVISIONS
|
||
|
Section
12.01
|
Amendment
|
130
|
|
Section
12.02
|
Recordation
of Agreement; Counterparts
|
132
|
|
Section
12.03
|
Governing
Law
|
133
|
|
Section
12.04
|
Intention
of Parties
|
133
|
|
Section
12.05
|
Notices
|
134
|
|
Section
12.06
|
Severability
of Provisions
|
135
|
|
Section
12.07
|
Limitation
on Rights of Certificateholders
|
135
|
|
Section
12.08
|
Certificates
Nonassessable and Fully Paid
|
136
|
|
Section
12.09
|
Rule of
Construction
|
136
|
|
Section
12.10
|
Waiver
of Jury Trial
|
136
|
-iv-
SCHEDULES
|
Schedule I
|
Mortgage
Loan Schedule
|
|
Schedule
II
|
Projected
Aggregate Scheduled Principal Balance of Forty-Year Mortgage
Loans
|
EXHIBITS
|
Exhibit A
|
Form
of Class A and Class M Certificates
|
|
Exhibit B
|
Form
of Class P Certificate
|
|
Exhibit C
|
Form
of Class R Certificate
|
|
Exhibit D
|
Form
of Class X Certificate
|
|
Exhibit E
|
Form
of Initial Certification of Custodian
|
|
Exhibit F
|
Form
of Document Certification and Exception Report of
Custodian
|
|
Exhibit G
|
Form
of Residual Transfer Affidavit
|
|
Exhibit H
|
Form
of Transferor Certificate
|
|
Exhibit I-A
|
Form
of Rule 144A Investment Letter
|
|
Exhibit
I-B
|
Form
of Regulation S Investment Letter
|
|
Exhibit J
|
Form
of Request for Release
|
|
Exhibit K
|
Contents
for Each Mortgage File
|
|
Exhibit L
|
Form
of Xxxxxxxx-Xxxxx Certification to be Provided by Master Servicer
(or
other Certification Party) signing Form 10-K
|
|
Exhibit M
|
List
of Servicing Agreements
|
|
Exhibit
N
|
Form
of Servicing Function Participant Back-Up Xxxxxxxx-Xxxxx
Certification
|
|
Exhibit
O
|
Form
of Swap Agreement
|
|
Exhibit
P
|
Form
of Cap Agreement
|
|
Exhibit
Q
|
[Reserved]
|
|
Exhibit
R
|
[Reserved]
|
|
Exhibit
S
|
Servicing
Criteria Matrix
|
|
Exhibit
T
|
Transaction
Parties
|
|
Exhibit
U
|
Form
of Annual Compliance Certificate
|
|
Exhibit
V
|
Additional
Form 10-D Disclosure
|
|
Exhibit
W
|
Additional
Form 10-K Disclosure
|
|
Exhibit
X
|
Form
8-K Disclosure Information
|
|
Exhibit
Y
|
Additional
Disclosure Notification
|
|
Exhibit
Z
|
Class
Notional Balance Schedule for Class A-IO
Certificates
|
-v-
THIS
POOLING AND SERVICING AGREEMENT, dated as of November 1, 2006, among HSI
ASSET
SECURITIZATION CORPORATION, as depositor (the “Depositor”),
XXXXX
FARGO BANK, N.A., a national banking association, as custodian (in such
capacity, “the Custodian”),
CITIMORTGAGE, INC., as master servicer (the “Master
Servicer”),
CITIBANK, N.A., as securities administrator (the “Securities
Administrator”),
OFFICETIGER GLOBAL REAL ESTATE SERVICES INC., as credit risk manager (the
“Credit
Risk Manager”),
and
DEUTSCHE BANK NATIONAL TRUST COMPANY, a national banking association, as
trustee
(the “Trustee”).
W I T N E S S E T H:
In
consideration of the mutual agreements herein contained, the parties hereto
agree as follows:
PRELIMINARY
STATEMENT
The
Securities Administrator on behalf of the Trust Fund (exclusive of (i) the
Swap
Agreement, (ii) the Cap Agreement (iii) the right to receive and the obligation
to pay Basis Risk Carryover Amounts, (iv) the Excess Reserve Fund Account,
(v)
the Supplemental Interest Trust and the Supplemental Interest Trust Account
(vi)
the Final Maturity Reserve Trust, and (vii) the obligation to pay Class I
Shortfalls (collectively, the “Excluded
Trust Assets”))
shall
elect that two segregated asset pools within the Trust Fund be treated for
federal income tax purposes as comprising four real estate mortgage investment
conduits under Section 860D of the Code (each a “REMIC”
or,
in
the alternative, “REMIC
1,”
REMIC
2,”
“REMIC
3” and “REMIC
4,”;
REMIC
4 also being referred to herein as the “Upper
Tier REMIC.”)
Any
inconsistencies or ambiguities in this Agreement or in the administration
of
this Agreement shall be resolved in a manner that preserves the validity
of such
REMIC election.
Each
Certificate, other than the Class R Certificates, represents ownership of
a
regular interest in the Upper Tier REMIC for purposes of the REMIC Provisions.
In addition, each Certificate, other than the Class R, Class X and Class
P
Certificates, represents (i) the right to receive payments with respect to
any
Basis Risk Carryover Amounts and (ii) the obligation to pay Class I Shortfalls.
The Class R Certificate represents ownership of the sole Class of residual
interest in each of REMIC 1, REMIC 2, REMIC 3 and the Upper Tier REMIC for
purposes of the REMIC Provisions.
The
Upper Tier REMIC shall hold as its assets the uncertificated Lower Tier
Interests in REMIC 3, other than the Class LT3-R interest, and each such
Lower
Tier Interest is hereby designated as a regular interest in REMIC 3 for purposes
of the REMIC Provisions. REMIC 3 shall hold as its assets the uncertificated
Lower Tier Interests in REMIC 2, other than the Class LT2-R interest, and
each
such Lower Tier Interest is hereby designated as a regular interest in REMIC
2.
REMIC 2 shall hold as its assets the uncertificated Lower Tier Interests
in
REMIC 1, other than the Class LT1-R interest, and each such Lower Tier Interest
is hereby designated as a regular interest in REMIC 1. REMIC 1 shall hold
as its
assets the property of the Trust Fund other than the Lower Tier Interests
in
REMIC 1, REMIC 2 and REMIC 3 and the Excluded Trust Assets.
REMIC
1:
The
following table sets forth the designations, principal balances and interest
rates for each interest in REMIC 1, each of which (other than the Class LT1-R
Lower Tier Interest) is hereby designated as a regular interest in REMIC
1 (the
“REMIC 1 Regular Interests”):
|
Class
Designation
|
Initial
Principal Balance
|
Interest
Rate
|
|
LT1-A
|
$
55,863,283.78
|
(1)
|
|
LT1-F1
|
$
11,127,871.50
|
(2)
|
|
LT1-V1
|
$
11,127,871.50
|
(3)
|
|
LT1-F2
|
$
13,397,393.00
|
(2)
|
|
LT1-V2
|
$
13,397,393.00
|
(3)
|
|
LT1-F3
|
$
15,660,672.50
|
(2)
|
|
LT1-V3
|
$
15,660,672.50
|
(3)
|
|
LT1-F4
|
$
17,894,881.50
|
(2)
|
|
LT1-V4
|
$
17,894,881.50
|
(3)
|
|
LT1-F5
|
$
20,076,576.50
|
(2)
|
|
LT1-V5
|
$
20,076,576.50
|
(3)
|
|
LT1-F6
|
$
22,180,795.00
|
(2)
|
|
LT1-V6
|
$
22,180,795.00
|
(3)
|
|
LT1-F7
|
$
24,179,981.50
|
(2)
|
|
LT1-V7
|
$
24,179,981.50
|
(3)
|
|
LT1-F8
|
$
26,052,736.00
|
(2)
|
|
LT1-V8
|
$
26,052,736.00
|
(3)
|
|
LT1-F9
|
$
27,720,679.50
|
(2)
|
|
LT1-V9
|
$
27,720,679.50
|
(3)
|
|
LT1-F10
|
$
26,654,767.50
|
(2)
|
|
LT1-V10
|
$
26,654,767.50
|
(3)
|
|
LT1-F11
|
$
25,377,210.50
|
(2)
|
|
LT1-V11
|
$
25,377,210.50
|
(3)
|
|
LT1-F12
|
$
24,159,569.00
|
(2)
|
|
LT1-V12
|
$
24,159,569.00
|
(3)
|
|
LT1-F13
|
$
23,000,414.50
|
(2)
|
|
LT1-V13
|
$
23,000,414.50
|
(3)
|
|
LT1-F14
|
$
21,896,934.00
|
(2)
|
|
LT1-V14
|
$
21,896,934.00
|
(3)
|
|
LT1-F15
|
$
20,846,441.50
|
(2)
|
|
LT1-V15
|
$
20,846,441.50
|
(3)
|
|
LT1-F16
|
$
19,849,408.00
|
(2)
|
|
LT1-V16
|
$
19,849,408.00
|
(3)
|
|
LT1-F17
|
$
18,896,917.50
|
(2)
|
|
LT1-V17
|
$
18,896,917.50
|
(3)
|
|
LT1-F18
|
$
17,990,202.00
|
(2)
|
|
LT1-V18
|
$
17,990,202.00
|
(3)
|
|
LT1-F19
|
$
17,199,494.00
|
(2)
|
-2-
|
Class
Designation
|
Initial
Principal Balance
|
Interest
Rate
|
|
LT1-V19
|
$
17,199,494.00
|
(3)
|
|
LT1-F20
|
$
28,861,751.00
|
(2)
|
|
LT1-V20
|
$
28,861,751.00
|
(3)
|
|
LT1-F21
|
$
27,500,525.00
|
(2)
|
|
LT1-V21
|
$
27,500,525.00
|
(3)
|
|
LT1-F22
|
$
24,777,383.00
|
(2)
|
|
LT1-V22
|
$
24,777,383.00
|
(3)
|
|
LT1-F23
|
$
22,349,388.00
|
(2)
|
|
LT1-V23
|
$
22,349,388.00
|
(3)
|
|
LT1-F24
|
$
20,146,217.00
|
(2)
|
|
LT1-V24
|
$
20,146,217.00
|
(3)
|
|
LT1-F25
|
$
12,554,128.00
|
(2)
|
|
LT1-V25
|
$
12,554,128.00
|
(3)
|
|
LT1-F26
|
$
11,136,843.50
|
(2)
|
|
LT1-V26
|
$
11,136,843.50
|
(3)
|
|
LT1-F27
|
$
10,580,852.50
|
(2)
|
|
LT1-V27
|
$
10,580,852.50
|
(3)
|
|
LT1-F28
|
$
11,232,358.50
|
(2)
|
|
LT1-V28
|
$
11,232,358.50
|
(3)
|
|
LT1-F29
|
$
10,512,551.00
|
(2)
|
|
LT1-V29
|
$
10,512,551.00
|
(3)
|
|
LT1-F30
|
$
9,805,816.00
|
(2)
|
|
LT1-V30
|
$
9,805,816.00
|
(3)
|
|
LT1-F31
|
$
9,151,931.50
|
(2)
|
|
LT1-V31
|
$
9,151,931.50
|
(3)
|
|
LT1-F32
|
$
8,540,999.50
|
(2)
|
|
LT1-V32
|
$
8,540,999.50
|
(3)
|
|
LT1-F33
|
$
7,979,845.00
|
(2)
|
|
LT1-V33
|
$
7,979,845.00
|
(3)
|
|
LT1-F34
|
$
7,435,671.50
|
(2)
|
|
LT1-V34
|
$
7,435,671.50
|
(3)
|
|
LT1-F35
|
$
6,508,445.00
|
(2)
|
|
LT1-V35
|
$
6,508,445.00
|
(3)
|
|
LT1-F36
|
$
6,127,170.00
|
(2)
|
|
LT1-V36
|
$
6,127,170.00
|
(3)
|
|
LT1-F37
|
$
5,783,182.50
|
(2)
|
|
LT1-V37
|
$
5,783,182.50
|
(3)
|
|
LT1-F38
|
$
5,458,808.00
|
(2)
|
|
LT1-V38
|
$
5,458,808.00
|
(3)
|
|
LT1-F39
|
$
5,152,909.50
|
(2)
|
|
LT1-V39
|
$
5,152,909.50
|
(3)
|
|
LT1-F40
|
$
4,864,373.00
|
(2)
|
|
LT1-V40
|
$
4,864,373.00
|
(3)
|
|
LT1-F41
|
$
4,592,303.50
|
(2)
|
-3-
|
Class
Designation
|
Initial
Principal Balance
|
Interest
Rate
|
|
LT1-V41
|
$
4,592,303.50
|
(3)
|
|
LT1-F42
|
$
4,335,704.00
|
(2)
|
|
LT1-V42
|
$
4,335,704.00
|
(3)
|
|
LT1-F43
|
$
74,833,545.50
|
(2)
|
|
LT1-V43
|
$
74,833,545.50
|
(3)
|
|
LT1-R
|
(4)
|
(4)
|
|
(1)
|
For
any Distribution Date (and the related Interest Accrual Period)
the
interest rate for the Class LT1-A Interest shall be the Net WAC
Rate.
|
|
(2)
|
For
any Distribution Date (and the related Interest Accrual Period)
the
interest rate for each of these Lower Tier Interests shall be the
lesser
of (i) 10.20% and (ii) the product of (a) the Net WAC Rate and
(b)
2.
|
|
(3)
|
For
any Distribution Date (and the related Interest Accrual Period)
the
interest rate for each of these Lower Tier Interests shall be the
excess,
if any, of (i) the product of (a) the Net WAC Rate and (b) 2, over
(ii)
10.20%.
|
|
(4)
|
The
Class LT1-R interest shall not have a principal amount and shall
not bear
interest. The Class LT1-R interest is hereby designated as the
sole class
of residual interest in REMIC 1.
|
On
each
Distribution Date, the Securities Administrator shall first pay or charge
as an
expense of REMIC 1 all expenses of the Trust Fund for such Distribution Date,
other than any Net Swap Payment or Swap Termination Payment required to be
made
from the Trust Fund.
On
each
Distribution Date the Securities Administrator shall distribute the Interest
Remittance Amount (net of expenses described in the preceding paragraph)
with
respect to each of the Lower Tier Interests in REMIC 1 based on the
above-described interest rates.
On
each
Distribution Date, the Securities Administrator shall distribute the Principal
Remittance Amount with respect to the Lower Tier Interests in REMIC 1, first
to
the Class LT1-A Interest until its principal balance is reduced to zero,
and
then sequentially, to the other Lower Tier Interests in REMIC 1 in ascending
order of their numerical class designation, and, with respect to each pair
of
classes having the same numerical designation, in equal amounts to each such
class, until the principal balance of each such class is reduced to zero.
All
losses on the Mortgage Loans shall be allocated among the Lower Tier Interests
in REMIC 1 in the same manner that principal distributions are
allocated.
On
each
Distribution Date, the Securities Administrator shall distribute the Prepayment
Charges collected during the preceding Prepayment Period to the Class LT1-V43
Lower Tier Interests.
-4-
REMIC
2:
The
following table sets forth the designations, principal balances, and interest
rates for each interest in REMIC 2, each of which (other than the LT2-R
Interest) is hereby designated as a regular interest in REMIC 2 (the “REMIC 2
Regular Interests”):
|
Class
Designation
|
Initial
Principal Balance
|
Interest
Rate
|
||
|
LT2-1A-IO
|
$
76,232,000.00
|
(1)
|
||
|
LT2-2A-IO
|
$
76,232,000.00
|
(1)
|
||
|
LT2-3A-IO
|
$
228,695,000.00
|
(1)
|
||
|
LT2-Pool
|
(2)
|
(1)
|
||
|
LT2-IO-Swap
|
(3)
|
(3)
|
||
|
LT2-R
|
(4)
|
(4)
|
| (1) |
For
any Distribution Date (and the related Accrual Period) the interest
rate
for each of these REMIC 2 Regular Interests is a per annum rate
equal to
the weighted average of the interest rates on the Lower Tier Interests
in
REMIC 1 for such Distribution Date, provided,
however, that
(i) for any Distribution Date on which the LT2-IO-Swap Interest
is
entitled to a portion of the interest accruals on the Lower Tier
Interests
in REMIC 1 with an “F “ in its designation, as described in footnote three
below, such weighted average shall be computed by first subjecting
the
rate on such Lower Tier Interest in REMIC 1 to a cap equal to Swap
LIBOR
for such Distribution Date.
|
| (2) |
This
interest shall have an initial principal balance equal to the excess
of
(a) the aggregate Principal Balance of the Mortgage Loans as of
the
Cut-off Date over (b) the sum of the initial principal balances
of the
interests in REMIC 2 containing the letters “A-IO” in their class
designations.
|
| (3) |
The
LT2-IO-Swap Interest is an interest only class that does not have
a
principal balance. For only those Distribution Dates listed in
the first
column in the table below, the LT2-IO-Swap Interest shall be entitled
to
interest accrued on the Lower Tier Interest in REMIC 1 listed in
the
second column in the table below, at a per annum rate equal to
the excess,
if any, of (i) the interest rate for such Lower Tier Interest in
REMIC 1
for such Distribution Date over (ii) Swap LIBOR for such Distribution
Date.
|
|
Distribution
Dates
|
REMIC
1
Class Designation
|
|
|
2
|
Class
LT1-F1
|
|
|
2-3
|
Class
LT1-F2
|
|
|
2-4
|
Class
LT1-F3
|
|
|
2-5
|
Class
LT1-F4
|
|
|
2-6
|
Class
LT1-F5
|
|
|
2-7
|
Class
LT1-F6
|
|
|
2-8
|
Class
LT1-F7
|
|
|
2-9
|
Class
LT1-F8
|
|
|
2-10
|
Class
LT1-F9
|
|
|
2-11
|
Class
LT1-F10
|
|
|
2-12
|
Class
LT1-F11
|
|
|
2-13
|
Class
LT1-F12
|
|
|
2-14
|
Class
LT1-F13
|
|
|
2-15
|
Class
LT1-F14
|
|
|
2-16
|
Class
LT1-F15
|
|
|
2-17
|
Class
LT1-F16
|
|
|
2-18
|
Class
LT1-F17
|
|
|
2-19
|
Class
LT1-F18
|
-5-
|
Distribution
Dates
|
REMIC
1
Class Designation
|
|
2-20
|
Class
LT1-F19
|
|
|
2-21
|
Class
LT1-F20
|
|
|
2-22
|
Class
LT1-F21
|
|
|
2-23
|
Class
LT1-F22
|
|
|
2-24
|
Class
LT1-F23
|
|
|
2-25
|
Class
LT1-F24
|
|
|
2-26
|
Class
LT1-F25
|
|
|
2-27
|
Class
LT1-F26
|
|
|
2-28
|
Class
LT1-F27
|
|
|
2-29
|
Class
LT1-F28
|
|
|
2-30
|
Class
LT1-F29
|
|
|
2-31
|
Class
LT1-F30
|
|
|
2-32
|
Class
LT1-F31
|
|
|
2-33
|
Class
LT1-F32
|
|
|
2-34
|
Class
LT1-F33
|
|
|
2-35
|
Class
LT1-F34
|
|
|
2-36
|
Class
LT1-F35
|
|
|
2-37
|
Class
LT1-F36
|
|
|
2-38
|
Class
LT1-F37
|
|
|
2-39
|
Class
LT1-F38
|
|
|
2-40
|
Class
LT1-F39
|
|
|
2-41
|
Class
LT1-F40
|
|
|
2-42
|
Class
LT1-F41
|
|
|
2-43
|
Class
LT1-F42
|
|
|
2-44
|
Class
LT1-F43
|
| (4) |
The
LT2-R Interest shall not have a principal amount and shall not
bear
interest. The LT2-R interest is hereby designated as the sole class
of
residual interest in REMIC 2.
|
On
each
Distribution Date, interest distributable in respect of the REMIC 1 Interests
for such Distribution Date shall be distributed to the Interests in REMIC
2 at
the rates shown above.
On
each
Distribution Date, all Realized Losses and all payments of principal in respect
of the Mortgage Loans shall be allocated to the LT2-Pool Interest until the
principal balance of such Interest is reduced to zero, and then to the Interests
having the letters “A-IO” in their Class designation in ascending order of their
numerical designation until the principal balance of each such Interest is
reduced to zero.
On
each
Distribution Date, the Securities Administrator shall distribute the Prepayment
Charges collected during the preceding Prepayment Period to the LT2-3A-IO
Interest.
REMIC
3:
The
following table sets forth the designations, principal balances, and interest
rates for each interest in REMIC 3, each of which (other than the LT3-R
Interest) is hereby designated as a regular interest in REMIC 3 (the “REMIC 3
Regular Interests”):
-6-
|
Class
Designation
|
Initial
Principal Balance
|
Interest
Rate
|
Corresponding
Class of Certificates
|
|
LT3-I-A
|
½
Corresponding Class balance
|
(1)
|
I-A
|
|
LT3-II-A-1
|
½
Corresponding Class balance
|
(1)
|
II-A-1
|
|
LT3-II-A-2
|
½
Corresponding Class balance
|
(1)
|
II-A-2
|
|
LT3-II-A-3
|
½
Corresponding Class balance
|
(1)
|
II-A-3
|
|
LT3-II-A-4
|
½
Corresponding Class balance
|
(1)
|
II-A-4
|
|
LT3-M-1
|
½
Corresponding Class balance
|
(1)
|
M-1
|
|
LT3-M-2
|
½
Corresponding Class balance
|
(1)
|
M-2
|
|
LT3-M-3
|
½
Corresponding Class balance
|
(1)
|
M-3
|
|
LT3-M-4
|
½
Corresponding Class balance
|
(1)
|
M-4
|
|
LT3-M-5
|
½
Corresponding Class balance
|
(1)
|
M-5
|
|
LT3-M-6
|
½
Corresponding Class balance
|
(1)
|
M-6
|
|
LT3-M-7
|
½
Corresponding Class balance
|
(1)
|
M-7
|
|
LT3-M-8
|
½
Corresponding Class balance
|
(1)
|
M-8
|
|
LT3-M-9
|
½
Corresponding Class balance
|
(1)
|
M-9
|
|
LT3-M-10
|
½
Corresponding Class balance
|
(1)
|
M-10
|
|
LT3-Q
|
(2)
|
(1)
|
X
|
|
LT3-A-IO
|
(3)
|
(3)
|
A-IO
|
|
LT3-IO-Swap
|
(4)
|
(4)
|
N/A
|
|
LT3-R
|
(5)
|
(5)
|
R
|
|
LT3-Reserve-IO
|
(6)
|
(6)
|
N/A
|
| (1) |
This
interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 3 Regular Interests is
a per annum
rate equal to the greater of (i) 0.00% and (ii) the weighted average
of the interest rates on each REMIC 2 Interest having an “A-IO” in its
designation and the LT2-Pool Interest, computed after (i) reducing
the
rate payable on each such REMIC 2 Interest having an “A-IO” in its Class
designation by 1.50% for any Distribution Date on which interest
is
payable on the Class LT-3-A-IO Interest (as described in footnote
(3)
below) and (ii) reducing the rate payable on each such REMIC 2
Interest
having an “A-IO” or “Pool” in its Class designation by 0.80% for any
Distribution Date on which the LT3-Reserve-IO Interest is entitled
to
receive interest (as described in footnote (6)
below).
|
| (2) |
Thisinterest
shall have an initial principal balance equal to the excess of
(a) the
aggregate Principal Balance of the Mortgage Loans as of the Cut-off
Date
over (b) the sum of the initial principal balances of the interests
in
REMIC 3 (other than any interest-only
classes).
|
| (3) |
This
REMIC 3 Interest is an interest-only Interest and does not have
a
principal balance. For each Distribution Date on the chart below,
this
REMIC 3 Interest shall be entitled to interest payable on the REMIC
2
Interest corresponding to such Distribution Dates at a rate equal
to the
lesser of (i) 1.50% and (ii) the interest rate of the REMIC 2 Interest
corresponding to such Distribution Date.
|
|
Distribution
Date occurring in
|
Corresponding
REMIC
2 Interest
|
|
|
December
2006 - May 2007
|
LT2-1A-IO
- LT2-3A-IO
|
|
|
June
2007 - November 2007
|
LT2-2A-IO
- LT2-3A-IO
|
|
|
December
2007 - February 2008
|
LT2-3A-IO
|
| (4) |
The
LT3-IO-Swap Interest shall not have a principal balance, but shall
be
entitled to receive, on each Distribution Date, 100% of the interest
distributable on the Class LT2-IO-Swap Interest in REMIC 2.
|
-7-
| (5) |
The
LT3-R Interest shall not have a principal amount and shall not
bear
interest. The LT3-R interest is hereby designated as the sole class
of
residual interest in REMIC 3.
|
| (6) |
TheClass
LT2-Reserve-IO Interest is an interest-only class that does not
have a
principal balance. For only those Distribution Dates on or after
the
Distribution Date in December 2016 to and including the Distribution
Date
in December 2036, the Class LT2-Reserve-IO Interest shall have
a notional
principal balance equal to the aggregate Stated Principal Balance
of the
Mortgage Loans having an original term to maturity of 40 years
and shall
accrue interest on such notional principal balance at a per annum
rate of
0.80%.
|
On
each Distribution Date, interest distributable in respect of the REMIC 2
Regular
Interests shall be distributed with respect to each of the Interests in REMIC
3
based on the above-described interest rates, provided, however,
that interest that accrues on the LT3-Q Interest shall be deferred to the
extent
necessary to make the principal distributions described in priority (i) below
for such Distribution Date. Any interest so deferred shall itself bear interest
at the interest rate for the LT3-Q Interest.
On
each Distribution Date, the principal distributed on the REMIC 2 Regular
Interests (together with an amount equal to the interest deferred on the
Class
LT3-Q Interest for such Distribution Date) shall be distributed, and Realized
Losses shall be allocated, among the Interests in REMIC 3 in the following
order
of priority:
(i) first,
to
each interest in REMIC 3 having a Corresponding Class in REMIC 4 (other than
a
REMIC 3 interest having an “A-IO” in its class designation) until the
outstanding principal amount of each such interest equals one-half of the
outstanding principal amount of the Corresponding Class of Certificates for
such
interest immediately after such Distribution Date;
(ii) finally,
to the Class LT3-Q Interest, any remaining amounts.
On
each
Distribution
Date,
the Securities Administrator shall distribute the Prepayment Charges collected
during the preceding Prepayment Period to the LT3-Q Interest
Upper
Tier REMIC
The
Upper
Tier REMIC shall issue the following Classes of Upper Tier REMIC Regular
Interests and each such interest, other than the Class R Interest, is hereby
designated as a regular interest in the Upper Tier REMIC.
-8-
Upper
Tier REMIC
|
Upper
Tier REMIC
Class Designation
|
Upper
Tier REMIC Interest Rate and Corresponding Class Interest
Rate
|
Initial
Upper Tier REMIC Principal Amount and Corresponding Class Certificate
Balance or Class Notional Balance
|
Corresponding
Class of
Certificates
|
|||
|
Class I-A
|
(1)
|
$384,335,000.00
|
Class I-A(11)
|
|||
|
Class II-A-1
|
(2)
|
$442,587,000.00
|
Class II-A-1(11)
|
|||
|
Class II-A-2
|
(3)
|
$128,811,000.00
|
Class II-A-2(11)
|
|||
|
Class II-A-3
|
(4)
|
$224,585,000.00
|
Class II-A-3(11)
|
|||
|
Class II-A-4
|
(5)
|
$
63,784,000.00
|
Class II-A-4(11)
|
|||
|
Class A-IO
|
(6)
|
$381,159,000.00
|
Class A-IO(11)
|
|||
|
Class M-1
|
(7)
|
$
53,362,000.00
|
Class M-1(11)
|
|||
|
Class M-2
|
(7)
|
$
47,263,000.00
|
Class M-2(11)
|
|||
|
Class M-3
|
(7)
|
$
28,207,000.00
|
Class M-3(11)
|
|||
|
Class M-4
|
(7)
|
$
25,156,000.00
|
Class M-4(11)
|
|||
|
Class M-5
|
(7)
|
$
22,870,000.00
|
Class M-5(11)
|
|||
|
Class M-6
|
(7)
|
$
23,632,000.00
|
Class M-6(11)
|
|||
|
Class M-7
|
(7)
|
$
21,345,000.00
|
Class M-7(11)
|
|||
|
Class M-8
|
(7)
|
$
14,484,000.00
|
Class M-8(11)
|
|||
|
Class M-9
|
(7)
|
$
8,385,000.00
|
Class M-9(11)
|
|||
|
Class M-10
|
(7)
|
$
12,197,000.00
|
Class M-10(11)
|
|||
|
Class X
|
(8)
|
(8)
|
Class X
|
|||
|
Class R
|
(9)
|
(9)
|
Class R
|
|||
|
Class P
|
(10)
|
(10)
|
Class
P
|
|
(1)
|
The
Class I-A Interest will bear interest during each Interest Accrual
Period at a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Interest Margin and (ii) the Group I Available Funds Cap or
(b) after the Optional Termination Date, the lesser of (i) LIBOR
plus the applicable Interest Margin and (ii) the Group I
Available Funds Cap. For purposes of the REMIC Provisions, the
reference
to “Group I Available Funds Cap” in clause (ii) of the preceding sentence
shall be deemed a reference to the REMIC 3 Net Funds Cap; therefore,
on
any Distribution Date on which the Interest Rate for the Class
I-A
Certificates exceeds the REMIC 3 Net Funds Cap, interest accruals
based on
such excess shall be treated as having been paid from the Excess
Reserve
Fund Account or the Supplemental Interest Trust, as applicable;
on any
Distribution Date on which the Interest Rate on the Class I-A Certificates
is based on the Group I Available Funds Cap, the amount of interest
that
would have accrued on the Class I-A Certificates if the REMIC 3
Net Funds
Cap were substituted for the Group I Available Funds Cap shall
be treated
as having been paid by the Class I-A Certificateholders to the
Supplemental Interest Trust, all pursuant to and as further provided
in
Section 8.11 hereof.
|
|
(2)
|
The
Class II-A-1 Interest will bear interest during each Interest Accrual
Period at a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Interest Margin and (ii) the Group II Available Funds Cap or
(b) after the Optional Termination Date, the lesser of (i) LIBOR
plus the applicable Interest Margin and (ii) the Group II Available
Funds Cap. For purposes of the REMIC Provisions, the reference
to “Group
II Available Funds Cap” in clause (ii) of the preceding sentence shall be
deemed a reference to the REMIC 3 Net Funds Cap; therefore, on
any
Distribution Date on which the Interest Rate for the Class II-A-1
Certificates exceeds the REMIC 3 Net Funds Cap, interest accruals
based on
such excess shall be treated as having been paid from the Excess
Reserve
Fund Account or the Supplemental Interest Trust, as applicable;
on any
Distribution Date on which the Interest Rate on the Class II-A-1
Certificates is based on the Group II Available Funds Cap, the
amount of
interest that would have accrued on the Class II-A-1 Certificates
if the
REMIC 3 Net Funds Cap were substituted for the Group II Available
Funds
Cap shall be treated as having been paid by the Class II-A-1
Certificateholders to the Supplemental Interest Trust, all pursuant
to and
as further provided in Section 8.11
hereof.
|
-9-
|
(3)
|
The
Class II-A-2 Interest will bear interest during each Interest Accrual
Period at a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Interest Margin and (ii) the Group II Available Funds Cap or
(b) after the Optional Termination Date, the lesser of (i) LIBOR
plus the applicable Interest Margin and (ii) the Group II Available
Funds Cap. For purposes of the REMIC Provisions, the reference
to “Group
II Available Funds Cap” in clause (ii) of the preceding sentence shall be
deemed a reference to the REMIC 3 Net Funds Cap; therefore, on
any
Distribution Date on which the Interest Rate for the Class II-A-2
Certificates exceeds the REMIC 3 Net Funds Cap, interest accruals
based on
such excess shall be treated as having been paid from the Excess
Reserve
Fund Account or the Supplemental Interest Trust, as applicable;
on any
Distribution Date on which the Interest Rate on the Class II-A-2
Certificates is based on the Group II Available Funds Cap, the
amount of
interest that would have accrued on the Class II-A-2 Certificates
if the
REMIC 3 Net Funds Cap were substituted for the Group II Available
Funds
Cap shall be treated as having been paid by the Class II-A-2
Certificateholders to the Supplemental Interest Trust, all pursuant
to and
as further provided in Section 8.11
hereof.
|
|
(4)
|
The
Class II-A-3 Interest will bear interest during each Interest Accrual
Period at a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Interest Margin and (ii) the Group II Available Funds Cap or
(b) after the Optional Termination Date, the lesser of (i) LIBOR
plus the applicable Interest Margin and (ii) the Group II Available
Funds Cap. For purposes of the REMIC Provisions, the reference
to “Group
II Available Funds Cap” in clause (ii) of the preceding sentence shall be
deemed a reference to the REMIC 3 Net Funds Cap; therefore, on
any
Distribution Date on which the Interest Rate for the Class II-A-3
Certificates exceeds the REMIC 3 Net Funds Cap, interest accruals
based on
such excess shall be treated as having been paid from the Excess
Reserve
Fund Account or the Supplemental Interest Trust, as applicable;
on any
Distribution Date on which the Interest Rate on the Class II-A-3
Certificates is based on the Group II Available Funds Cap, the
amount of
interest that would have accrued on the Class II-A-3 Certificates
if the
REMIC 3 Net Funds Cap were substituted for the Group II Available
Funds
Cap shall be treated as having been paid by the Class II-A-3
Certificateholders to the Supplemental Interest Trust, all pursuant
to and
as further provided in Section 8.11
hereof.
|
|
(5)
|
The
Class II-A-4 Interest will bear interest during each Interest Accrual
Period at a per annum rate equal to (a) on or prior to the Optional
Termination Date, the lesser of (i) LIBOR plus the applicable
Interest Margin and (ii) the Group II Available Funds Cap or
(b) after the Optional Termination Date, the lesser of (i) LIBOR
plus the applicable Interest Margin and (ii) the Group II Available
Funds Cap. For purposes of the REMIC Provisions, the reference
to “Group
II Available Funds Cap” in clause (ii) of the preceding sentence shall be
deemed a reference to the REMIC 3 Net Funds Cap; therefore, on
any
Distribution Date on which the Interest Rate for the Class II-A-4
Certificates exceeds the REMIC 3 Net Funds Cap, interest accruals
based on
such excess shall be treated as having been paid from the Excess
Reserve
Fund Account or the Supplemental Interest Trust, as applicable;
on any
Distribution Date on which the Interest Rate on the Class II-A-4
Certificates is based on the Group II Available Funds Cap, the
amount of
interest that would have accrued on the Class II-A-4 Certificates
if the
REMIC 3 Net Funds Cap were substituted for the Group II Available
Funds
Cap shall be treated as having been paid by the Class II-A-4
Certificateholders to the Supplemental Interest Trust, all pursuant
to and
as further provided in Section 8.11
hereof.
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|
(6)
|
The
Class A-IO Interest will bear interest during each Interest Accrual
Period based on its Class Notional Balance at a per annum rate
equal to
the lesser of (i) 1.50% per annum and (ii) the Class A-IO
Available Funds Cap. For purposes of the REMIC Provisions, the
reference
to the Class A-IO Available Funds Cap in clause (ii) of the preceding
sentence shall be deemed to be computed without regard to the Swap
Agreement (the “REMIC A-IO Available Funds Cap”); therefore, on any
Distribution Date on which the Interest Rate on the Class A-IO
Certificates is based on the Class A-IO Available Funds Cap, the
amount of
interest that would have accrued on the Class A-IO Certificates
if the
REMIC A-IO Available Funds Cap were substituted for the Class A-IO
Available Funds Cap shall be treated as having been paid by the
Class A-IO
Certificateholders to the Supplemental Interest Trust, all pursuant
to and
as further provided in Section 8.11 hereof. The Class A-IO Certificates
will not bear interest after the Distribution Date in February
2008.
|
-10-
|
(7)
|
The
Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8,
Class M-9 and Class M-10 Interests will bear interest during
each Interest Accrual Period at a per annum rate equal to (a) on or
prior to the Optional Termination Date, the lesser of (i) LIBOR plus
the applicable Interest Margin and (ii) the Class M Available Funds
Cap or (b) after the Optional Termination Date, the lesser of
(i) LIBOR plus the applicable Interest Margin and (ii) the Class
M Available Funds Cap. For purposes of the REMIC Provisions, the
reference
to Class M Available Funds Cap in clause (ii) of the preceding
sentence
shall be deemed to be a reference to the REMIC 3 Net Funds Cap;
therefore,
on any Distribution Date on which the Interest Rate for the Class
X-0,
X-0, X-0, X-0, X-0, M-6, M-7, M-8, M-9 and M-10 Certificates, as
applicable, exceeds the REMIC 3 Net Funds Cap, interest accruals
based on
such excess shall be treated as having been paid from the Excess
Reserve
Fund Account or the Supplemental Interest Trust, as applicable;
on any
Distribution Date on which the Interest Rate on the Class X-0,
X-0, X-0,
X-0, X-0, M-6, M-7, M-8, M-9 and M-10 Certificates, as applicable,
is
based on the Class M Available Funds Cap, the amount of interest
that
would have accrued on each such Class of Certificates if the REMIC
3 Net
Funds Cap were substituted for the Class M Available Funds Cap
shall be
treated as having been paid by the Class X-0, X-0, X-0, X-0, X-0,
M-6,
M-7, M-8, M-9 and M-10 Certificateholders, as applicable, to the
Supplemental Interest Trust, all pursuant to and as further provided
in
Section 8.11 hereof.
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|
(8)
|
For
purposes of the REMIC Provisions, the Class X Interest shall have
an
initial principal balance of $23,631,478.78 (initial overcollateralization
of $23,631,578.78 less $100.00 attributable to the Class P Principal
Amount), and the right to receive distributions of such amount
represents
a regular interest in the Upper Tier REMIC. The Class X Certificate
shall
also comprise three notional components, each of which represents
a
regular interest in the Upper Tier REMIC. The first such component
has a
notional balance that will at all times equal the aggregate of
the Class
Certificate Balances of the Lower Tier Interests in REMIC 3, and,
for each
Distribution Date (and the related Interest Accrual Period) this
notional
component shall bear interest at a per annum rate equal to the
excess, if
any, of (i) the weighted average of the interest rates on the Lower
Tier
Interests in REMIC 3 (other than any interest-only regular interest)
over
(ii) the Adjusted Lower Tier WAC. The second notional component
represents
the right to receive all distributions in respect of the Class
LT3-IO-Swap
in REMIC 3 (the “LT4-I” interest). The third notional component represents
the right to receive all distributions in respect of the Class
LT3-Reserve-IO in REMIC 3. In addition, for purposes of the REMIC
Provisions, the Class X Certificate shall represent beneficial
ownership
of (i) the Excess Reserve Fund Account; (ii) the Supplemental Interest
Trust, including the Swap Agreement, Swap Account, Cap Agreement,
and Cap
Account, and (iii) the Final Maturity Reserve Trust and (iv) an
interest
in the notional principal contracts described in Section 8.11
hereof.
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|
(9)
|
The
Class R Interest is the sole Class of residual interest in the Upper
Tier REMIC. The Class R Interest is issued without a principal amount
does not bear a stated Interest Rate. The Class R Certificate will
be
issued as a single certificate evidencing the initial Percentage
Interest
of such Class, and shall represent ownership of each of the Class
R, Class
LT1-R, Class LT2-R, and Class LT3-R
Interests.
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(10)
|
The
Class P Interest shall not bear interest at a stated Interest Rate.
Prepayment Charges paid with respect to the Mortgage Loans shall
be paid
to the Class P Certificateholders as provided in Section 4.02(b).
For
purposes of the REMIC Provisions, the Class P Interest shall represent
a
regular interest in the Upper Tier REMIC. The Class P Certificate
will
have a Class P Principal Amount of
$100.
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|
(11)
|
Each
of these Certificates will represent not only the ownership of
the
Corresponding Class of Upper Tier REMIC Regular Interest but also the
right to receive payments from (i) the Excess Reserve Fund Account
in
respect of any Basis Risk Carryover Amounts and (ii) the Supplemental
Interest Trust in respect of proceeds from the Derivative Agreements.
For
federal income tax purposes, the Securities Administrator will
treat a
Certificateholder’s right to receive payments from the Excess Reserve Fund
Account as payments made pursuant to a notional principal contract
written
by the Class X
Certificateholders.
|
-11-
The
minimum denomination for each Class of Certificates, other than the
Class P, Class R and the Class X Certificates, will be $25,000 of
Certificate Balance (notional balance in the case of Class A-IO Certificates)
($100,000 with respect to initial investors resident in a Member State of
the
European Economic Area subject to the EU Prospectus Directive 2003/71/EC)
with
integral multiples of $1 in excess thereof, except that one Certificate in
each
Class may be issued in a different amount. The minimum denomination for
each of the Class P and Class X Certificates will be a 10.00%
Percentage Interest in such Class, and the minimum denomination for the
Class R Certificates shall be 100% Percentage Interest in such
Class.
Set
forth
below are designations of Classes of Certificates to the categories used
herein:
|
Book-Entry
Certificates
|
All
Classes of Certificates other than the Physical
Certificates.
|
|
Class A
Certificates
|
Class
A-IO, Class I-A, Class II-A-1, Class II-A-2, Class II-A-3 and Class
II-A-4 Certificates.
|
|
Class M
Certificates
|
Class M-1,
Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9 and
Class M-10 Certificates.
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Delay
Certificates
|
The
Class A-IO Certificates.
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|
ERISA-Restricted
|
|
|
Certificates
|
Any
Class P, Class X and Class R Certificates and any Certificate with
a
rating which falls below the lowest applicable permitted rating
under the
Underwriters’ Exemption.
|
|
ERISA-Restricted
|
|
|
Trust
Certificates
|
Any
Class A Certificate or Class M Certificate.
|
|
Group
I Certificates
|
The
Class I-A Certificates.
|
|
Group
II Certificates
|
Collectively,
the Class II-A-1, Class II-A-2, Class II-A-3 and Class II-A-4
Certificates.
|
|
Interest-Only
Certificates
|
The
Class A-IO Certificates.
|
|
LIBOR
Certificates
|
Collectively,
the Class I-A, Class II-A-1, Class II-A-2, Class II-A-3,
Class II-A-4 Certificates and any Class M
Certificate.
|
|
Non-Delay
Certificates
|
The
Class A Certificates (other than the Class A-IO Certificates),
the
Class M Certificates and Class X
Certificates.
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|
Offered
Certificates
|
All
Classes of Certificates other than the Private
Certificates.
|
|
Physical
Certificates
|
Class P,
Class X and Class R Certificates.
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|
Private
Certificates
|
Class
M-10, Class P, Class X and Class R
Certificates.
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-12-
|
Rating
Agencies
|
Fitch,
Xxxxx’x and Standard & Poor’s.
|
|
Regular
Certificates
|
All
Classes of Certificates other than the Class R
Certificates.
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|
Residual
Certificates
|
Class R
Certificates.
|
ARTICLE
I
DEFINITIONS
Whenever
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
10-K
Filing Deadline: As defined in Section 8.12(a)(ii).
Account:
Any of
the Collection Accounts, the Master Servicing Account, the Distribution Account
and any Escrow Account, with respect to the Supplemental Interest Trust, the
Excess Reserve Fund Account and the Supplemental Interest Trust Account and
with
respect to the Final Maturity Reserve Trust, the Final Maturity Reserve Fund.
Each Account shall be an Eligible Account.
Additional
Disclosure Notification:
The
form of notice set forth on Exhibit Y.
Additional
Form 10-D Disclosure:
As
defined in Section 8.12(a)(i).
Additional
Form 10-K Disclosure:
As
defined in Section 8.12(a)(ii).
Additional
Termination Event:
As
defined in the Cap Agreement or the Swap Agreement, as applicable.
Adjustable
Rate Mortgage Loan:
A
Mortgage Loan which provides for the adjustment of the Mortgage Rate payable
in
respect thereto.
Adjusted
Lower Tier WAC:
For
any
Distribution Date (and the related Accrual Period), an amount equal to (i)
two,
multiplied by (ii) the weighted average of the interest rates for such
Distribution Date for the Class LT3-I-A, LT3-II-A-1, LT3-II-A-2, LT3-II-A-3,
LT3-II-A-4, LT3-M-1, LT3-M-2, LT3-M-3, LT3-M-4, LT3-M-5, LT3-M-6, LT3-M-7,
LT3-M-8, LT3-M-9, LT3-M-10 and LT3-Q Interests, weighted in proportion to their
Class Certificate Balances as of the beginning of the related Accrual Period
and
computed by subjecting the rate on the Class LT3-Q Interest to a cap of 0.00%,
and by subjecting the rate on each of the Class LT3-I-A, LT3-II-A-1, LT3-II-A-2,
LT3-II-A-3, LT3-II-A-4, LT3-M-1, LT3-M-2, LT3-M-3, LT3-M-4, LT3-M-5, LT3-M-6,
LT3-M-7, LT3-M-8, LT3-M-9 and LT3-M-10 Interests to a cap that corresponds
to
the Interest Rate (determined by substituting the REMIC 3 Net Funds Cap for
the
applicable Available Funds Cap) for the Corresponding Class of Certificates;
provided,
however,
that
for each Class of LIBOR Certificates, the Certificate Interest Rate shall be
multiplied by the quotient of (a) the actual number of days in the Interest
Accrual Period, divided by (b) 30.
Advance:
Any
P&I Advance or Servicing Advance.
-13-
Affected
Party:
As
defined in the Swap Agreement.
Affiliate:
With
respect to any Person, any other Person controlling, controlled by or under
common control with such first Person. For the purposes of this definition,
“control” means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by
contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.
Agreement:
This
Pooling and Servicing Agreement and all amendments or supplements
hereto.
Amounts
Held for Future Distribution:
As to
the Certificates on any Distribution Date, the aggregate amount held in the
Collection Accounts of the Servicers at the close of business on the related
Determination Date on account of (i) Principal Prepayments, Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds and Subsequent Recoveries
on the Mortgage Loans received after the end of the related Prepayment Period
and (ii) all Scheduled Payments on the Mortgage Loans due after the end of
the related Due Period.
Applied
Realized Loss Amount:
With
respect to any Distribution Date, the amount, if any, by which the aggregate
Class Certificate Balance of the LIBOR Certificates after distributions of
principal on such Certificates on such Distribution Date exceeds the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution
Date.
Appraised
Value:
The
value set forth in an appraisal made in connection with the origination of
the
related Mortgage Loan as the value of the Mortgaged Property.
Assignment
of Mortgage:
An
assignment of the Mortgage, notice of transfer or equivalent instrument in
recordable form (other than the assignee’s name and recording information not
yet returned from the recording office), reflecting the sale of the Mortgage
to
the Trustee.
Available
Funds:
With
respect to any Distribution Date and the Mortgage Loans to the extent received
by the Master Servicer (x) the sum of (i) all scheduled installments
of interest (net of the related Expense Fees) and principal due on the Due
Date
on such Mortgage Loans in the related Due Period and received by the Servicers
on or prior to the related Determination Date, together with any
P&I Advances in respect thereof; (ii) all Condemnation Proceeds,
Insurance Proceeds, Liquidation Proceeds and Subsequent Recoveries received
by
the Servicers during the related Prepayment Period (in each case, net of
unreimbursed expenses incurred in connection with a liquidation or foreclosure
and unreimbursed Advances, if any); (iii) all partial or full prepayments
on the Mortgage Loans received by the Servicers during the related Prepayment
Period together with all Compensating Interest paid by the Servicers in
connection therewith (excluding any Prepayment Charges); (iv) all
Substitution Adjustment Amounts with respect to the substitutions of Mortgage
Loans that occur on or prior to the related Determination Date; (v) all
amounts received with respect to such Distribution Date as the Repurchase Price
in respect of a Mortgage Loan repurchased by a Mortgage Loan Seller or the
Sponsor on or prior to the related Determination Date; and (vi) the
proceeds with respect to the termination of the Trust Fund pursuant to
clause (a) of Section 11.01; reduced by (y) amounts in
reimbursement for Advances previously made with respect to the Mortgage Loans
and other amounts as to which a Servicer, the Depositor, the Master Servicer,
the Securities Administrator, the Credit Risk Manager or the Trustee are
entitled to be paid or reimbursed pursuant to the Servicing Agreements or this
Agreement.
-14-
Back-up
Certification:
As
defined in Section 3.05.
Basic
Principal Payment Amount:
With
respect to any Distribution Date, the excess of (i) the Principal
Remittance Amount for such Distribution Date over (ii) the Excess
Overcollateralization Amount, if any, for such Distribution Date.
Basis
Risk Carryover Amount:
With
respect to each Class of LIBOR Certificates, as of any Distribution Date,
the sum of (A) if on such Distribution Date the Interest Rate for any
Class of LIBOR Certificates is based upon the Group I Available Funds Cap,
the Group II Available Funds Cap or the Class M Available Funds Cap, as
applicable, the excess of (i) the amount of interest such Class of
Certificates would otherwise be entitled to receive on such Distribution Date
had such Interest Rate been calculated as the sum of LIBOR and the applicable
Interest Margin on such Class of Certificates for such Distribution Date,
over (ii) the amount of interest payable on such Class of
Certificates, in the case of any Group I Certificates, based on the Group I
Available Funds Cap, in the case of any Group II Certificates, based on the
Group II Available Funds Cap and in the case of any Class of Class M
Certificates, based on the Class M Available Funds Cap and (B) the portion
of any such excess described in clause (A) for such Class of
Certificates from all previous Distribution Dates not previously paid, together
with interest thereon at a rate equal the applicable Interest Rate for each
such
Class of Certificates for such Distribution Date. With respect to the
Interest-Only Certificates, as of any Distribution Date, the sum of (A) if
on
such Distribution Date the Interest Rate of the Interest-Only Certificates
is
based on the Class A-IO Available Funds Cap, the excess of (i) the amount of
interest that the Interest-Only Certificates would otherwise have been entitled
to receive on such Distribution Date had the Interest Rate equaled 1.50% per
annum over (ii) the amount of interest payable on the Interest-Only Certificates
if subject to the Class A-IO Available Funds Cap for such Distribution Date
and
(B) the portion of such excess described in clause (A) for the Interest-Only
Certificates from all previous Distribution Dates not previously paid, together
with interest thereon at a rate equal to 1.50% per annum.
Basis
Risk Payment:
For any
Distribution Date, an amount equal to the lesser of (i) the aggregate of
the Basis Risk Carryover Amounts of the LIBOR Certificates and the Interest-Only
Certificates for such Distribution Date and (ii) the Class X
Distributable Amount (prior to any reduction for Basis Risk
Payments).
Book-Entry
Certificates:
As
specified in the Preliminary Statement.
Business
Day:
Any day
other than (i) Saturday or Sunday, or (ii) a day on which banking and
savings and loan institutions, in (a) the States of New York, California,
Maryland or Minnesota, (b) the Commonwealth of Pennsylvania or any other
State in which a Servicer’s servicing operations are located, or (c) any
State in which the Corporate Trust Office is located, are authorized or
obligated by law or executive order to be closed.
-15-
Cap
Account:
The
sub-account of the Supplemental Interest Trust Account created pursuant to
Section 4.06(a).
Cap
Agreement:
The
interest rate cap agreement entered into by the Supplemental Interest Trust
and
the Cap Counterparty, dated December 5, 2006, which agreement provides for
the
monthly payment specified to the securities administrator of the Supplemental
Interest Trust (for the benefit of Certificateholders) commencing with the
Distribution Date in June 2007 and ending on the Distribution Date in December
2013, by the Cap Counterparty, but subject to the conditions set forth therein,
together with any schedule, confirmations or other agreements relating thereto,
attached as Exhibit P.
Cap
Amount:
With
respect to each Distribution Date, the amount of any Cap Payment deposited
into
the Cap Account.
Cap
Counterparty:
The
counterparty to the Supplemental Interest Trust under the Cap Agreement, and
any
successor in interest or its assigns. Initially, the Cap Counterparty shall
be
ABN AMRO Bank N.V.
Cap
Payment:
With
respect to each Distribution Date, any payment required to be made by the Cap
Counterparty to the Supplemental Interest Trust pursuant to the terms of the
Cap
Agreement.
Cap
Payment Date:
For as
long as the Cap Agreement is in effect or any amounts remain unpaid thereunder,
the Business Day immediately preceding each Distribution Date.
Cap
Replacement Receipts:
As
defined in Section 4.08(b)(i).
Cap
Replacement Receipts Account:
As
defined in Section 4.08(b)(i).
Cap
Termination Payment:
Upon
the designation of an “Early Termination Date” as defined in the Cap Agreement,
the payment required to be made by the Cap Counterparty to the Supplemental
Interest Trust pursuant to the terms of the Cap Agreement and any unpaid amounts
due on previous Cap Payment Dates and accrued interest thereon as provided
in
the Cap Agreement, as calculated by the Cap Counterparty and furnished to the
Securities Administrator.
Cap
Termination Receipts:
As
defined in Section 4.08(b)(i).
Cap
Termination Receipts Account:
As
defined in Section 4.08(b)(i).
Certificate:
Any one
of the Certificates executed and authenticated by the Securities Administrator
in substantially the forms attached hereto as exhibits.
Certificate
Balance:
With
respect to any Certificate, other than a Class A-IO, Class X, Class P
or Class R Certificate, at any date, the maximum dollar amount of principal
to which the Holder thereof is then entitled hereunder, such amount being equal
to the Denomination thereof minus all distributions of principal previously
made
with respect thereto and in the case of any Class M Certificates, reduced by
any
Applied Realized Loss Amounts allocated to such Class of Certificates
pursuant to Section 4.05; provided,
however,
that
immediately following the Distribution Date on which a Subsequent Recovery
is
distributed, the Class Certificate Balances of any Class or Classes of
Certificates that have been previously reduced by Applied Realized Loss Amounts
will be increased, in order of seniority, by the amount of any Subsequent
Recovery distributed on such Distribution Date (up to the amount of Unpaid
Realized Loss Amount for such Class or Classes for such Distribution Date).
The Class P Certificates are issued with an initial Class P Principal
Amount of $100. The Class X and Class R Certificates have no
Certificate Balance. The Class A-IO Certificates are issued with a Class
Notional Balance.
-16-
Certificate
Owner:
With
respect to a Book-Entry Certificate, the Person who is the beneficial owner
of
such Book-Entry Certificate.
Certificate
Register:
The
register maintained pursuant to Section 5.02.
Certificateholder
or
Holder:
The
person in whose name a Certificate is registered in the Certificate Register,
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 100.00% 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. The Securities Administrator is entitled
to rely conclusively on a certification of the Depositor or any Affiliate of
the
Depositor in determining which Certificates are registered in the name of an
Affiliate of the Depositor.
Certification
Parties:
As
defined in Section 3.05.
Certificate
Group:
The
Group I Certificates or the Group II Certificates, as
applicable.
Certifying
Person:
As
defined in Section 3.05.
Citibank:
Citibank, N.A., and its successors in interest.
CitiMortgage:
CitiMortgage, Inc., and its successors in interest.
Class:
All
Certificates bearing the same class designation as set forth in the Preliminary
Statement.
Class I-A
Certificates:
All
Certificates bearing the Class designation of “Class I-A”.
Class II-A-1
Certificates:
All
Certificates bearing the Class designation of “Class II-A-1”.
-17-
Class II-A-2
Certificates:
All
Certificates bearing the Class designation of “Class II-A-2”.
Class II-A-3
Certificates:
All
Certificates bearing the Class designation of “Class II-A-3”.
Class II-A-4
Certificates:
All
Certificates bearing the Class designation of “Class II-A-4”.
Class A
Certificates:
As
specified in the Preliminary Statement.
Class A-IO
Available Funds Cap:
With
respect to the Class A-IO Certificates and any Distribution Date, a per annum
rate equal to (x) the weighted average of the Expense Adjusted Mortgage Rate
of
the Mortgage Loans then in effect on the beginning of the related Due Period
minus
(y) a
percentage equal to the product of (i) a fraction, the numerator of which is
equal to the Net Derivative Payment or Swap Termination Payment (other than
a
Swap Termination Payment resulting from a Derivative Counterparty Trigger Event)
made to the Swap Counterparty with respect to such Due Period, and the
denominator of which is equal to the Pool Balance as of the beginning of the
related Due Period and (ii) 12.
Class A-IO
Certificates:
All
Certificates bearing the Class designation of “Class A-IO”.
Class Certificate
Balance:
With
respect to any Class of LIBOR Certificates and as to any date of determination,
the aggregate of the Certificate Balances of all Certificates of such
Class as of such date. With respect to the Class A-IO, Class X, Class P and
Class R Certificates, zero. With respect to any Lower Tier Interest and as
to
any date of determination, the initial Class Principal Balance as shown or
described in the table set forth in the Preliminary Statement to this Agreement
for the issuing REMIC, as reduced by any principal distributed with respect
to
such Lower Tier Interest and Realized Losses allocated to such Lower Tier
Interest.
Class
I Shortfalls:
As
defined in Section 8.11 hereof. For
purposes of clarity, the aggregate Class I Shortfall for any Distribution Date
shall equal the amount payable to the Derivative Counterparty on such
Distribution Date in excess of the amount payable with respect to the Class
LT3-I interest in the Upper Tier REMIC on such Distribution Date, all as further
provided in Section 8.11 hereof.
Class
M Available Funds Cap:
With
respect to the Class M Certificates as of any Distribution Date, a per annum
rate equal to the weighted average of the Group I Available Funds Cap and the
Group II Available Funds Cap, weighted on the basis of the Group Subordinate
Amount for the Group I Mortgage Loans and the Group Subordinate Amount for
the
Group II Mortgage Loans, respectively.
Class M
Certificates:
As
specified in the Preliminary Statement.
-18-
Class M
Principal Payment Amount:
With
respect to any Distribution Date and any Class of Class M
Certificates, the lesser of (i) the excess of (a) the Principal
Payment Amount over (b) the aggregate amount distributed on that
Distribution Date as principal to all Classes of Certificates more senior than
that Class of Class M Certificates (provided,
however,
for
this purpose, the Class M-1, Class M-2 and Class M-3 Certificates will be
treated as having the same seniority) and (ii) the excess of (a) the sum of
the
aggregate Class Certificate Balances of all Class of Certificates more
senior than that Class of Class M Certificates (after giving effect to
all amounts distributed on that Distribution Date to those Classes of more
senior certificates (provided,
however,
for
this purpose, the Class M-1, Class M-2 and Class M-3 Certificates will be
treated as having the same seniority)) and the Class Certificate Balance of
that Class of Class M Certificates immediately prior to that
Distribution Date over (b) the lesser of:
(x) the
percentage set forth in the table below for the applicable Class of
Class M Certificates multiplied by the aggregate Stated Principal Balance
of the Mortgage Loans for that Distribution Date:
|
Class
|
|
Percentage
|
|
X-0,
X-0 xxx X-0
|
80.10%*
|
|
|
M-4
|
83.40%
|
|
|
M-5
|
86.40%
|
|
|
M-6
|
89.50%
|
|
|
M-7
|
92.30%
|
|
|
M-8
|
94.20%
|
|
|
M-9
|
95.30%
|
|
|
M-10
|
96.90%
|
and
(y) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for that Distribution Date over 0.50% of the aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date, until the Class Certificate
Balance of that Class of Class M Certificates has been reduced to
zero.
_______________
| * |
Theamount
calculated according to such percentage will be allocated sequentially
to
the Class M-1, Class M-2 and Class M-3
Certificates.
|
Class M-1
Certificates:
All
Certificates bearing the Class designation of “Class M-1”.
Class M-2
Certificates:
All
Certificates bearing the Class designation of “Class M-2”.
Class M-3
Certificates:
All
Certificates bearing the Class designation of “Class M-3”.
Class M-4
Certificates:
All
Certificates bearing the Class designation of “Class M-4”.
-19-
Class M-5
Certificates:
All
Certificates bearing the Class designation of “Class M-5”.
Class M-6
Certificates:
All
Certificates bearing the Class designation of “Class M-6”.
Class M-7
Certificates:
All
Certificates bearing the Class designation of “Class M-7”.
Class M-8
Certificates:
All
Certificates bearing the Class designation of “Class M-8”.
Class M-9
Certificates:
All
Certificates bearing the Class designation of “Class M-9”.
Class M-10
Certificates:
All
Certificates bearing the Class designation of “Class M-10”.
Class Notional
Balance:
With
respect to each Distribution Date and the related Interest Accrual Period and
the Class A-IO Certificates, the lesser of (a) the Pool Balance as of the first
day of the related Due Period and (b) the amount set forth in the schedule
in
Exhibit Z for such Distribution Date.
Class P
Certificates:
All
Certificates bearing the Class designation of “Class P”.
Class P
Principal Amount:
As of
the Closing Date, $100.00.
Class R
Certificates:
All
Certificates bearing the Class designation of “Class R”.
Class X
Certificates:
All
Certificates bearing the Class designation of “Class X”.
Class
X Distributable Amount:
With
respect to any Distribution Date, the amount of interest that has accrued on
the
Class X Notional Balance, as described in the Preliminary Statement, but that
has not been distributed prior to such date. In addition, such amount shall
include the initial Overcollateralization Amount of $23,631,478.78
($23,631,578.78 less $100 of such amount allocated to the Class P Certificates)
to the extent such amount has not been distributed on an earlier Distribution
Date as part of the Overcollateralization Reduction Amount.
Class
X Notional Balance:
With respect to
any Distribution Date (and the related Interest Accrual Period) the aggregate
principal balance of the regular interests in REMIC 3 as specified in the
Preliminary Statement hereto.
Closing
Date:
December 5, 2006.
Code:
The
Internal Revenue Code of 1986, including any successor or amendatory
provisions.
-20-
Collateral
Account:
The
account maintained by the trustee of the Supplemental Interest Trust in
accordance with the provisions of Section 4.06(b).
Collection
Account:
With
respect to each Servicer, the account defined as a “Custodial Account” in the
related Servicing Agreement.
Commission:
The
United States Securities and Exchange Commission.
Compensating
Interest:
For any
Distribution Date, the lesser of (a) the amount, if any, by which the
Prepayment Interest Shortfall, if any, for such Distribution Date, with respect
to all voluntary Principal Prepayments (excluding any payments made upon
liquidation of any Mortgage Loan) exceeds all Prepayment Interest Excesses
for
such Distribution Date, and (b) the aggregate amount of the Servicing Fee
actually retained by or paid to the applicable Servicer for such Distribution
Date.
Condemnation
Proceeds:
All
awards or settlements in respect of a Mortgaged Property, whether permanent
or
temporary, partial or entire, by exercise of the power of eminent domain or
condemnation.
Corporate
Trust Office:
With
respect to the Securities Administrator, (i) for transfer, presentation or
surrender of Certificates, the office at 000 Xxxx Xxxxxx, 15th
Floor
Window, New York, New York 10005, Attention: Corporate Trust Services - HASCO
2006-HE2, and (ii) for all other purposes, 000
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Structured Finance Agency and Trust -
HASCO
2006-HE2
or at
such other address as the Securities Administrator may designate from time
to
time by notice to the Certificateholders, the Depositor, the Master Servicer
and
the Trustee. With respect to the Trustee, the designated office of the Trustee
in the State of California at which any particular time its corporate trust
business with respect to this Agreement is administered, which office at the
date of the execution of this Agreement is located at 0000 Xxxx Xx. Xxxxxx
Xxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000-0000, Attention: Trust Administration -
HB06H2, facsimile number (000) 000-0000, and its telephone number is (000)
000-0000 and which is also the address to which notices to and correspondence
with the Trustee under this Agreement should be directed.
Corresponding
Class:
As set
forth in first table under the heading REMIC 3 and in the first table under
the
heading Upper Tier REMIC in the Preliminary Statement.
Countrywide
Servicing:
Countywide Home Loans Servicing LP.
Credit
Enhancement Percentage:
With
respect to any Distribution Date, the percentage obtained by dividing
(x) the sum of (i) the aggregate Class Certificate Balance of the
Class M Certificates and (ii) the Overcollateralization Amount
(assuming the Overcollateralization Amount is not less than zero and in each
case after taking into account the distributions of the Principal Payment Amount
for such Distribution Date assuming no Trigger Event has occurred) by
(y) the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date.
-21-
Credit
Risk Manager:
OfficeTiger Global Real Estate Services Inc., formerly known as MortgageRamp,
Inc., and its successors and assigns.
Credit
Risk Management Agreement:
The
Loan
Performance Monitoring
Agreement dated as of the Closing Date, entered into by Xxxxx Fargo, as
Servicer, and the Credit Risk Manager.
Credit
Risk Manager’s Fee:
With
respect to any Distribution Date and each Mortgage Loan, an amount equal to
the
product of (a) one twelfth, (b) the Credit Risk Manager’s Fee Rate and (c) the
Stated Principal Balance of such Mortgage Loan as of the first day of the
related Due Period; provided, however, that such amount shall not be less than
$1,500.00 on each Distibution Date.
Credit
Risk Manager’s Fee Rate:
0.014% per
annum.
Credit
Support Annex:
The
credit support annex to the Swap Agreement and the Cap Agreement dated as of
December 5, 2006, between the trustee of the Supplemental Interest Trust, on
behalf of the Supplemental Interest Trust, the Swap Counterparty and Cap
Counterparty.
Cumulative
Loss Percentage:
With
respect to any Distribution Date, the percentage equivalent of a fraction,
the
numerator of which is the aggregate amount of Realized Losses incurred from
the
Cut-off Date to the last day of the calendar month preceding the month in which
such Distribution Date occurs and the denominator of which is the Cut-off Date
Pool Principal Balance of the Mortgage Loans.
Cumulative
Loss Trigger Event:
If,
with respect to any Distribution Date, the quotient (expressed as a
percentage) of (x) the aggregate amount of Realized Losses incurred since
the Cut-off Date through the last day of the related Prepayment Period, divided
by (y) the Cut-off Date Pool Principal Balance, exceeds the applicable loss
percentages set forth below with respect to such Distribution Date:
| Distribution Date Occurring In: | Loss Percentage: | |||
|
December
2008 through November 2009
|
1.35%
for the first month, plus an additional 1/12th of
1.70%
for each month thereafter
|
|||
|
December
2009 through November 2010
|
3.05%
for the first month, plus an additional 1/12th of
1.50%
for each month thereafter
|
|||
|
December
2010 through November 2011
|
4.55%
for the first month, plus an additional 1/12th of
1.40%
for each month thereafter
|
|||
|
December
2011 through November 2012
|
5.95%
for the first month, plus an additional 1/12th of
0.75%
for each month thereafter
|
|||
|
December
2012 through November 2013
|
6.70%
for the first month, plus an additional 1/12th of
0.30%
for each month thereafter
|
|||
|
December
2013 and thereafter
|
7.00%
|
|||
-22-
Custodial
File:
The
meaning assigned to such term in Section 2.01(a).
Custodian:
Initially, Xxxxx Fargo, or any successor custodian appointed
hereunder.
Cut-off
Date:
November 1, 2006.
Cut-off
Date Pool Principal Balance:
The
aggregate Stated Principal Balances of all Mortgage Loans as of the Cut-off
Date.
Cut-off
Date Principal Balance:
As to
any Mortgage Loan, the Stated Principal Balance thereof as of the close of
business on the Cut-off Date.
Data
Tape Information:
With
respect to each Mortgage Loan, the same information (provided as of the Cut-off
Date) included in the data fields specified under the definition of “Mortgage
Loan Schedule” in the applicable Transfer Agreement, with such additions and
modifications as agreed upon by the applicable Mortgage Loan Seller and the
Depositor. A copy of each Transfer Agreement is attached as Exhibit Q
hereto.
Debt
Service Reduction:
With
respect to any Mortgage Loan, a reduction by a court of competent jurisdiction
in a proceeding under the United States Bankruptcy Code in the Scheduled Payment
for such Mortgage Loan which became final and non-appealable, except such a
reduction resulting from a Deficient Valuation or any reduction that results
in
a permanent forgiveness of principal.
Defaulting
Party:
As
defined in the Swap Agreement or Cap Agreement, as applicable.
Deficient
Valuation:
With
respect to any Mortgage Loan, a valuation of the related Mortgaged Property
by a
court of competent jurisdiction in an amount less than then outstanding
principal balance of the Mortgage Loan, which valuation results from a
proceeding initiated under the United States Bankruptcy Code.
Definitive
Certificates:
Any
Certificate evidenced by a Physical Certificate and any Certificate issued
in
lieu of a Book-Entry Certificate pursuant to Section 5.02(e).
Delay
Certificates:
As
specified in the Preliminary Statement.
Deleted
Mortgage Loan:
A
Mortgage Loan repurchased by a Mortgage Loan Seller or the Sponsor and removed
from the Trust Fund.
-23-
Delinquency
Rate:
For any
calendar month, a fraction, expressed as a percentage, the numerator of which
is
the aggregate Stated Principal Balance of 60+ Day Delinquent Mortgage Loans
as
of the close of business on the last day of such month (not including those
Mortgage Loans that are liquidated as of the end of the related Prepayment
Period), and the denominator of which is the aggregate Stated Principal Balance
of the Mortgage Loans as of the close of business on the last day of such month
(not including those Mortgage Loans that are liquidated as of the end of the
related Prepayment Period).
Delinquency
Trigger Event:
With
respect to any Distribution Date on or after the Stepdown Date, the
circumstances in which the Rolling Three Month Delinquency Rate as of the last
day of the immediately preceding calendar month exceeds the applicable
percentages of the Credit Enhancement Percentage for the prior Distribution
Date
as set forth below for the most senior Class of LIBOR Certificates then
outstanding:
|
Class
|
Percentage
|
|
|
A
|
39.49%
|
|
|
M-1
|
48.77%
|
|
|
M-2
|
61.58%
|
|
|
M-3
|
73.03%
|
|
|
M-4
|
87.54%
|
|
|
M-5
|
107.65%
|
|
|
M-6
|
138.40%
|
|
|
M-7
|
188.73%
|
|
|
M-8
|
250.56%
|
|
|
M-9
|
315.92%
|
|
|
M-10
|
484.41%
|
Denomination:
With
respect to each Certificate, the amount set forth on the face thereof as the
“Initial Certificate Balance of this Certificate” (or initial notional balance,
in the case of the Class A-IO Certificates) or the Percentage Interest appearing
on the face thereof.
Depositor:
HSI
Asset Securitization Corporation, a Delaware corporation, and its successors
in
interest.
Depository:
The
initial Depository shall be The Depository Trust Company, the nominee of which
is CEDE & Co., as the registered Holder of the Book-Entry Certificates.
The Depository shall at all times be a “clearing corporation” as defined in
Section 8-102(a)(5) of the Uniform Commercial Code of the State of New
York.
Depository
Institution:
Any
depository institution or trust company, including the Trustee and the
Securities Administrator, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and
(c) has outstanding unsecured commercial paper or other short-term
unsecured debt obligations that are rated P-1 by Moody’s, F1+ by Fitch and A-1
by Standard & Poor’s.
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.
-24-
Derivative
Agreement:
The
Swap Agreement and the Cap Agreement.
Derivative
Counterparty:
Collectively, the Cap Counterparty and the Swap Counterparty.
Derivative
Payment Date:
For so
long as either the Cap Agreement or the Swap Agreement is in effect, the
Business Day preceding each Distribution Date.
Determination
Date:
With
respect to each Servicer, the meaning assigned to such term in the related
Servicing Agreement.
Disqualified
Non-U.S. Person:
With
respect to a Class R Certificate, any Non-U.S. Person or agent thereof
other than (i) a Non-U.S. Person that holds the Class R Certificate in
connection with the conduct of a trade or business within the United States
and
has furnished the transferor and the Securities Administrator with an effective
IRS Form W-8ECI or (ii) a Non-U.S. Person that has delivered to both the
transferor and the Securities Administrator an opinion of a nationally
recognized tax counsel to the effect that the transfer of the Class R
Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of the Class R
Certificate will not be disregarded for federal income tax
purposes.
Distribution
Account:
The
separate Eligible Account created and maintained by the Securities Administrator
pursuant to Section 3.01(d) in the name of the Securities Administrator as
paying agent for the benefit of the Trustee and the Certificateholders and
designated “Citibank, N.A. as paying agent in trust for registered holders of
HSI Asset Securitization Corporation Trust 2006-HE2 Mortgage Pass-Through
Certificates, Series 2006-HE2”. Funds in the Distribution Account shall be
held in trust for the Certificateholders for the uses and purposes set forth
in
this Agreement.
Distribution
Date:
The
25th day of each calendar month, or if such day is not a Business Day, the
next
succeeding Business Day, commencing in December 2006.
Document
Certification and Exception Report:
The
form of report attached to Exhibit F hereto.
Due
Date:
The day
of the month on which the Scheduled Payment is due on a Mortgage Loan, exclusive
of any days of grace.
Due
Period:
With
respect to any Distribution Date, the period commencing on the second day of
the
calendar month preceding the month in which such Distribution Date occurs and
ending on the first day of the calendar month in which such Distribution Date
occurs.
Early
Termination Event:
As
defined in the Derivative Agreement.
XXXXX:
The
Commission’s Electronic Data Gathering and Retrieval System.
-25-
Eligible
Account:
Either
(i) an account maintained with a federal or state-chartered depository
institution or trust company that complies with the definition of Eligible
Institution, (ii) an account maintained with the corporate trust department
of a
federal depository institution or state-chartered depository institution subject
to regulations regarding fiduciary funds on deposit similar to Title 12 of
the
U.S. Code of Federal Regulation Section 9.10(b), which, in either case, has
corporate trust powers and is acting in its fiduciary capacity or (iii) any
other account acceptable to each Rating Agency. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Securities Administrator.
Eligible
Institution:
A
federal or state-chartered depository institution or trust company the
commercial paper, short-term debt obligations, or other short-term deposits
of
which are rated at least “A-1+” by Standard & Poor’s if the amounts on
deposit are to be held in the account for no more than 365 days (or at least
“A-2” if the amounts on deposit are to be held in the account for no more than
30 days), “P-1” by Moody’s and “F1+” by Fitch (or a comparable rating if another
Rating Agency is specified by the Depositor by written notice to each of the
Servicers and the Securities Administrator) or long-term unsecured debt
obligations are rated at least “AA-” by Standard & Poor’s if the amounts on
deposit are to be held in the account for no more than 365 days.
ERISA:
The
Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying
Underwriting:
A best
efforts or firm commitment underwriting or private placement that meets the
requirements of Prohibited Transaction Exemption (“PTE”) 96-84,
61 Fed. Reg. 58234 (1996), as amended by XXX 00-00, 00 Xxx. Xxx. 00000
(1997), PTE 2000-58, 65 Fed. Reg. 67765 (2000) and PTE 2002-41, 67 Fed.
Reg. 54487 (2002) (or any successor thereto), or any substantially
similar administrative exemption granted by the U.S. Department of
Labor.
ERISA-Restricted
Certificate:
As
specified in the Preliminary Statement.
ERISA-Restricted
Trust Certificate:
As
specified in the Preliminary Statement.
Escrow
Account:
With
respect to each Servicer, the meaning assigned to such term in the related
Servicing Agreement.
Event
of Default:
With
respect to each Servicer, the meaning assigned to such term in the related
Servicing Agreement.
Excess
Overcollateralization
Amount:
With
respect to any Distribution Date, the excess, if any, of (a) the
Overcollateralization Amount (for purposes of this calculation only, assuming
100% of the Principal Remittance Amount is applied as a principal payment to
the
LIBOR Certificates on such Distribution Date, but before giving effect to any
other distributions on the LIBOR Certificates in reduction of their respective
Class Certificate Balances on such Distribution Date) on such Distribution
Date
over (b) the Overcollateralization Target Amount for such Distribution
Date.
-26-
Excess
Reserve Fund Account:
The
separate Eligible Account created and maintained by the Securities Administrator
under the Supplemental Interest Trust pursuant to Sections 3.01(a) and
3.01(b) in the name of the Securities Administrator as paying agent for the
benefit of the LIBOR Certificateholders, the Class A-IO Certificateholders
and
the Class X Certificateholders and designated “Citibank, N.A. as paying agent in
trust for registered holders of HSI Asset Securitization Corporation Trust
2006-HE2, Mortgage Pass-Through Certificates, Series 2006-HE2”. Funds in
the Excess Reserve Fund Account shall be held in trust for such
Certificateholders for the uses and purposes set forth in this Agreement.
Amounts on deposit in the Excess Reserve Fund Account shall not be invested.
The
Excess Reserve Fund Account shall be considered part of the Supplemental
Interest Trust but not part of any REMIC.
Exchange
Act:
The
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
Excluded
Trust Assets:
As
defined in the Preliminary Statement.
Expense
Adjusted Mortgage Rate:
With
respect to any Distribution Date and as to each Mortgage Loan, the per annum
rate equal to the Mortgage Rate as of the first day of the related Due Period
less the Expense Fee Rate.
Expense
Fee Rate:
As to
each Mortgage Loan, a per annum rate equal to the Servicing Fee
Rate.
Expense
Fees:
As to
each Mortgage Loan and any Distribution Date, the Servicing Fee.
Extra
Principal Payment Amount:
As of
any Distribution Date, the lesser of (x) the related Total Monthly Excess
Spread for such Distribution Date and (y) the related Overcollateralization
Deficiency for such Distribution Date.
Xxxxxx
Xxx:
The
Federal National Mortgage Association, or any successor thereto.
FDIC:
The
Federal Deposit Insurance Corporation, or any successor thereto.
Final
Maturity Required Deposit:
For any
Distribution Date beginning on the Distribution Date in December 2016 up to
and
including the Final Maturity Reserve Funding Date will equal the lesser of
(a)
the product of (i) 0.80% and (ii) the aggregate Stated Principal Balance of
the
Mortgage Loans having an original term to maturity of 40 years as of the last
day of the related Due Period (after giving effect to principal prepayments
in
the Prepayment Period related to such Distribution Date) and (b) the excess
of
(i) the Final Maturity Funding Cap for such Distribution Date over (ii) the
amount on deposit in the Final Maturity Reserve Fund immediately prior to such
Distribution Date.
Final
Maturity Funding Cap:
For any
Distribution Date beginning with the Distribution Date in December 2016 will
equal the lesser of (i) the aggregate Class Certificate Balance of the
Certificates immediately prior to that Distribution Date and (ii) the aggregate
Stated Principal Balance of all outstanding Mortgage Loans with original terms
to maturity of 40 years as of the as of the last day of the related Due Period
(after giving effect to principal prepayments received during the Prepayment
Period related to that Distribution Date).
-27-
Final
Maturity OC Trigger Event:
The
event in effect with respect to any Distribution Date on or after the
Distribution Date in December 2026 if the sum of (x) the Overcollateralization
Amount and (y) the amount on deposit in the Final Maturity Reserve Fund on
that
Distribution Date (after giving effect to any deposits into the Final Maturity
Reseve Fund on that Distribution Date) is less than the outstanding Stated
Principal Balance of all Mortgage Loans with original terms to maturity of
40
years as of the last day of the related Due Period (after giving effect to
principal prepayments in the Prepayment Period related to that Distribution
Date).
Final
Maturity Reserve Fund:
The
account created pursuant to Section 4.09 of this Agreement.
Final
Maturity Reserve Funding Date:
The
earlier of (i) the Distribution Date on which the amount on deposit in the
Final
Maturity Reserve Fund is equal to the Final Maturity Funding Cap and (ii) the
Distribution Date in December 2036.
Final
Maturity Reserve Trust:
The
corpus of a trust created pursuant to Section 4.09 of this Agreement and
designated as the “Final Maturity Reserve Trust” consisting of the Final
Maturity Reserve Fund, but which is not an asset of any REMIC.
Final
Recovery Determination:
With
respect to any defaulted Mortgage Loan or any REO Property (other than a
Mortgage Loan or REO Property purchased by the Mortgage Loan Seller or the
Sponsor as contemplated by this Agreement, any Transfer Agreement or the
Purchase Agreement, as applicable), a determination made by any Servicer that
all Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and other
payments or recoveries which the Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered.
Final
Scheduled Distribution Date:
The
Final Scheduled Distribution Date for each Class of Certificates (other
than the Class A-IO Certificates) is the Distribution Date occurring in December
2036. The Final Scheduled Distribution Date for the Class A-IO Certificatesis
the Distribution Date occurring in February 2008.
Fitch:
Fitch,
Inc., or any successor thereto. If Fitch is designated as a Rating Agency in
the
Preliminary Statement, for purposes of Section 12.05 the address for
notices to Fitch shall be Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: MBS Monitoring - HASCO (HSI Asset Securitization
Corporation Trust 2006-HE2), or such other address as Fitch may hereafter
furnish to the Depositor and the Securities Administrator.
Fixed
Rate Mortgage Loan:
A
Mortgage Loan with respect to which the Mortgage Rate set forth in the Mortgage
Note is fixed for the term of such Mortgage Loan.
Form
8-K Disclosure Information:
As
defined in Section 8.12(a)(iii).
-28-
Xxxxxxx
Mac:
The
Federal Home Loan Mortgage Corporation, a corporate instrumentality of the
United States created and existing under Title III of the Emergency Home
Finance Act of 1970, as amended, or any successor thereto.
Gross
Margin:
With
respect to each Adjustable Rate Mortgage Loan, the fixed percentage amount
set
forth in the related Mortgage Note to be added to the Index to determine the
Mortgage Rate.
Group I
Available Funds Cap:
With
respect to the Group I Mortgage Loans as of any Distribution Date, the per
annum
rate (subject to adjustment based on the actual number of days elapsed in the
related Interest Accrual Period) equal to (x) the weighted average of the
Expense Adjusted Mortgage Rate for each Group I Mortgage Loan then in effect
at
the beginning of the related Due Period (not including for this purpose any
Group I Mortgage Loans for which Principal Prepayments in Full have been
received and distributed in the month prior to that Distribution Date)
minus
(y) a
percentage equal to the product of (i) a fraction, the numerator of which is
equal to the sum of (a) the portion of the Net Derivative Payment or Swap
Termination Payment (other than a Swap Termination Payment resulting
from a Derivative Counterparty Trigger Event)
made to
the Swap Counterparty with respect to such Due Period allocated to the Group
I
Mortgage Loans based on the applicable Group Percentage, (b) the portion of
the
Final Maturity Required Deposit for such Due Period allocable to the Group
I
Mortgage Loans based
on
the applicable Group Percentage
and (c)
the Senior Interest Payment Amount accrued on the Class A-IO Certificates
allocable to the Group I Mortgage Loans based on the applicable Group
Percentage, and the denominator of which is equal to the aggregate Stated
Principal Balance of the Group I Mortgage Loans as of the beginning of the
related Due Period and (ii) 12.
Group I
Certificates:
As
specified in the Preliminary Statement.
Group I
Mortgage Loans:
The
Mortgage Loans identified on the Mortgage Loan Schedule as Group I Mortgage
Loans.
Group I
Principal Payment Amount:
With
respect to any Distribution Date prior to the Stepdown Date, the Principal
Payment Amount multiplied by the Group Principal Allocation Percentage for
the Group I Certificates.
Group I
Senior Principal Payment Amount:
With
respect to any Distribution Date, the lesser of (i) the Group I Principal
Payment Amount for that Distribution Date and (ii) the excess of (a) the
aggregate Class Certificate Balance of the Group I Certificates
immediately prior to that Distribution Date over (b) the lesser of
(x) 63.20% of the aggregate Stated Principal Balance of the Group I
Mortgage Loans for that Distribution Date and (y) the excess, if any, of
the aggregate Stated Principal Balance of the Group I Mortgage Loans for
that Distribution Date over 0.50% of the aggregate State Principal Balance
of
the Group I Mortgage Loans as of the Cut-off Date.
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Group II
Available Funds Cap:
With
respect to the Group II Mortgage Loans as of any Distribution Date, the per
annum rate (subject to adjustment based on the actual number of days elapsed
in
the related Interest Accrual Period) equal to (x) the weighted average of the
Expense Adjusted Mortgage Rate for each Group II Mortgage Loan then in effect
at
the beginning of the related Due Period (not including for this purpose any
Group II Mortgage Loans for which Principal Prepayments in Full have been
received and distributed in the month prior to that Distribution Date)
minus
(y) a
percentage equal to the product of (i) a fraction, the numerator of which is
equal to the sum of (a) the portion of the Net Derivative Payment or Swap
Termination Payment (other than a Swap Termination Payment resulting from a
Derivative Counterparty Trigger Event) made to the Swap Counterparty with
respect to such Due Period allocated to the Group II Mortgage Loans based on
the
applicable Group Percentage, (b) the portion of the Final Maturity Required
Deposit for such Due Period allocable to the Group II Mortgage Loans based
on
the applicable Group Percentage and (c) the Senior Interest Payment Amount
accrued on the Class A-IO Certificates allocable to the Group II Mortgage Loans
based on the applicable Group Percentage and the denominator of which is equal
to the aggregate Stated Principal Balance of the Group II Mortgage Loans as
of
the beginning of the related Due Period and (ii) 12.
Group II
Certificates:
As
specified in the Preliminary Statement.
Group II
Mortgage Loans:
The
Mortgage Loans identified on the Mortgage Loan Schedule as Group II
Mortgage Loans.
Group II
Principal Payment Amount:
With
respect to any Distribution Date, the Principal Payment Amount multiplied by
the
Group Principal Allocation Percentage for the Group II
Certificates.
Group II
Senior Principal Payment Amount:
With
respect to any Distribution Date, the lesser of (i) the Group II Principal
Payment Amount for that Distribution Date and (ii) the excess of (a) the
aggregate Class Certificate Balance of the Group II Certificates
immediately prior to that Distribution Date over (b) the lesser of
(x) 63.20% of the aggregate Stated Principal Balance of the Group II
Mortgage Loans for that Distribution Date and (y) the excess, if any, of
the aggregate Stated Principal Balance of the Group II Mortgage Loans for
that Distribution Date over 0.50% of the aggregate State Principal Balance
of
the Group II Mortgage Loans as of the Cut-off Date.
Group Available
Funds Cap:
The
Group I Available Funds Cap or the Group II Available Funds Cap, as
applicable.
Group
Percentage: For
any
Distribution Date and for each of the Group I Mortgage Loans and the
Group II Mortgage Loans, a fraction (expressed as a percentage) the
numerator of which is the aggregate Stated Principal Balance of the Mortgage
Loans in such Loan Group as of the beginning of the related Due Period and
the
denominator of which is equal to the aggregate Stated Principal Balance of
all
the Mortgage Loans as of such date.
Group Principal
Allocation Percentage:
With
respect to any Distribution Date, the percentage equivalent of a fraction,
determined as follows:
(i) with
respect to the Group I Certificates, a fraction, the numerator of which is
the portion of the Principal Remittance Amount for that Distribution Date that
is attributable to the principal received or advanced on the Group I
Mortgage Loans and the denominator of which is the Principal Remittance Amount
for that Distribution Date; and
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(ii) with
respect to the Group II Certificates, a fraction, the numerator of
which is the portion of the Principal Remittance Amount for that Distribution
Date that is attributable to the principal received or advanced on the
Group II Mortgage Loans and the denominator of which is the Principal
Remittance Amount for that Distribution Date.
Group Subordinate
Amount:
For any
Distribution Date and (i) for the Group I Mortgage Loans, the excess
of the aggregate Stated Principal Balance of the Group I Mortgage Loans as
of the beginning of the related Due Period over the Class Certificate
Balance of the Group I Certificates immediately prior to such Distribution
Date
and (ii) for the Group II Mortgage Loans, the excess of the aggregate
Stated Principal Balance of the Group II Mortgage Loans as of the beginning
of the related Due Period over the aggregate Class Certificate Balance of
the Group II Certificates immediately prior to the current Distribution Date
Independent:
When
used with respect to any accountants, a Person who is “independent” within the
meaning of Rule 2-01(B) of the Commission’s Regulation S-X. Independent means,
when used with respect to any other Person, a Person who (A) is in fact
independent of another specified Person and any Affiliate of such other Person,
(B) does not have any material direct or indirect financial interest in such
other Person or any Affiliate of such other Person, (C) is not connected with
such other Person or any Affiliate of such other Person as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions and (D) is not a member of the immediate family of a Person defined
in
clause (B) or (C) above.
Index:
As to
each Adjustable Rate Mortgage Loan, the six-month LIBOR index or one-year LIBOR
index, as applicable, from time to time in effect for the adjustment of the
Mortgage Rate as set forth in the related Mortgage Note.
Initial
Certification:
As
defined in Section 2.02.
Insurance
Policy:
With
respect to any Mortgage Loan included in the Trust Fund, any insurance policy,
including, but not limited to, any standard hazard insurance policy, flood
insurance policy, earthquake insurance policy, title insurance policy or Primary
Mortgage Insurance Policy (if any), including all riders and endorsements
thereto in effect, including any replacement policy or policies.
Insurance
Proceeds:
With
respect to each Mortgage Loan, proceeds of Insurance Policies insuring the
Mortgage Loan or the related Mortgaged Property.
Interest
Accrual Period:
With
respect to each Class of LIBOR Certificates and any Distribution Date, the
period commencing on the Distribution Date occurring in the month preceding
the
month in which the current Distribution Date occurs and ending on the day
immediately preceding the current Distribution Date (or, in the case of the
first Distribution Date, the period from and including the Closing Date to
but
excluding such first Distribution Date). For purposes of computing interest
accruals on each Class of LIBOR Certificates, each Interest Accrual Period
has the actual number of days in such month and each year is assumed to have
360 days. With respect to the Interest-Only Certificates and the
Corresponding Class of Lower Tier REMIC Regular Interests and any Distribution
Date, the calendar month immediately preceding the month in which such
Distribution Date occurs. For purposes of computing interest accruals on the
Interest-Only Certificates and each class of Lower Tier Interests, each Interest
Accrual Period shall consist of a thirty day month and each year is assumed
to
have 360 days.
-00-
Xxxxxxxx
Xxxxx Xxxxxxx Xxxxxx:
As of
any Distribution Date and any Class of LIBOR Certificates and the
Interest-Only Certificates, the sum of, if applicable, (i) the portion of the
Interest Payment Amount from Distribution Dates prior to the current
Distribution Date remaining unpaid immediately prior to the current Distribution
Date (excluding any Basis Risk Carryover Amount with respect to such Class),
and
(ii) interest on the amount in clause (i) above at the applicable Interest
Rate
(to the extent permitted by applicable law).
Interest
Margin:
Except
as set forth in the following sentence, with respect to each Class of LIBOR
Certificates, the following percentages: Class I-A Certificates, 0.130%;
Class II-A-1 Certificates, 0.050%; Class II-A-2 Certificates, 0.110%;
Class II-A-3 Certificates, 0.170%; Class II-A-4 Certificates, 0.220%;
Class M-1 Certificates, 0.240%; Class M-2 Certificates, 0.290%;
Class M-3 Certificates, 0.350%; Class M-4 Certificates, 0.380%;
Class M-5 Certificates, 0.400%; Class M-6 Certificates, 0.470%,
Class M-7 Certificates, 1.000%, Class M-8 Certificates, 1.750%,
Class M-9 Certificates, 2.000% and Class M-10 Certificates, 2.000%. On the
first Distribution Date after the Optional Termination Date, the Interest
Margins shall increase to the following percentages: Class I-A
Certificates, 0.260%; Class II-A-1 Certificates, 0.100%; Class II-A-2
Certificates, 0.220%; Class II-A-3 Certificates, 0.340%; Class II-A-4
Certificates, 0.440%; Class M-1 Certificates, 0.360%; Class M-2
Certificates, 0.435%; Class M-3 Certificates, 0.525%; Class M-4
Certificates, 0.570%; Class M-5 Certificates, 0.600%; Class M-6
Certificates, 0.705%, Class M-7 Certificates, 1.500%, Class M-8
Certificates, 2.625%, Class M-9 Certificates, 3.000% and Class M-10
Certificates, 3.000%.
Interest
Payment Amount:
With
respect to any Distribution Date for each Class of LIBOR Certificates and
the Interest-Only Certificates, the amount of interest accrued during the
related Interest Accrual Period at the applicable Interest Rate on the related
Class Certificate Balance (or Class Notional Balance, in the case of the
Interest-Only Certificates) immediately prior to such Distribution Date, as
reduced by such Class’s share of Net Prepayment Interest Shortfalls and Relief
Act Interest Shortfalls for such Distribution Date allocated to such
Class pursuant to Section 4.02.
Interest
Rate:
For
each Class of LIBOR Certificates and the Interest-Only Certificates, each Class
of Upper Tier REMIC Regular Interest and each class of Lower Tier Interest,
the
per annum rate set forth or calculated in the manner described in the
Preliminary Statement.
Interest
Remittance Amount:
With
respect to any Distribution Date and the Mortgage Loans in a Loan Group, that
portion of Available Funds attributable to interest relating to the Mortgage
Loans in that Loan Group.
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Investor:
With
respect to each MERS Designated Mortgage Loan, the Person named on the MERS
System as the investor pursuant to the MERS Procedures Manual.
IRS:
The
Internal Revenue Service.
Late
Collections:
With
respect to any Mortgage Loan and any Due Period, all amounts received after
the
Determination Date immediately following such Due Period, whether as late
payments of Scheduled Payments or as Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds, Subsequent Recoveries or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to
any
acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent for such Due Period and not previously recovered.
LIBOR:
With
respect to any Interest Accrual Period for the LIBOR Certificates, the per
annum
rate determined on the LIBOR Determination Date in the following manner by
the
Securities Administrator on the basis of the “Interest Settlement Rate” set by
the British Bankers’ Association (the “BBA”) for one-month United States dollar
deposits, as such rates appear on the Telerate Page 3750, as of 11:00 a.m.
(London time) on such LIBOR Determination Date.
If
on
such a LIBOR Determination Date, the BBA’s Interest Settlement Rate does not
appear on the Telerate Page 3750 as of 11:00 a.m. (London time), or if the
Telerate Page 3750 is not available on such date, the Securities Administrator
will obtain such rate from Reuters’ “page LIBOR 01” or, if such rate does not
appear therein, the Securities Administrator will obtain such rate from
Bloomberg’s page “BBAM.” If such rate is not published for such LIBOR
Determination Date, LIBOR for such date will be the most recently published
Interest Settlement Rate. In the event that the BBA no longer sets an Interest
Settlement Rate, the Securities Administrator will designate an alternative
index that has performed, or that the Securities Administrator expects to
perform, in a manner substantially similar to the BBA’s Interest Settlement
Rate. The Securities Administrator will select a particular index as the
alternative index only if it receives an Opinion of Counsel, which opinion
shall
be an expense reimbursed from the Distribution Account pursuant to Section
4.01,
that the selection of such index will not cause any of the REMICs to lose their
classification as REMICs for federal income tax purposes.
LIBOR
Certificates:
As
specified in the Preliminary Statement.
LIBOR
Determination Date:
With
respect to any Interest Accrual Period for the LIBOR Certificates, the second
London Business Day preceding the commencement of such Interest Accrual
Period.
Liquidated
Mortgage Loan:
With
respect to any Distribution Date, a defaulted Mortgage Loan (including any
REO
Property) which was liquidated in the calendar month preceding the month of
such
Distribution Date and as to which a Servicer has certified to the Securities
Administrator that it has received all amounts it expects to receive in
connection with the liquidation of such Mortgage Loan including the final
disposition of an REO Property.
Liquidation
Proceeds:
Cash
received in connection with the liquidation of a Liquidated Mortgage Loan,
whether through a trustee’s sale, foreclosure sale or otherwise.
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Loan
Group:
The
Group I Mortgage Loans or the Group II Mortgage Loans, as
applicable.
Loan-to-Value
Ratio
or
LTV:
As of
any date and as to any Mortgage Loan, the ratio (expressed as a
percentage) of the outstanding principal balance of the Mortgage Loan to
(a) in the case of a purchase, the lesser of (i) the sale price of the
Mortgaged Property and (ii) its appraised value at the time of sale or
(b) in the case of a refinancing or modification, the appraised value of
the Mortgaged Property at the time of the refinancing or
modification.
London
Business Day:
Any day
on which dealings in deposits of United States dollars are transacted in the
London interbank market.
Lower
Tier Interest:
An
interest in any REMIC formed hereby other than the Upper Tier
REMIC.
Master
Agreement:
The
ISDA Form Master Agreement, dated December 5, 2006, entered into between the
Supplemental Interest Trust and the Derivative Counterparty.
Master
Servicer:
CitiMortgage, and any successors in interest, and if a successor master servicer
is appointed hereunder, such successor.
Master
Servicer Event of Default:
As
defined in Section 9.06.
Master
Servicer Float Period: With respect to
each Distribution Date and the related amounts in the Master Servicing Account,
the period commencing on the applicable Remittance Date immediately preceding
the related Master Servicer Remittance Date and ending on such Master Servicer
Remittance Date.
Master
Servicer Remittance Date: As to any
Distribution Date, noon New York City time on the first Business Day immediately
preceding such Distribution Date.
Master
Servicing Account: The separate Eligible Account created and maintained by
the Master Servicer pursuant to Section 3.01(c) in the name of the Master
Servicer for the benefit of the Trustee and the Certificateholders and
designated “CitiMortgage, Inc., in trust for registered holders of HSI Asset
Securitization Corporation Trust 2006-HE2 Mortgage Pass-Through Certificates,
Series 2006-HE2”. Funds in the Master Servicing Account shall be held in trust
for the Certificateholders for the uses and purposes set forth in this
Agreement.
Master
Servicing Officer:
Any
officer of the Master Servicer involved in, or responsible for, the
administration and master servicing of the Mortgage Loans.
MERS:
Mortgage Electronic Registration Systems, Inc., a Delaware corporation, and
its
successors in interest.
MERS
Designated Mortgage Loan:
Any
Mortgage Loan as to which the related Mortgage, or an Assignment of Mortgage,
has been or will be recorded in the name of MERS, as nominee for the holder
from
time to time of the Mortgage Note.
MERS
Procedure Manual:
The
MERS Procedures Manual, as it may be amended, supplemented or otherwise modified
from time to time.
MERS®
System:
MERS
mortgage electronic registry system, as more particularly described in the
MERS
Procedures Manual.
MIN:
The
Mortgage Identification Number of Mortgage Loans registered with MERS on the
MERS® System.
Monthly
Statement:
The
statement made available to the Certificateholders by the Securities
Administrator through its website pursuant to Section 4.03.
Moody’s:
Xxxxx’x
Investors Service, Inc. If Xxxxx’x is designated as a Rating Agency in the
Preliminary Statement, for purposes of Section 12.05 the address for
notices to Moody’s shall be Xxxxx’x Investors Service, Inc., 00 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage Pass-Through Group,
HASCO (HSI Asset Securitization Corporation Trust Series 2006-HE2), or such
other address as Moody’s may hereafter furnish to the Depositor and the
Securities Administrator.
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Mortgage:
The
mortgage, deed of trust or other instrument identified on the Mortgage Loan
Schedule as securing a Mortgage Note.
Mortgage
File:
The
items pertaining to a particular Mortgage Loan contained in either the Servicing
File or Custodial File.
Mortgage
Loan:
An
individual Mortgage Loan that is the subject of this Agreement, each Mortgage
Loan originally sold and subject to this Agreement being identified on the
Mortgage Loan Schedule, which Mortgage Loan includes, without limitation, the
Mortgage File, the Scheduled Payments, Principal Prepayments, Liquidation
Proceeds, Subsequent Recoveries, Condemnation Proceeds, Insurance Proceeds,
REO
Disposition proceeds, Prepayment Charges, and all other rights, benefits,
proceeds and obligations arising from or in connection with such Mortgage Loan,
excluding replaced or repurchased Mortgage Loans.
Mortgage
Loan Seller:
Any
entity which sold Mortgage Loans to the Sponsor pursuant to a Transfer
Agreement.
Mortgage
Loan Schedule:
A
schedule of Mortgage Loans prepared by the Depositor, delivered to the Trustee
on the Closing Date and referred to on Schedule I, such schedule setting
forth the Data Tape Information with respect to each Mortgage Loan.
Mortgage
Note:
The
note or other evidence of the indebtedness of a Mortgagor under a Mortgage
Loan.
Mortgage
Rate:
The
annual rate of interest borne on a Mortgage Note, which shall be adjusted from
time to time.
Mortgaged
Property:
With
respect to each Mortgage Loan, the real property (or leasehold estate, if
applicable) identified on the Mortgage Loan Schedule as securing repayment
of
the debt evidenced by the related Mortgage Note.
Mortgagor:
The
obligor(s) on a Mortgage Note.
Net
Derivative Payment:
The net
payment required to be made on the Derivative Payment Date either by (a) the
Supplemental Interest Trust to the Derivative Counterparty, to the extent that
the fixed amount payable by the Supplemental Interest Trust under the terms
of
the Swap Agreement exceeds the aggregate amount of the corresponding floating
amount payable by the Derivative Counterparty under the terms of the Swap
Agreement and any amounts payable by the Derivative Counterparty under the
Cap
Agreement, or (b) the Derivative Counterparty to the Supplemental Interest
Trust, to the extent that the aggregate amount of the floating amount payable
by
the Derivative Counterparty under the terms of the Swap Agreement and any such
amount payable by the Derivative Counterparty under the Cap Agreement exceeds
the corresponding fixed amount payable by the Supplemental Interest Trust under
the terms of the Swap Agreement, plus in the case of a payment made under either
clause (a) or clause (b) any unpaid amounts due under such clause from previous
Derivative Payment Dates, and accrued interest thereon as provided in the
applicable Derivative Agreement, as calculated by the Derivative Counterparty
and furnished to the securities administrator of the Supplemental Interest
Trust. Any Swap Termination Payment or Cap Termination Payment will be made
exclusive of the Net Derivative Payment required to be made by the Derivative
Counterparty or Supplemental Interest Trust, as applicable, under the Swap
Agreement or the Cap Agreement.
-35-
Net
Monthly Excess Cash Flow:
For any
Distribution Date, the amount of interest and principal remaining for
distribution pursuant to subsection 4.02(a)(iii) (before giving effect to
distributions pursuant to such subsection).
Net
Prepayment Interest Shortfall:
For any
Distribution Date, the amount by which the sum of the Prepayment Interest
Shortfalls for such Distribution Date exceeds the sum of Compensating Interest
payments made with respect to such Distribution Date.
Net
Swap Payment:
With
respect to each Swap Payment Date, the net payment (not including any Swap
Termination Payment) required to be made pursuant to the terms of the Swap
Agreement plus any unpaid amounts due on previous Swap Payment Dates and accrued
interest thereon as provided in the Swap Agreement, as calculated by the Swap
Counterparty and furnished to the Securities Administrator.
Net
WAC Rate:
With
respect to any Distribution Date (and the related Interest Accrual Period),
a
per annum rate equal to the weighted average of the Expense Adjusted Mortgage
Rates of the Mortgage Loans as of the first day of the related Due Period (not
including for this purpose Mortgage Loans for which Principal Prepayments in
Full have been received and distributed in the month prior to that Distribution
Date).
NIM
Issuer:
The
entity established as the issuer of the NIM Securities.
NIM
Securities:
Any
debt securities secured or otherwise backed by some or all of the Class X
and Class P Certificates that are rated by any Rating Agency.
NIM
Trustee:
The
indenture trustee for the NIM Securities.
Non-Delay
Certificates:
As
specified in the Preliminary Statement.
Non-Permitted
Transferee:
A
Person other than a Permitted Transferee.
Non-U.S.
Person:
A
person that is not a U.S. Person.
Nonrecoverable
P&I Advance:
Any
P&I Advance previously made or proposed to be made in respect of a Mortgage
Loan or REO Property that, in the good faith business judgment (taking into
account Accepted Servicing Practices) of the related Servicer, the Master
Servicer, as successor servicer, or any successor master servicer including
the
Trustee, as applicable, will not or, in the case of a proposed P&I Advance,
would not be ultimately recoverable from related Late Collections on such
Mortgage Loan or REO Property as provided herein.
-36-
Nonrecoverable
Servicing Advance:
Any
Servicing Advances previously made or proposed to be made in respect of a
Mortgage Loan or REO Property, which, in accordance with Accepted Servicing
Practices, will not or, in the case of a proposed Servicing Advance, would
not
be ultimately recoverable from related Late Collections.
Notice
of Final Distribution:
The
notice to be provided by the Securities Administrator pursuant to
Section 11.02 to the effect that final distribution on any of the
Certificates shall be made only upon presentation and surrender
thereof.
Offered
Certificates:
As
specified in the Preliminary Statement.
Offering
Documents:
The
Prospectus and the Private Placement Memorandum.
Officer’s
Certificate:
As
defined in the applicable Servicing Agreement.
Opinion
of Counsel:
A
written opinion of counsel, which may be in-house or outside counsel to the
Depositor, the Sponsor, the Master Servicer or the Trustee, acceptable to the
Trustee or the Securities Administrator, as applicable, except that any opinion
of counsel relating to (a) the qualification of any REMIC created hereunder
as a
REMIC or (b) compliance with the REMIC Provisions must be an opinion of
Independent counsel.
Option
to Purchase:
On the
initial Optional Termination Date, the Master Servicer, upon instruction by
the
Depositor, shall
have the option to purchase the Mortgage Loans. If the Depositor fails to
instruct the Master Servicer to purchase the Mortgage Loans, the Master Servicer
has the right and, at its own option, may purchase the Mortgage Loans on any
Distribution Date thereafter.
Optional
Termination Date:
Any
Distribution Date on which the aggregate Stated Principal Balance of the
Mortgage Loans, as of the last day of the related Due Period, is less than
or
equal to 10.00% of the Cut-off Date Pool Principal Balance.
OTS:
Office
of Thrift Supervision, and any successor thereto.
Outstanding:
With
respect to the Certificates as of any date of determination, all Certificates
theretofore executed and authenticated under this Agreement except:
(i) Certificates
theretofore canceled by the Securities Administrator or delivered to the
Securities Administrator for cancellation; and
(ii) Certificates
in exchange for which or in lieu of which other Certificates have been executed
and delivered by the Securities Administrator pursuant to this
Agreement.
Outstanding
Mortgage Loan:
As of
any Due Date, a Mortgage Loan with a Stated Principal Balance greater than
zero
which was not the subject of a Principal Prepayment in Full prior to such Due
Date and which did not become a Liquidated Mortgage Loan prior to such Due
Date.
-37-
Overcollateralization
Amount:
As of
any Distribution Date, the excess, if any, of (a) the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
(b) the aggregate of the Class Certificate Balances of the LIBOR
Certificates as of such Distribution Date (after giving effect to the payment
of
the Principal Remittance Amount on such Certificates on such Distribution
Date).
Overcollateralization
Deficiency:
With
respect to any Distribution Date, the excess, if any, of (a) the
Overcollateralization Target Amount applicable to such Distribution Date over
(b) the Overcollateralization Amount (for purposes of this calculation
only, assuming 100% of the Principal Remittance Amount is applied as a principal
payment to the LIBOR Certificates on such Distribution Date, but before giving
effect to any other distributions on the LIBOR Certificates in reduction of
their respective Class Certificate Balances on such Distribution Date)
applicable to such Distribution Date.
Overcollateralization
Reduction Amount:
With
respect to any Distribution Date, an amount equal to the lesser of (a) the
Excess Overcollateralization Amount and (b) the Net Monthly Excess Cash
Flow.
Overcollateralization
Target Amount:
Prior
to the Stepdown Date, an amount equal to 1.55% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date. On and after the Stepdown
Date provided a Trigger Event is not in effect, an amount equal to the greater
of (i) 3.10% of the aggregate Stated Principal Balance of the Mortgage Loans
as
of the last day of the related Due Period and (ii) 0.50% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date; provided,
however,
that
if, on any Distribution Date a Trigger Event exists, the Overcollateralization
Target Amount shall not be reduced to the applicable percentage of then current
aggregate Stated Principal Balance of the Mortgage Loans until the Distribution
Date on which a Trigger Event no longer exists but rather shall remain the
Overcollateralization Target Amount as determined for the immediately preceding
Distribution Date. When the Class Certificate Balance of each Class of
LIBOR Certificates has been reduced to zero, the Overcollateralization Target
Amount will thereafter equal zero.
Ownership
Interest:
As to
any Residual 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.
P&I
Advance:
As to
any Mortgage Loan or REO Property, any advance made by a Servicer in respect
of
any Remittance Date representing the aggregate of all payments of principal
and
interest, net of the applicable Servicing Fee, that were due during the related
Due Period on the Mortgage Loans and that were delinquent on the related
Determination Date, plus certain amounts representing assumed payments not
covered by any current net income on the Mortgaged Properties acquired by
foreclosure or deed in lieu of foreclosure as determined pursuant to the related
Servicing Agreement.
Percentage
Interest:
As to
any Certificate, the percentage interest evidenced thereby in distributions
required to be made on the related Class, such percentage interest being set
forth on the face thereof or equal to the percentage obtained by dividing the
Denomination of such Certificate by the aggregate of the Denominations of all
Certificates of the same Class.
-38-
Permitted
Investments:
Any one
or more of the following obligations or securities acquired at a purchase price
of not greater than par, regardless of whether issued by the Securities
Administrator, the Trustee or any of their respective Affiliates:
(i) direct
obligations of, or obligations fully guaranteed as to timely payment of
principal and interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and credit
of
the United States;
(ii) demand
and time deposits in, certificates of deposit of, or bankers’ acceptances (which
shall each have an original maturity of not more than 90 days and, in the
case of bankers’ acceptances, shall in no event have an original maturity of
more than 365 days or a remaining maturity of more than 30 days)
denominated in United States dollars and issued by, any Depository Institution
and rated F1+ by Fitch, A-1+ by Standard & Poor’s and P-1 by
Moody’s;
(iii) repurchase
obligations with respect to any security described in clause (i) above
entered into with a Depository Institution (acting as principal);
(iv) securities
bearing interest or sold at a discount that are issued by any corporation
incorporated under the laws of the United States of America or any state thereof
and that are rated by Fitch, Moody’s and Standard & Poor’s (in each case, to
the extent they are designated as Rating Agencies in the Preliminary Statement),
and by each other Rating Agency that rates such securities, in its highest
long-term unsecured rating categories at the time of such investment or
contractual commitment providing for such investment;
(v) commercial
paper (including both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a specified date not more
than 30 days after the date of acquisition thereof) that is rated by Fitch,
Moody’s and Standard & Poor’s (in each case, to the extent they are
designated as Rating Agencies in the Preliminary Statement), and by each other
Rating Agency that rates such securities, in its highest short-term unsecured
debt rating available at the time of such investment;
(vi) units
of
money market funds, including money market funds managed by the Trustee, the
Securities Administrator or an Affiliate thereof, that have been rated “Aaa” by
Moody’s, “AAA” by Standard & Poor’s and, if rated by Fitch, “AAA” by
Fitch; and
(vii) if
previously confirmed in writing to the Securities Administrator, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to each of the Rating Agencies as a permitted
investment of funds backing “Aaa” or “AAA” rated securities;
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provided,
however,
that no
instrument described hereunder shall evidence either the right to receive
(a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provide a yield to maturity at par greater
than
120.00% of the yield to maturity at par of the underlying
obligations.
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) which 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 any Residual
Certificate, (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code, (v) a Person that is a Disqualified
Non-U.S. Person or a U.S. Person with respect to whom income from a Residual
Certificate is attributable to a foreign permanent establishment or fixed base,
within the meaning of an applicable income tax treaty, of such Person or any
other U.S. Person, (vi) an “electing large partnership” within the meaning
of Section 775 of the Code and (vii) any other Person so designated by
the Depositor based upon an Opinion of Counsel that the Transfer of an Ownership
Interest in a Residual Certificate to such Person may cause any REMIC formed
hereby to fail to qualify as a REMIC at any time that the Certificates are
outstanding. The terms “United States”, “State” and “international organization”
shall have the meanings set forth in Section 7701 of the Code or successor
provisions. A corporation will not be treated as an instrumentality of the
United States or of any State or political subdivision thereof for these
purposes if all of its activities are subject to tax and, with the exception
of
Xxxxxxx Mac, a majority of its board of directors is not selected by such
government unit.
Person:
Any
individual, corporation, partnership, joint venture, association, limited
liability company, joint-stock company, trust, unincorporated organization
or
government, or any agency or political subdivision thereof.
Physical
Certificates:
As
specified in the Preliminary Statement.
Pool
Stated Principal Balance:
As to
any Distribution Date, the aggregate of the Stated Principal Balances of the
Mortgage Loans for such Distribution Date that were Outstanding Mortgage Loans
on the Due Date in the related Due Period.
Prepayment
Charge:
Any
prepayment premium, penalty or charge collected by a Servicer with respect
to a
Mortgage Loan from a Mortgagor in connection with any Principal Prepayment
pursuant to the terms of the related Mortgage Note.
Prepayment
Interest Excess:
With
respect to any Distribution Date and any Mortgage Loan serviced by Xxxxx Fargo,
any interest collected by Xxxxx Fargo, as Servicer, with respect to any such
Mortgage Loan as to which a Principal Prepayment in Full occurs from the 1st
day
of the month through the 13th day of the month in which such Distribution Date
occurs and that represents interest that accrues from the 1st day of such month
to the date of such Principal Prepayment in Full;
and
with respect to any Distribution Date and any Mortgage Loan serviced by
Countrywide Servicing, any interest collected by Countrywide Servicing with
respect to any such Mortgage Loan as to which a Principal Prepayment occurs
from
the 1st day of the month through the 15th day of the month in which such
Distribution Date occurs and that represents interest that accrues from the
1st
day of such month to the date of such Principal Prepayment in Full.
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Prepayment
Interest Shortfall:
With
respect to each Servicer, the meaning assigned to such term in the related
Servicing Agreement.
Prepayment
Period:
With
respect to each Servicer, the meaning assigned to such term (or to the term
“Principal Prepayment Period” with respect to Xxxxx Fargo) in the related
Servicing Agreement.
Primary
Mortgage Insurance Policy:
Any
mortgage guaranty insurance, if any, on an individual Mortgage Loan as evidenced
by a policy or certificate, whether such policy is obtained by the related
Mortgage Loan Seller, the lender or the borrower.
Principal
Payment Amount:
For any
Distribution Date, the sum of (i) the Basic Principal Payment Amount for
such Distribution Date and (ii) the Extra Principal Payment Amount for such
Distribution Date.
Principal
Prepayment:
Any
full or partial payment or other recovery of principal on a Mortgage Loan
(including upon liquidation of a Mortgage Loan) that is received in advance
of
its scheduled Due Date, excluding any Prepayment Charge thereon, and that is
not
accompanied by an amount of interest representing scheduled interest due on
any
date or dates in any month or months subsequent to the month of prepayment.
Principal
Prepayment in Full:
Any
Principal Prepayment made by a Mortgagor of the entire principal balance of
a
Mortgage Loan.
Principal
Remittance Amount:
With
respect to any Distribution Date, the amount equal to the sum of the following
amounts (without duplication) with respect to the related Due Period:
(i) each scheduled payment of principal on a Mortgage Loan due during such
Due Period and received by the Servicers on or prior to the related
Determination Date or advanced by the Servicers for the related Remittance
Date,
(ii) all Principal Prepayments received during the related Prepayment
Period; (iii) all net Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds on the Mortgage Loans allocable to principal, and all
Subsequent Recoveries, actually collected by the Servicers during the related
Prepayment Period; (iv) the portion of the Repurchase Price allocable to
principal with respect to each Mortgage Loan repurchased by a Mortgage Loan
Seller or the Sponsor, as the case may be, that was repurchased on or prior
to
the related Determination Date; and (v) all Substitution Adjustment Amounts
allocable to principal with respect to the substitutions of Mortgage Loans
that
occur on or prior to the related Determination Date; and (vi) the allocable
portion of the proceeds received with respect to the termination of the Trust
Fund pursuant to clause (a) of Section 11.01 (to the extent such
proceeds relate to principal).
Private
Certificates:
As
specified in the Preliminary Statement.
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Private
Placement Memorandum:
The
Private Placement Memorandum, dated December 4, 2006 relating to the offering
of
the Class M-10 Certificates.
Prospectus:
The
Prospectus, dated April 3, 2006, as supplemented by the Prospectus
Supplement.
Prospectus
Supplement:
The
Prospectus Supplement, dated December
4, 2006
relating
to the Offered Certificates.
PTCE:
As
defined in Section 5.02(b).
Purchase
Agreement:
The
Mortgage Loan Purchase Agreement, dated as of November 1, 2006, between the
Depositor and the Sponsor.
Rating
Agency:
Each of
the Rating Agencies specified in the Preliminary Statement. If such organization
or a successor is no longer in existence, “Rating Agency” shall be such
nationally recognized statistical rating organization, or other comparable
Person, as is designated by the Depositor, notice of which designation shall
be
given to the Trustee and the Securities Administrator. References herein to
a
given rating or rating category of a Rating Agency shall mean such rating
category without giving effect to any modifiers. For purposes of
Section 12.05, the addresses for notices to each Rating Agency shall be the
address specified therefor in the definition corresponding to the name of such
Rating Agency, or such other address as either such Rating Agency may hereafter
furnish to the Depositor and the Securities Administrator.
Realized
Losses:
With
respect to any date of determination and any Liquidated Mortgage Loan, the
amount, if any, by which (a) the unpaid principal balance of such
Liquidated Mortgage Loan together with accrued and unpaid interest thereon
exceeds (b) the Liquidation Proceeds with respect thereto net of the
expenses incurred by the applicable Servicer in connection with the liquidation
of such Liquidated Mortgage Loan and net of the amount of unreimbursed Servicing
Advances with respect to such Liquidated Mortgage Loan.
Record
Date:
With
respect to any Distribution Date and any Certificate other than Certificate
issued in definitive form or an Interest-Only Certificate, the close of business
on the Business Day immediately preceding such Distribution Date; provided,
however,
that,
for any Certificate issued in definitive form and for any Interest-Only
Certificate, the Record Date shall be the close of business on the last Business
Day of the month preceding the month in which such applicable Distribution
Date
occurs (or, in the case of the first Distribution Date, the Closing
Date).
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 Fed. 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.
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Regulation
S:
Regulation S promulgated under the Securities Act or any successor provision
thereto, in each case as the same may be amended from time to time; and all
references to any rule, section or subsection of, or definition or term
contained in, Regulation S means such rule, section, subsection, definition
or
term, as the case may be, or any successor thereto, in each case as the same
may
be amended from time to time.
Regulation
S Investment Letter:
As
defined in Section 5.02(b).
Regular
Certificates:
As
specified in the Preliminary Statement.
Relevant
Servicing Criteria:
The
Servicing Criteria applicable to the parties having reporting obligations
hereunder, as set forth on Exhibit S attached hereto. For clarification
purposes, multiple parties can have responsibility for the same Relevant
Servicing Criteria. With respect to any Servicing Function Participant engaged
by the Master Servicer, the Securities Administrator, the Custodian or any
Servicer, the term “Relevant Servicing Criteria” may refer to a portion of the
Relevant Servicing Criteria applicable to such parties.
Relief
Act Interest Shortfall:
With
respect to any Distribution Date and any Mortgage Loan, any reduction in the
amount of interest collectible on such Mortgage Loan for the most recently
ended
Due Period as a result of the application of the Servicemembers Civil Relief
Act
or any applicable similar state statutes.
REMIC:
Each
pool of assets in the Trust Fund designated as a REMIC pursuant to the
Preliminary Statement.
REMIC
1:
As
described in the Preliminary Statement.
REMIC
2:
As
described in the Preliminary Statement.
REMIC
3:
As
described in the Preliminary Statement.
REMIC
3 Net Funds Cap:
For any
Distribution Date (and the related Interest Accrual Period) and any Class of
LIBOR Certificates, an amount equal to (i) the weighted average of the interest
rates on the Lower Tier Interests in REMIC 3 (other than any interest-only
regular interest), weighted in proportion to their Class Certificate Balances
as
of the beginning of the related Interest Accrual Period, multiplied by (ii)
the
quotient of (a) 30, divided by (b) the actual number of days in the Interest
Accrual Period.
REMIC
4:
As
described in the Preliminary Statement.
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 regulations
promulgated thereunder, as the foregoing may be in effect from time to time
as
well as provisions of applicable state laws.
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Remittance
Date:
To the
extent provided in the related Servicing Agreement, (i) with respect to Xxxxx
Fargo, as Servicer, the 18th
calendar
day of any month, or if such 18th
day is
not a Business Day, the first Business Day immediately following and (ii) with
respect to Countrywide Servicing, the 21st
or
24th
day of
any month, as applicable, or if such 21st
or
24th
day is
not a Business Day, the first Business Day immediately preceding.
REO
Disposition:
The
final sale by a Servicer of any REO Property.
REO
Property:
A
Mortgaged Property acquired by the Trust Fund through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage
Loan.
Reportable
Event:
As
defined in Section 8.12(a)(iii).
Reporting
Servicer:
As
defined in Section 8.12(a)(ii).
Repurchase
Price:
With
respect to any Mortgage Loan, an amount equal to the sum of (i) the unpaid
principal balance of such Mortgage Loan as of the date of repurchase,
(ii) interest on such unpaid principal balance of such Mortgage Loan at the
Mortgage Rate from the last date through which interest has been paid to the
date of repurchase, (iii) all unreimbursed Servicing Advances, (iv) the
amount of any costs and damages incurred by the Trust Fund as a result of any
violation of any applicable federal, state or local predatory- or
abusive-lending law arising from or in connection with the origination of such
Mortgage Loan and (v) all expenses incurred by the Master Servicer, the
Securities Administrator, the related Servicer or Trustee arising out of the
Master Servicer’s, the related Servicer’s or Trustee’s enforcement of the
applicable Mortgage Loan Seller’s or Sponsor’s repurchase obligation hereunder.
Request
for Release:
The
Request for Release submitted by a Servicer to the Trustee, substantially in
the
form of Exhibit J.
Residual
Certificates:
As
specified in the Preliminary Statement.
Responsible
Officer:
When
used with respect to the Trustee, the Securities Administrator or the Master
Servicer, any vice president, any assistant vice president, any assistant
secretary, any assistant treasurer, any associate, or any other officer of
the
Trustee, the Securities Administrator or the Master Servicer customarily
performing functions similar to those performed by any of the above designated
officers who at such time shall be officers 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 and who, in each case, shall
have
direct responsibility for the administration of this Agreement.
Rolling
Three Month Delinquency Rate:
With
respect to any Distribution Date, the average of the Delinquency Rates for
each
of the three (or one or two, in the case of the first and second Distribution
Dates) immediately preceding calendar months.
Rule 144A
Investment Letter:
As
defined in Section 5.02(b).
Xxxxxxxx-Xxxxx
Act:
The
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations of the Commission
promulgated thereunder (including any interpretations thereof by the
Commission’s staff).
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Xxxxxxxx-Xxxxx
Certification:
A
written certification signed by an officer of the Master Servicer that complies
with (i) the Xxxxxxxx-Xxxxx Act, and (ii) Exchange Act Rules 13a-14(d) and
15d-14(d), as in effect from time to time; provided that if, after the Closing
Date (a) the Xxxxxxxx-Xxxxx Act is amended, (b) the Rules referred to in clause
(ii) are modified or superseded by any subsequent statement, rule or regulation
of the Commission or any statement of a division thereof, or (c) any future
releases, rules and regulations are published by the Commission from time to
time pursuant to the Xxxxxxxx-Xxxxx Act, which in any such case affects the
form
or substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous that then form of the required certification as of
the
Closing Date, the Xxxxxxxx-Xxxxx Certification shall be as agreed to by the
Master Servicer and the Depositor following a negotiation in good faith to
determine how to comply with any such requirements.
Scheduled
Payment:
The
scheduled monthly payment on a Mortgage Loan due on any Due Date allocable
to
principal and/or interest on such Mortgage Loan which, unless otherwise
specified herein, shall give effect to any related Debt Service Reduction and
any Deficient Valuation that affects the amount of the monthly payment due
on
such Mortgage Loan.
Securities
Act:
The
Securities Act of 1933, as amended and the rules and regulations
thereunder.
Securities
Administrator:
Citibank, and any successors in interest, and if a successor securities
administrator is appointed hereunder, such successor.
Securities
Administrator Float Period:
With
respect to the Distribution Date and the related amounts in the Distribution
Account, the period commencing on the Remittance Date immediately preceding
such
Distribution Date and ending on such Distribution Date.
Senior
Interest Payment Amount:
With
respect to any Distribution Date and any Class of Class A
Certificates, the sum of the Interest Payment Amount and the Interest Carry
Forward Amount, if any, for that Distribution Date for that Class.
Servicer:
Each of
Xxxxx Fargo and Countrywide Servicing, and any successors in
interest.
Service(s)(ing):
In
accordance with Regulation AB, the act of servicing and administering the
Mortgage Loans or any other assets of the Trust Fund 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 Item 1108 of Regulation AB. For
clarification purposes, any uncapitalized occurrence of this term in this
Agreement shall have the meaning commonly understood by participants in the
residential mortgage-backed securitization market.
Servicing
Advances:
With
respect to the Servicers and the Master Servicer (including the Trustee in
its
capacity as successor master servicer), all customary and reasonable “out of
pocket” costs and expenses (including reasonable attorneys’ fees and expenses)
incurred by the Servicers in the performance of its servicing obligations under
the related Servicing Agreement or by the Master Servicer (including the Trustee
in its capacity as successor master servicer) in the performance of its
obligations hereunder, including, but not limited to, the cost of (i) the
preservation, restoration, inspection and protection of the Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii)
the
management and liquidation of the REO Property and (iv) any other expenses
permitted to be reimbursed as Servicing Advances under the related Servicing
Agreement, as applicable.
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Servicing
Agreement:
Each
reconstituted servicing agreement or assignment, assumption and recognition
agreement set forth on Exhibit M hereto and relating to a Servicer and the
servicing of the related Mortgage Loans by such Servicer, as the same may be
amended from time to time.
Servicing
Criteria:
The
criteria set forth in paragraph (d) of Item 1122 of Regulation AB, as such
may
be amended from time to time.
Servicing
Fee:
With
respect to each Servicer, the meaning assigned to such term in the related
Servicing Agreement.
Servicing
Fee Rate:
With
respect to each Mortgage Loan, the rate specified in the related Servicing
Agreement.
Servicing
File:
With
respect to each Servicer, the meaning assigned to such term in the related
Servicing Agreement.
Servicing
Function Participant: Any
Subservicer or Subcontractor of a Servicer, the Master Servicer, the Custodian
or the Securities Administrator, respectively.
Servicing
Officer:
As
defined in the applicable Servicing Agreement.
Similar
Law:
As
defined in Section 5.02(b).
60+
Day Delinquent Mortgage Loan:
Each
Mortgage Loan with respect to which any portion of a Scheduled Payment is,
as of
the last day of the prior Due Period, two months or more past due (including
any
such Mortgage Loan in foreclosure, any such Mortgage Loan related to REO
Property and any such Mortgage Loan where the related Mortgagor has filed for
bankruptcy), without giving effect to any grace period.
Sponsor:
HSBC
Bank USA, National Association, a national banking association, and its
successors in interest.
Standard &
Poor’s:
Standard & Poor’s Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc. If Standard & Poor’s is designated as a Rating Agency
in the Preliminary Statement, for purposes of Section 12.05 the address for
notices to Standard & Poor’s shall be Standard & Poor’s, 00
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage
Surveillance Group - HASCO (HSI Asset Securitization Corporation Trust,
Series 2006-HE2), or such other address as Standard & Poor’s may
hereafter furnish to the Depositor and the Securities
Administrator.
Standard &
Poor’s Glossary:
The
Standard & Poor’s LEVELS® Glossary, as may be in effect from time to
time.
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Startup
Day:
The
Closing Date.
Stated
Principal Balance:
As to
each Mortgage Loan and as of any date of determination, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date (whether or not received), minus
(ii) all amounts previously remitted to the Securities Administrator with
respect to the related Mortgage Loan representing payments or recoveries of
principal including advances in respect of scheduled payments of principal.
For
purposes of any Distribution Date, the Stated Principal Balance of any Mortgage
Loan will give effect to any scheduled payments of principal received by the
related Servicer on or prior to the related Determination Date or advanced
by
the related Servicer for the related Remittance Date and any unscheduled
principal payments and other unscheduled principal collections received during
the related Prepayment Period, and the Stated Principal Balance of any Mortgage
Loan that has prepaid in full or has become a Liquidated Mortgage Loan during
the related Prepayment Period shall be zero.
Stepdown
Date:
The
earlier to occur of (i) the first Distribution Date following the Distribution
Date on which the aggregate Class Certificate Balances of the Class A
Certificates have been reduced to zero and (ii) the later to occur of (a) the
Distribution Date in December 2009 and (b) the first Distribution Date on which
the Credit Enhancement Percentage for the Class A Certificates (calculated
for
this purpose only after taking into account payments of principal applied to
reduce the Stated Principal Balance of the Mortgage Loans for that Distribution
Date but prior to any applications of Principal Payment Amount to the
Certificates on that Distribution Date) is greater than or equal to
36.80%.
Subcontractor:
Any
vendor, subcontractor or other Person that is not responsible for the overall
servicing of the 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 any Servicer (or a Subservicer of any Servicer),
the Master Servicer, the Custodian or the Securities Administrator.
Subsequent
Recovery:
With
respect to any Mortgage Loan or related Mortgaged Property that became a
Liquidated Mortgage Loan or was otherwise disposed of, all amounts received
in
respect of such Liquidated Mortgage Loan after an Applied Realized Loss Amount
related to such Mortgage Loan or Mortgaged Property is allocated to reduce
the
Class Certificate Balance of any Class of Class M Certificates.
Any Subsequent Recovery that is received during a Prepayment Period will be
included as part of the Principal Remittance Amount for the related Distribution
Date.
Subservicer:
Any
Person that services Mortgage Loans on behalf of a Servicer, and is responsible
for the performance (whether directly or through subservicers or Subcontractors)
of servicing functions required to be performed under this Agreement, any
related Servicing Agreement or any subservicing agreement that are identified
in
Item 1122(d) of Regulation AB.
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Substitute
Mortgage Loan:
A
Mortgage Loan substituted by a Mortgage Loan Seller or the Sponsor for a Deleted
Mortgage Loan which must, in the case of a Mortgage Loan substituted by the
Sponsor, on the date of such substitution, as confirmed in a Request for
Release, substantially in the form of Exhibit J,
(i) have a Stated Principal Balance, after deduction of all Scheduled
Payments due in the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan; (ii) be accruing interest at a rate
not lower than and not more than 1.00% higher than that of the Deleted Mortgage
Loan; (iii) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Mortgage Loan; (iv) be of
the same type as the Deleted Mortgage Loan; and (v) conforms to each
representation and warranty applicable to the Deleted Mortgage Loan made in
the
Purchase Agreement.
Substitution
Adjustment Amount: As
provided in the related Transfer Agreement with respect to each Mortgage Loan
Seller, the amount (if any) by which the aggregate unpaid principal balance
of
all Substitute Mortgage Loans as of the date of substitution is less than the
aggregate unpaid principal balance of all Deleted Mortgage Loans, increased
by
the aggregate amount of any unreimbursed Advances with respect to such Deleted
Mortgage Loans. Such amount to be remitted by the applicable Mortgage Loan
Seller in accordance with its respective Transfer Agreeement.
Supplemental
Interest Trust:
The
corpus of a trust created pursuant to Section 4.06 of this Agreement and
designated as the “Supplemental Interest Trust,” consisting of the Swap
Agreement, the Supplemental Interest Trust Account, the Swap Account, the Excess
Reserve Fund Account, the Cap Agreement, the Cap Account, the Collateral
Account, the right to receive the Class X Distributable Amount as provided
in
Section 4.02(a)(iii)(J), the Class LT4-I Interest in REMIC 4 and the right
to
receive Class I Shortfalls.
Supplemental
Interest Trust Account:
The
Account created pursuant to Section 4.06(a).
Swap
Account:
The
sub-account of the Supplemental Interest Trust Account created pursuant to
Section 4.06(a).
Swap
Agreement:
The
interest rate swap agreement entered into by the Supplemental Interest Trust
and
the Swap Counterparty, dated December 5, 2006, which agreement provides for,
among other things, a Net Swap Payment to be paid pursuant to the conditions
provided therein, commencing with the Distribution Date in January 2007 and
ending on the Distribution Date in July 2010, together with any schedules,
confirmations or other agreements relating thereto, attached hereto as Exhibit
O.
Swap
Amount:
With
respect to each Distribution Date and the related Swap Payment Date, the sum
of
any Net Swap Payment and any Swap Termination Payment deposited in the Swap
Account.
Swap
Counterparty:
The
counterparty to the Supplemental Interest Trust under the Swap Agreement, and
any successor in interest or assigns. Initially, the Swap Counterparty shall
be
ABN AMRO Bank N.V.
Swap
Counterparty Trigger Event:
A Swap
Counterparty Trigger Event shall have occurred if any of a Swap Default with
respect to which the Swap Counterparty is a Defaulting Party, a Termination
Event (other than a “Tax Event” or “Illegality” as such terms are defined in the
Master Agreement) with respect to which the Swap Counterparty is the sole
Affected Party or an Additional Termination Event with respect to which the
Swap
Counterparty is the sole Affected Party has occurred.
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Swap
Default:
Any of
the circumstances constituting an “Event of Default” under the Swap
Agreement.
Swap
LIBOR:
With
respect to any Distribution Date (and the Accrual Period relating to such
Distribution Date), the product of (i) the Floating Rate Option (as defined
in
the Swap Agreement) for the related Swap Payment Date, (ii) two, and (iii)
the
quotient of (a) the actual number of days in the Accrual Period for the LIBOR
Certificates and (b) 30, as calculated by the Swap Counterparty and furnished
to
the Securities Administrator.
Swap
Payment Date:
For so
long as the Swap Agreement is in effect or any amounts remain unpaid thereunder,
the Business Day immediately preceding each Distribution Date.
Swap
Replacement Receipts:
As
defined in Section 4.08(a)(i).
Swap
Replacement Receipts Account:
As
defined in Section 4.08(a)(i).
Swap
Termination Payment:
Upon
the designation of an “Early Termination Date” as defined in the Swap Agreement,
the payment required to be made by the Supplemental Interest Trust to the Swap
Counterparty, or by the Swap Counterparty to the Supplemental Interest Trust,
as
applicable, pursuant to the terms of the Swap Agreement, and any unpaid amounts
due on previous Distribution Dates and accrued interest thereon as provided
in
the Swap Agreement, as calculated by the Swap Counterparty and furnished to
the
Securities Administrator.
Swap
Termination Receipts:
As
defined in Section 4.08(a)(i).
Swap
Termination Receipts Account:
As
defined in Section 4.08(a)(i).
Tax
Matters Person:
The Holder of the Class R Certificates designated as “tax matters person” of
each REMIC created hereunder in the manner provided under Treasury Regulations
Section 1.860F-4(d) and Treasury Regulations Section
301.6231(a)(7)-1.
Telerate
Page 3750:
The
display page currently so designated on the Bridge Telerate Service (or such
other page as may replace that page on that service for displaying
comparable rates or prices).
Termination
Event:
The
occurrence of a termination event under the termination provision of the Cap
Agreement or Swap Agreement, as applicable.
Termination
Price:
As
defined in Section 11.01.
-49-
Total
Monthly Excess Spread:
As to
any Distribution Date, an amount equal to the excess, if any, of (i) the
interest on the Mortgage Loans (other than Prepayment Interest Excesses)
received by the Servicers on or prior to the related Determination Date or
advanced by the Servicers for the related Remittance Date (net of Expense Fees)
over (ii) the sum of the amounts payable to the Certificates pursuant to
Section 4.02(a)(i)(A) through (E) on such Distribution Date.
Transfer:
Any
direct or indirect transfer or sale of any Ownership Interest in a Residual
Certificate.
Transfer
Affidavit:
As
defined in Section 5.02(c).
Transfer
Agreement:
The
various agreements by which
the
Sponsor purchased the Mortgage Loans from the Mortgage Loan
Sellers.
Transferor
Certificate:
As
defined in Section 5.02(b).
Trigger
Event:
Either
a Cumulative Loss Trigger Event or a Delinquency Trigger Event.
Trust:
The
express trust created hereunder in Section 2.01(c).
Trust
Fund:
The
corpus of the trust created hereunder consisting of (i) the Mortgage Loans
and all interest and principal with respect thereto received on or after the
related Cut-off Date, other than such amounts which were due on the Mortgage
Loans on or prior to the related Cut-off Date; (ii) the Collection
Accounts, the Master Servicing Account, the Distribution Account, the Cap
Termination Receipts Account, the Cap Replacement Receipts Account the Swap
Termination Receipts Account, the Swap Replacement Receipts 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
Depositor’s rights under the Purchase Agreement, each Transfer Agreement and
each Servicing Agreement; (v) the Insurance Policies; and (vi) all
proceeds of the conversion, voluntary or involuntary, of any of the
foregoing.
Trustee:
Deutsche Bank National Trust Company, a national banking association, and its
successors in interest and, if a successor trustee is appointed hereunder,
such
successor.
Underwriters’
Exemption:
Any
exemption listed under footnote 1 of, and amended by, Prohibited Transaction
Exemption 96-84, 61 Fed. Reg. 58234 (1996), as amended by XXX 00-00,
00 Xxx. Xxx. 00000 (1997), PTE 2000-58, 65 Fed. Reg. 67765 (2000) and
PTE 2002-41, 67 Fed. Reg. 54487 (2002), or any successor
exemption.
Unpaid
Realized Loss Amount:
With
respect to any Class of Class M Certificates and as to any
Distribution Date, is the excess of (i) Applied Realized Loss Amounts with
respect to such Class over (ii) the sum of (a) all distributions
in reduction of such Applied Realized Loss Amounts on all previous Distribution
Dates, and (b) the amount by which the Class Certificate Balance of
such Class has been increased due to the distribution of any Subsequent
Recoveries on all previous Distribution Dates. Any amounts distributed to a
Class of Class M Certificates in respect of any Unpaid Realized Loss
Amount will not be applied to reduce the Class Certificate Balance of such
Class.
-50-
Upper
Tier REMIC:
As
described in the Preliminary Statement.
Upper
Tier REMIC Regular Interest:
As
described in the Preliminary Statement.
U.S.
Person:
(i) A citizen or resident of the United States; (ii) a corporation (or
entity treated as a corporation for tax purposes) created or organized in the
United States or under the laws of the United States or of any State thereof,
including, for this purpose, the District of Columbia; (iii) a partnership
(or entity treated as a partnership for tax purposes) organized in the United
States or under the laws of the United States or of any State thereof,
including, for this purpose, the District of Columbia (unless provided otherwise
by future Treasury regulations); (iv) an estate whose income is includible
in gross income for United States income tax purposes regardless of its source;
or (v) 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 U.S.
Persons have authority to control substantial decisions of the trust.
Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue
to
be U.S. Persons.
Voting
Rights:
The
portion of the voting rights of all of the Certificates which is allocated
to
any Certificate. As of any date of determination, 1.00% of all Voting Rights
shall be allocated to each of the Class A-IO, Class X, Class P and Class R
Certificates, if any (such Voting Rights to be allocated among the holders
of
Certificates of each such Class in accordance with their respective
Percentage Interests) and the remaining Voting Rights shall be allocated
among Holders of the remaining Classes of Certificates in proportion to the
Certificate Balances of their respective Certificates on such date. After the
Class Notional Balance of the Class A-IO Certificates have been reduced to
zero,
the Voting Rights allocated to the Class A-IO Certificates will be allocated
to
any outstanding Classes of LIBOR Certificates on a pro
rata
basis.
Xxxxx
Fargo:
Xxxxx
Fargo Bank, N.A., a national banking association, and its successors in
interest.
ARTICLE
II
CONVEYANCE
OF MORTGAGE LOANS;
REPRESENTATIONS
AND WARRANTIES
Section
2.01 Conveyance
of Mortgage Loans. (a) The
Depositor, concurrently with the execution and delivery hereof, hereby sells,
transfers, assigns, sets over and otherwise conveys to the Trustee for the
benefit of the Certificateholders, without recourse, all the right, title and
interest of the Depositor in and to 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).
Concurrently
with the execution of this Agreement, the Derivative Agreements shall be
delivered to the Securities Administrator. In connection therewith, the
Depositor hereby directs the Securities Administrator (solely in its capacity
as
trustee of the Supplemental Interest Trust) and the Securities Administrator
is
hereby authorized to execute and deliver each of the Derivative Agreements
on
behalf of the Supplemental Interest Trust, for the benefit of
Certificateholders. The Depositor, the Sponsor, the Master Servicer, the Credit
Risk Manager and the Certificateholders (by their acceptance of such
Certificates) acknowledge and agree that the Securities Administrator is
executing and delivering the Derivative Agreements solely in its capacity as
trustee of the Supplemental Interest Trust and not in its individual capacity.
The Securities Administrator shall have no duty or responsibility to enter
into
any other interest rate swap agreement upon the expiration or termination of
the
Swap Agreement or interest rate cap agreement upon the termination of the Cap
Agreement unless so directed by the Depositor.
-51-
Concurrently
with the execution and delivery of this Agreement, the Depositor does hereby
assign to the Trustee all of its rights and interest under (i) the Purchase
Agreement, including the right to enforce the Sponsor’s obligation to repurchase
or substitute defective Mortgage Loans under Section 4 of the Purchase Agreement
and (ii) each Servicing Agreement and each Transfer Agreement, to the extent
assigned under the Purchase Agreement. The Trustee hereby accepts such
assignment, and as set forth herein in Section 2.03(d), shall be entitled to
exercise all the rights of the Depositor under the Purchase Agreement as if,
for
such purpose, it were the Depositor.
(b) In
connection with the transfer and assignment of each Mortgage Loan, the Depositor
has delivered or caused to be delivered to the Custodian for the benefit of
the
Certificateholders the following documents or instruments with respect to each
Mortgage Loan so assigned:
(i) the
original Mortgage Note bearing all intervening endorsements necessary to show
a
complete chain of endorsements from the original payee, endorsed in blank,
“Pay
to the order of _____________, without recourse”, and, if previously endorsed,
signed in the name of the last endorsee by a duly qualified officer of the
last
endorsee;
(ii) the
original Assignment of Mortgage for each Mortgage Loan, in form and substance
acceptable for recording. The Mortgage shall be assigned, with assignee’s name
left blank;
(iii) the
original of each guarantee executed in connection with the Mortgage Note, if
any;
(iv) the
original recorded Mortgage, with evidence of recording thereon. If in connection
with any Mortgage Loan, the original Mortgage cannot be delivered with evidence
of recording thereon on or prior to the Closing Date because of a delay caused
by the public recording office where such Mortgage has been delivered for
recordation or because such Mortgage has been lost or because such public
recording office retains the original recorded Mortgage, the Depositor shall
deliver or cause to be delivered to the Custodian, (A) in the case of a
delay caused by the public recording office, a copy of such Mortgage certified
by the applicable Mortgage Loan Seller, escrow agent, title insurer or closing
attorney to be a true and complete copy of the original recorded Mortgage and
(B) in the case where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after recordation
in a
public recording office, a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage;
-52-
(v) originals
or a certified copy of each modification agreement, if any;
(vi) the
originals of all intervening assignments of Mortgage with evidence of recording
thereon evidencing a complete chain of ownership from the originator of the
Mortgage Loan to the last assignee, or if any such intervening assignment of
Mortgage has not been returned from the applicable public recording office
or
has been lost or if such public recording office retains the original recorded
intervening assignments of Mortgage, a photocopy of such intervening assignment
of Mortgage, together with (A) in the case of a delay caused by the public
recording office, an officer’s certificate of the applicable Mortgage Loan
Seller, escrow agent, closing attorney or the title insurer insuring the
Mortgage stating that such intervening assignment of Mortgage has been delivered
to the appropriate public recording office for recordation and that such
original recorded intervening assignment of Mortgage or a copy of such
intervening assignment of Mortgage certified by the appropriate public recording
office to be a true and complete copy of the original recorded intervening
assignment of Mortgage will be promptly delivered to the Custodian upon receipt
thereof by the party delivering the officer’s certificate or by the applicable
Mortgage Loan Seller; or (B) in the case of an intervening assignment of
mortgage where a public recording office retains the original recorded
intervening assignment of Mortgage or in the case where an intervening
assignment of Mortgage is lost after recordation in a public recording office,
a
copy of such intervening assignment of Mortgage with recording information
thereon certified by such public recording office to be a true and complete
copy
of the original recorded intervening assignment of Mortgage;
(vii) if
the
Mortgage Note, the Mortgage, any Assignment of Mortgage or any other related
document has been signed by a Person on behalf of the Mortgagor, the copy of
the
power of attorney or other instrument that authorized and empowered such Person
to sign;
(viii) the
original lender’s title insurance policy (or a marked title insurance
commitment, in the event that an original lender’s title insurance policy has
not yet been issued) in the form of an ALTA mortgage title insurance policy,
containing all required endorsements and insuring the Trustee and its successors
and assigns as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan;
(ix) if
applicable, the original of any Primary Mortgage Insurance Policy or certificate
or, an electronic certification, evidencing the existence of the Primary
Mortgage Insurance Policy or certificate, if private mortgage guaranty insurance
is required; and
(x) original
of any security agreement, chattel mortgage or equivalent document executed
in
connection with the Mortgage, if any.
-53-
From
time
to time, a Mortgage Loan Seller, the Depositor or a Servicer, as applicable,
shall forward to the Custodian additional original documents, additional
documents evidencing an assumption, modification, consolidation or extension
of
a Mortgage Loan, in accordance with the terms of this Agreement, the Transfer
Agreements and the Servicing Agreements, upon receipt of such documents. All
such mortgage documents held by the Custodian as to each Mortgage Loan shall
constitute the “Custodial
File”.
Assignments
of Mortgage shall not be required to be completed and submitted for recording
with respect to any Mortgage Loan if the Trustee and each Rating Agency have
received an Opinion of Counsel from the Depositor, satisfactory in form and
substance to the Trustee and each Rating Agency to the effect that the
recordation of such Assignments of Mortgage in any specific jurisdiction is
not
necessary to protect the Trust Fund’s interest in the related Mortgage Note. If
the Assignment of Mortgage is to be recorded, the Mortgage shall be assigned
by
the Mortgage Loan Seller to “Deutsche Bank National Trust Company, as trustee
under the Pooling and Servicing Agreement dated as of November 1, 2006, for
HSI
Asset Securitization Corporation Trust 2006-HE2”.
(c) The
Depositor does hereby establish, pursuant to the further provisions of this
Agreement and the laws of the State of New York, an express trust (the
“Trust”)
to be
known, for convenience, as “HSI Asset Securitization Corporation Trust 2006-HE2”
and Deutsche Bank National Trust Company is hereby appointed as Trustee and
Citibank is appointed as Securities Administrator in accordance with the
provisions of this Agreement. The parties hereto acknowledge and agree that
it
is the policy and intention of the Trust to acquire only Mortgage Loans meeting
the requirements set forth in this Agreement, including without limitation,
the
representations and warranties set forth in the Schedules hereto.
(d) The
Trust
shall have the capacity, power and authority, and the Trustee on behalf of
the
Trust is hereby authorized, to accept the sale, transfer, assignment, set over
and conveyance by the Depositor to the Trust of all the right, title and
interest of the Depositor in and to the Trust Fund (including, without
limitation, the Mortgage Loans) pursuant to Section 2.01(a).
Section
2.02 Acceptance
by the Custodian of the Mortgage Loans. The
Custodian shall acknowledge, on the Closing Date, receipt by the Custodian
of
the documents identified in the Initial Certification in the form annexed hereto
as Exhibit E (“Initial
Certification”),
and
declares that it holds and will hold such documents and the other documents
delivered to it pursuant to Section 2.01, and that it holds or will hold
such other assets as are included in the Trust Fund, in trust for the exclusive
use and benefit of all present and future Certificateholders. The Custodian
shall maintain possession of the related Mortgage Notes in the States of
Minnesota, California, and Utah unless otherwise permitted by the Rating
Agencies.
In
connection with the Closing Date, the Custodian shall be required to deliver
via
facsimile (with original to follow the next Business Day) to the Depositor,
the
Securities Administrator and the Trustee an Initial Certification prior to
the
Closing Date, or, as the Depositor agrees on the Closing Date, certifying
receipt of a Mortgage Note and Assignment of Mortgage for each Mortgage Loan.
The Custodian shall not be responsible to verify the validity, sufficiency
or
genuineness of any document in any Custodian File.
-54-
Within
90 days of the Closing Date, the Custodian shall ascertain that all
documents identified in the Document Certification and Exception Report in
the
form attached hereto as Exhibit F are in its possession, and shall deliver
to the Depositor, the Securities Administrator, the Trustee, the Mortgage Loan
Seller and the Servicers, a Document Certification and Exception Report, in
the
form annexed hereto as Exhibit F, to the effect that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid
in
full or any Mortgage Loan specifically identified in such certification as
an
exception and not covered by such certification): (i) all documents
identified in the Document Certification and Exception Report and required
to be
reviewed by it are in its possession; (ii) such documents have been
reviewed by it and appear regular on their face and relate to such Mortgage
Loan; (iii) based on its examination and only as to the foregoing
documents, the information set forth in items (1), (2), (3), (15), (18) and
(22) of the Data Tape Information respecting such Mortgage Loan is correct;
and
(iv) each Mortgage Note has been endorsed as provided in Section 2.01
of this Agreement. Neither the Trustee nor the Custodian shall be responsible
to
verify the validity, sufficiency or genuineness of any document in any Custodial
File.
The
Custodian shall retain possession and custody of each Custodial File in
accordance with and subject to the terms and conditions set forth
herein.
Section
2.03 Remedies
for Breaches of Representations and Warranties with Respect to the Mortgage
Loans.
(a) Upon
the
removal of a Deleted Mortgage Loan and the substitution of a Substititute
Mortgage Loan and the deposit to the related Collection Account of the amount
required to be deposited therein in connection with such substitution, the
Custodian shall release the Mortgage File held for the benefit of the
Certificateholders relating to such Deleted Mortgage Loan to the applicable
Mortgage Loan Seller and the Trustee, upon receipt of a Request for Release
certifying that all amounts required to be deposited in accordance with this
Section 2.03(a) have been deposited in the related Collection Account, shall
execute and deliver at the applicable Mortgage Loan Seller’s direction such
instruments of transfer or assignment prepared by the applicable Mortgage Loan
Seller in each case without recourse, as shall be necessary to vest title in
the
applicable Mortgage Loan Seller of the Trustee’s interest in any Deleted
Mortgage Loan substituted for pursuant to this Section 2.03.
(b) In
addition to the repurchase or substitution obligations referred to in
Section 2.03(d) below, the Sponsor shall indemnify the Depositor, any of
its Affiliates, the Master Servicer, each Servicer, the Securities
Administrator, the Trustee and the Trust and hold such parties harmless against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses (including,
without limitation, any taxes payable by the Trust) resulting from any third
party claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach by the Sponsor of any of its representations and
warranties or obligations contained in this Agreement.
(c) Upon
receipt of a Request for Release substantially in the form of Exhibit J
hereto, the Custodian shall release the related Custodial File held for the
benefit of the Certificateholders to the related Mortgage Loan Seller or the
Sponsor, as applicable, as directed by the applicable Servicer, and the Trustee
shall execute and deliver at such Person’s direction such instruments of
transfer or assignment prepared by such Person, in each case without recourse,
as shall be necessary to transfer title from the Trustee. In accordance with
Section 12.05(a), if a Responsible Officer of the Securities Administrator
has actual knowledge of a purchase of a Mortgage Loan pursuant to this Section
2.03 or pursuant to a Transfer Agreement, the Securities Administrator shall
promptly notify each Rating Agency of such purchase.
-55-
(d) The
Trustee acknowledges that, except as provided in Section 5 of the Purchase
Agreement, the Sponsor shall not have any obligation or liability with respect
to any breach of a representation or warranty made by it with respect to a
Mortgage Loan sold by it, provided that such representation or warranty was
also
made by a Mortgage Loan Seller with respect to the related Mortgage Loan. It
is
understood and agreed that the representations and warranties of the Sponsor
set
forth in Section 4 of the Purchase Agreement and assigned to the Trustee by
the
Depositor hereunder shall survive the transfer of the Mortgage Loans by the
Depositor to the Trustee on the Closing Date, and shall inure to the benefit
of
the Trustee and the Certificateholders notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or Assignment of Mortgage and shall
continue throughout the term of this Agreement. Upon the discovery by any of
the
Sponsor, the Depositor, the Securities Administrator, the Trustee, the Master
Servicer or any Servicer of a breach of any of the Sponsor’s representations and
warranties set forth in Section 4 of the Purchase Agreement, the party
discovering the breach shall give prompt written notice to the others. Within
30 days of the earlier of either discovery by or notice to the Sponsor of
any breach of any of the foregoing representations or warranties that materially
and adversely affects the value of any Mortgage Loan or the interest of the
Trustee or the Certificateholders therein, the Sponsor shall use its best
efforts to cure such breach in all material respects and, if such defect or
breach cannot be remedied, the Sponsor shall, at the Depositor’s instructions as
specified in writing and provided to the Sponsor and the Trustee, (i) if
such 30-day period expires prior to the second anniversary of the Closing Date,
remove such Mortgage Loan from the Trust Fund and substitute in its place a
Substitute Mortgage Loan, in the same manner and subject to the same conditions
set forth in this Section 2.03 or (ii) repurchase such Mortgage Loan
at the Repurchase Price; provided,
however,
that
any such substitution pursuant to clause (i) above shall not be
effected prior to the delivery to the Custodian of a Request for Release
substantially in the form of Exhibit J, and the delivery of the Mortgage
File to the Custodian for any such Substitute Mortgage Loan. It is understood
and agreed that the obligations of the Sponsor under this Agreement to cure,
repurchase or substitute any Mortgage Loan as to which a breach of a
representation and warranty has occurred and is continuing, together with any
related indemnification obligations of the Sponsor set forth in Section 2.03(b),
shall constitute the sole remedies against the Sponsor available to the
Certificateholders, the Depositor and any of its affiliates, or the Trustee
on
their behalf.
The
provisions of this Section 2.03 shall survive delivery of the respective
Custodial Files to the Custodian for the benefit of the
Certificateholders.
Section
2.04 Execution
and Delivery of Certificates. The
Trustee acknowledges the transfer and assignment to it of the Trust Fund and,
concurrently with such transfer and assignment, the Securities Administrator
has
executed and delivered to, or upon the order of the Depositor, the Certificates
in authorized denominations evidencing directly or indirectly the entire
ownership of the 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.
-56-
Section
2.05 REMIC
Matters. The
Preliminary Statement sets forth the designations for federal income tax
purposes of all interests created hereby. The “Startup
Day”
for
purposes of the REMIC Provisions shall be the Closing Date. The
“latest
possible maturity date”
is
the
Distribution Date occurring three years after the month in which the
latest Mortgage Loan maturity date (of the Mortgage Loans held in the Trust
on
the Closing Date) occurs.
Section
2.06 Representations
and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the other parties to
this
agreement that as of the date of this Agreement or as of such date specifically
provided herein:
(a) The
Depositor is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware;
(b) The
Depositor has the power and authority to convey the Mortgage Loans and to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by, this Agreement;
(c) This
Agreement has been duly and validly authorized, executed and delivered by the
Depositor, all requisite company action having been taken, and, assuming the
due
authorization, execution and delivery hereof by the other parties hereto,
constitutes or will constitute the legal, valid and binding agreement of the
Depositor, enforceable against the Depositor in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless
of
whether such enforcement is considered in a proceeding in equity or at
law);
(d) No
consent, approval, authorization or order of, or registration or filing with,
or
notice to, any governmental authority or court is required for the execution,
delivery and performance of or compliance by the Depositor with this Agreement
or the consummation by the Depositor of any of the transactions contemplated
hereby, except as have been received or obtained on or prior to the Closing
Date;
(e) None
of
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby or thereby, or the fulfillment of or compliance
with the terms and conditions of this Agreement, (i) conflicts or will
conflict with or results or will result in a breach of, or constitutes or will
constitute a default or results or will result in an acceleration under
(A) the charter or bylaws of the Depositor, or (B) of any term,
condition or provision of any material indenture, deed of trust, contract or
other agreement or instrument to which the Depositor or any of its subsidiaries
is a party or by which it or any of its subsidiaries is bound; (ii) results
or will result in a violation of any law, rule, regulation, order, judgment
or
decree applicable to the Depositor of any court or governmental authority having
jurisdiction over the Depositor or its subsidiaries; or (iii) results in
the creation or imposition of any lien, charge or encumbrance which would have
a
material adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans;
-57-
(f) There
are
no actions, suits or proceedings before or against or investigations of, the
Depositor pending, or to the knowledge of the Depositor, threatened, before
any
court, administrative agency or other tribunal, and no notice of any such
action, which, in the Depositor’s reasonable judgment, might materially and
adversely affect the performance by the Depositor of its obligations under
this
Agreement, or the validity or enforceability of this Agreement;
(g) The
Depositor is not in default with respect to any order or decree of any court
or
any order, regulation or demand of any federal, state, municipal or governmental
agency that would materially and adversely affect its performance hereunder;
and
(h) Immediately
prior to the transfer and assignment by the Depositor to the Trustee on the
Closing Date, the Depositor had good title to, and was the sole owner of each
Mortgage Loan, free of any interest of any other Person, and the Depositor
has
transferred all right, title and interest in each Mortgage Loan to the Trustee.
The transfer of the Mortgage Note and the Mortgage as and in the manner
contemplated by this Agreement is sufficient either (i) fully to transfer
to the Trustee, for the benefit of the Certificateholders, all right, title,
and
interest of the Depositor thereto as note holder and mortgagee or (ii) to
grant to the Trustee, for the benefit of the Certificateholders, the security
interest referred to in Section 12.04.
It
is
understood and agreed that the representations, warranties and covenants set
forth in this Section 2.06 shall survive delivery of the respective
Mortgage Files to the Custodian and shall inure to the benefit of the
Trustee.
ARTICLE
III
ADMINISTRATION
AND SERVICING
OF
MORTGAGE LOANS
Section
3.01 Establishment
of Certain Accounts. (a)
(i) The Securities Administrator shall establish and maintain the Excess Reserve
Fund Account as an asset of the Supplemental Interest Trust, on behalf of the
Class X Certificateholders, to receive any Basis Risk Payment and to secure
their limited recourse obligation to pay to the LIBOR Certificateholders and
the
Class A-IO Certificateholders any Basis Risk Carryover Amounts. The Excess
Reserve Fund Account shall be funded on the Closing Date with an initial deposit
of $1,000 by the Depositor.
(ii) On
each
Distribution Date, the Securities Administrator shall deposit the amount of
any
Basis Risk Payment for such date into the Excess Reserve Fund Account.
(b) (i) On
each
Distribution Date on which there exists a Basis Risk Carryover Amount on any
Class of LIBOR Certificates or Interest-Only Certificates, the Securities
Administrator shall (1) withdraw from the Distribution Account and deposit
in the Excess Reserve Fund Account, as set forth in
Section 4.02(a)(iii)(D), the lesser of (x) the Class X
Distributable Amount (without regard to the reduction in the definition thereof
with respect to the Basis Risk Payment (to the extent remaining after the
distributions specified in Sections 4.02(a)(iii)(A)
through (I))) and (y) the aggregate Basis Risk Carryover Amounts for such
Distribution Date and (2) withdraw from the Excess Reserve Fund Account
amounts necessary to pay to such Class or Classes of LIBOR Certificates and
the Interest-Only Certificates the applicable Basis Risk Carryover Amount.
Such
payments shall be allocated to those Classes on a pro rata
basis
based upon the amount of Basis Risk Carryover Amount owed to each such
Class and shall be paid in the priority set forth in
Sections 4.02(a)(iii)(E).
-58-
(ii) The
Securities Administrator shall account for the Excess Reserve Fund Account
as an
asset of a grantor trust under subpart E, Part I of subchapter J
of the Code and not as an asset of any REMIC created pursuant to this Agreement.
The beneficial owners of the Excess Reserve Fund Account are the Class X
Certificateholders. For all federal tax purposes, amounts transferred by the
Upper Tier REMIC to the Excess Reserve Fund Account shall be treated as
distributions by the Securities Administrator to the Class X
Certificateholders.
(iii) Any
Basis
Risk Carryover Amounts paid by the Securities Administrator to the LIBOR
Certificateholders or holders of Interest-Only Certificates shall be accounted
for by the Securities Administrator as amounts paid first to the Holders of
the
Class X Certificates and then to the respective Class or Classes of
LIBOR Certificates and Interest-Only Certificates. In addition, the Securities
Administrator shall account for such Certificateholders’ rights to receive
payments of Basis Risk Carryover Amounts as rights in a limited recourse
notional principal contract written by the Class X Certificateholders in
favor of such Certificateholders.
(iv) Notwithstanding
any provision contained in this Agreement, the Securities Administrator shall
not be required to make any payments to and from the Excess Reserve Fund Account
except as expressly set forth in this Section 3.01(b) and
Sections 4.02(a)(iii)(E) and (J).
(c) The
Master Servicer shall establish and maintain the Master
Servicing Account on behalf of the Certificateholders. The Master Servicer
shall, promptly upon receipt, deposit in the Master Servicing Account
and retain therein the following:
(i) the
aggregate amount remitted by the Servicers to the Master Servicer pursuant
to
the Servicing Agreements;
(ii) any
amount deposited by the Servicers pursuant to the Servicing Agreements in
connection with any losses on Permitted Investments; and
(iii) any
other
amounts deposited hereunder which are required to be deposited in
the Master Servicing Account.
In
the
event that a Servicer shall remit any amount not required to be remitted,
it may
at any time direct the Master Servicer in writing to withdraw such amount
from
the Master Servicing Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering notice
to the
Master Servicer which describes the amounts deposited in error in the Master
Servicing Account. All funds deposited in the Master Servicing Account shall
be
held by the Master Servicer in trust for the Certificateholders until disbursed
in accordance with this Agreement. On each Master Servicer Remittance Date,
the
entire amount 206115 HASCO 2006-HE2 Pooling and Servicing Agreement on deposit
in the Master Servicing Account (subject to permitted withdrawals as set
forth
above) shall be remitted to the Securities Administrator for deposit into
the
Distribution Account by wire transfer in immediately available
funds.
(d)
The
Securities Administrator shall establish and maintain the Distribution Account
on behalf of the Certificateholders. The Securities Administrator shall,
promptly upon receipt, deposit in the Distribution Account and retain therein
the following:
(i)
the
aggregate amount remitted by the Servicers to the Securities Administrator
pursuant to the Servicing Agreements;
(ii)
any
amount deposited by the Servicers pursuant to the Servicing Agreements in
connection with any losses on Permitted Investments;
(iii)
any
amount remitted by the Master Servicer from the Master Servicing Account
pursuant to this Agreement; and
(iv)any
other amounts deposited hereunder which are required to be deposited in the
Distribution Account.
In
the
event that a Servicer or the Master Servicer shall remit any amount not required
to be remitted, it may at any time direct the Securities Administrator in
writing to withdraw such amount from the Distribution Account, any provision
herein to the contrary notwithstanding. Such direction may be accomplished
by
delivering notice to the Securities Administrator which describes the amounts
deposited in error in the Distribution Account. All funds deposited in the
Distribution Account shall be held by the Securities Administrator in trust
for
the Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 4.02.
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Section
3.02 Investment
of Funds in the Distribution Account and the Master Servicing Account.
(a) During
the Securities Administrator’s Float Period, the Securities Administrator shall
hold the funds in the Distribution Account uninvested, and shall have the
benefit of the use of such funds. During
the Master Servicer’s Float Period, the Master Servicer shall hold the funds in
the Master Servicing Account uninvested, and shall have the benefit of the
use
of such funds.
(b) The
Securities Administrator or its Affiliates are permitted to receive compensation
that could be deemed to be in the Securities Administrator’s economic
self-interest for (i) serving as investment adviser, administrator,
shareholder, servicing agent, custodian or sub-custodian with respect to certain
of the Permitted Investments, (ii) using Affiliates to effect transactions
in certain Permitted Investments and (iii) effecting transactions in
certain Permitted Investments. The
Master Servicer or its Affiliates are permitted to receive compensation that
could be deemed to be in the Master Servicer’s economic self-interest for (i)
serving as investment adviser, administrator, shareholder, servicing agent,
custodian or sub-custodian with respect to certain of the Permitted Investments,
(ii) using Affiliates to effect transactions in certain Permitted Investments
and (iii) effecting transactions in certain Permitted Investments. Such
compensation shall not be considered an amount that is reimbursable for payable
pursuant to this Agreement.
Section
3.03 Report
on Assessment of Compliance with Relevant Servicing Criteria. On or before
March 15th
of each
calendar year for so long as the Depositor is required to file reports with
respect to the Trust under the Exchange Act, commencing in March 2007, the
Master Servicer, the Securities Administrator and the Custodian, each at its
own
expense, shall furnish or otherwise make available, and each such party shall
cause any Servicing Function Participant engaged by it to furnish, each at
its
own expense, to the Securities Administrator and the Depositor, a report on
an
assessment of compliance with the Relevant Servicing Criteria set forth in
Exhibit S that contains (A) a statement by such party of its responsibility
for
assessing compliance with the Relevant Servicing Criteria, (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 8.12, 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 attestation
report on such party’s assessment of compliance with the Relevant Servicing
Criteria as of and for such period.
Promptly
after receipt of each such report on assessment of compliance as well as the
reports on assessment of compliance provided to the Depositor under the
Servicing Agreements, (i) the Depositor shall review each such report and,
if
applicable, consult with the Master Servicer, the Securities Administrator,
any
Servicer and any Servicing Function Participant engaged by any such party as
to
the nature of any material instance of noncompliance with the Relevant Servicing
Criteria by each such party, and (ii) the Master Servicer shall confirm that
the
assessments, taken as a whole, address all of the applicable Servicing Criteria
and taken individually address the Relevant Servicing Criteria for each party
as
set forth on Exhibit S or as set forth in the applicable Servicing
Agreement.
The
Master Servicer shall enforce any obligation of each Servicer to cause to be
delivered to the Master Servicer an annual report on assessment of compliance
within the time frames set
forth
in the related Servicing Agreements, and in such form and
substance as required by the related Servicing Agreements. The Master Servicer
will promptly forward any assessment of compliance it receives from any Servicer
to the Securities Administrator.
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In
the
event the Master Servicer, the Securities Administrator, the Custodian 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 a report on assessment of compliance pursuant to this Section
3.03, or to such other applicable agreement, for the period of time in such
reporting period prior to such termination, assignment or resignation,
notwithstanding any such termination, assignment or resignation.
Section
3.04 Report
on Attestation of Compliance with Relevant Servicing Criteria.
On or
before March 15th
of each
calendar year for so long as the Depositor is required to file reports with
respect to the Trust under the Exchange Act, commencing in March 2007, the
Master Servicer, the Securities Administrator and the Custodian, 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 Master Servicer,
the Securities Administrator, the Custodian or such other Servicing Function
Participants, as the case may be) that is a member of the American Institute
of
Certified Public Accountants to furnish an attestation report to the Securities
Administrator and 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 Public Company Accounting Oversight Board, 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.
Prior
to
executing any Form 10-K, the Master Servicer shall confirm that each assessment
submitted pursuant to Section 3.03 and the Servicing Agreements is coupled
with
an attestation meeting the requirements of this Section and notify the Depositor
of any exceptions.
The
Master Servicer shall enforce any obligation of each Servicer to cause to be
delivered to the Master Servicer an attestation within the time
frames set
forth
in the related Servicing Agreements, and in such form and substance as may
be
required by the related Servicing Agreements. The Master Servicer will promptly
forward any attestation it receives on behalf of any Servicer to the Securities
Administrator.
In
the
event the Master Servicer, the Securities Administrator, 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 other applicable agreement, as the case may be, such party shall cause
a
registered public accounting firm to provide an attestation pursuant to this
Section 3.04, or to such other applicable agreement, notwithstanding any such
termination, assignment or resignation.
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Section
3.05 Annual
Officer’s Certificates.
(a)
Each Form 10-K filed with the Commission shall include a Xxxxxxxx-Xxxxx
Certification exactly as set forth in Exhibit L attached hereto, required to
be
included therewith pursuant to the Xxxxxxxx-Xxxxx Act. The Securities
Administrator and the Custodian shall, and shall cause any Servicing Function
Participant engaged by them to, provide to the Person who signs the
Xxxxxxxx-Xxxxx Certification (the “Certifying
Person”),
by
March 10th
of each
year in which the Trust is subject to the reporting requirements of the Exchange
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 Person acts as an officer, and such entity’s
officers, directors and Affiliates (collectively with the Certifying Person,
“Certification
Parties”)
can
reasonably rely. The senior officer of the Master Servicer in charge of the
master servicing function shall serve as the Certifying Person on behalf of
the
Trust. Such officer of the Certifying Person can be contacted by facsimile
at
000-000-0000. In the event any such party or any Servicing Function Participant
engaged by any 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 3.05 with respect to the period of time it was subject to this
Agreement or any applicable subservicing agreement, as the case may be.
Notwithstanding the foregoing, (i) the Securities Administrator shall not be
required to deliver a Back-Up Certification to the Master Servicer if both
are
the same Person and the Master Servicer is the Certifying Person and (ii) the
Master Servicer shall not be obligated to sign the Xxxxxxxx-Xxxxx Certification
in the event that it does not receive any Back-Up Certification required to
be
furnished to it pursuant to this section or any Servicing
Agreement.
(b) On
or
before March 15th
of each
calendar year for so long as the Depositor is required to file reports with
respect to the Trust under the Exchange Act, commencing in March 2007, the
Master Servicer shall deliver (or otherwise make available) (and the Master
Servicer shall cause any Servicing Function Participant engaged by it to
deliver) to the Depositor and the Securities Administrator, an Officer’s
Certificate substantially in the form of Exhibit U stating, as to the signer
thereof, that (A) a review of such party’s activities during the preceding
calendar year or portion thereof and of such party’s performance under this
Agreement, or such other applicable agreement in the case of a Servicing
Function Participant, 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 a Servicing Function Participant, in all material
respects throughout such year or 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.
In
the
event the Master Servicer or any Servicing Function Participant engaged by
such
party is terminated or resigns pursuant to the terms of this Agreement, or
any
applicable agreement in the case of a Servicing Function Participant, as the
case may be, such party shall provide an Officer’s Certificate covering the
portion of the reporting period for which it served pursuant to this Section
3.05 or to such applicable agreement, as the case may be, notwithstanding any
such termination, assignment or resignation.
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The
Master Servicer shall enforce any obligation of each Servicer to cause to be
delivered to the Master Servicer such annual Officer’s Certificate (in respect
of Item 1123 of Regulation AB) within the time frames set
forth
in the related Servicing Agreements, and in such form and
substance as required by the related Servicing Agreements. The Master Servicer
will promptly forward any such Officer’s Certificate it receives from any
Servicer to the Securities Administrator.
Section
3.06 Indemnification.
(a) Each
of
the Depositor, the Master Servicer, the Securities Administrator, the Custodian
and any Servicing Function Participant (each, an “Indemnifying Party”) engaged
by any such party, shall indemnify and hold harmless the Trustee and each other
Indemnifying Party, and each of its 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 party
of
any if its obligations hereunder, including particularly its obligations to
provide any annual statement of compliance, annual assessment of compliance
with
Servicing Criteria or attestation report or any information, data or materials
required to be included in any Exchange Act report, (b) any material
misstatement or omission in any information, data or materials provided by
such
party including any material misstatement or material omission in (i) any annual
statement of compliance or annual assessment of compliance with Servicing
Criteria 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 or Form 8-K Disclosure Information provided
by
it, or (c) the negligence, bad faith or willful misconduct of such indemnifying
party in connection with its performance hereunder. If the indemnification
provided for herein is unavailable or insufficient to hold harmless the Master
Servicer, the Securities Administrator, the Trustee, the Custodian or the
Depositor, as the case may be, then each Indemnifying Party agrees that it
shall
contribute to the amount paid or payable by the Master Servicer, the Securities
Administrator, the Trustee, the Custodian or the Depositor, as applicable,
as a
result of any claims, losses, damages or liabilities incurred by such party
in
such proportion as is appropriate to reflect the relative fault of the
indemnified party on the one hand and the indemnifying party on the other.
This
indemnification shall survive the termination of this Agreement or the
termination of any party to this Agreement.
(b) The
Depositor, the Securities Administrator,
the
Custodian
and the Trustee shall immediately notify the Master Servicer if a claim is
made
by a third party with respect to this Agreement or the Mortgage Loans which
would entitle the Depositor, the Securities Administrator,
the
Custodian,
the Trustee or the Trust to indemnification from the Master Servicer, whereupon
the Master Servicer shall assume the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it
or
them in respect of such claim. If the Master Servicer and any such indemnified
party have a conflict of interest with respect to any such claim, the
indemnified party shall have the right to retain separate counsel.
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Section
3.07 Advances.
(a) To
the extent provided in the related Servicing Agreement, the amount of P&I
Advances to be made by each Servicer for any Remittance Date shall equal,
subject to Section 3.07(c), the sum of (i) the aggregate amount of
Scheduled Payments (with each interest portion thereof net of the related
Servicing Fee), due during the Due Period immediately preceding such Remittance
Date in respect of the Mortgage Loans, which Scheduled Payments were not
received as of the close of business on the related Determination Date, plus
(ii) with respect to each REO Property, which REO Property was acquired
during or prior to the related Prepayment Period and as to which such REO
Property an REO Disposition did not occur during the related Prepayment Period,
an amount equal to the excess, if any, of the Scheduled Payments (with each
interest portion thereof net of the related Servicing Fee) that would have
been
due on the related Due Date in respect of the related Mortgage Loans, over
the
net income from such REO Property transferred to the Collection Account for
distribution on such Remittance Date.
(b) To
the
extent provided in the related Servicing Agreement, on each Remittance Date,
each Servicer shall remit in immediately available funds to the Master
Servicer or the Securities Administrator, as applicable, an amount equal
to the aggregate amount of P&I Advances, if any, to be made in respect of
the Mortgage Loans and REO Properties for the related Remittance Date either
(i) from its own funds or (ii) from the Collection Account, to the
extent of funds held therein for future distribution (in which case, it will
cause to be made an appropriate entry in the records of the Collection Account
that Amounts Held for Future Distribution have been, as permitted by this
Section 3.07, used by it in discharge of any such P&I Advance) or
(iii) in the form of any combination of (i) and (ii) aggregating the
total amount of P&I Advances to be made by the applicable Servicer with
respect to the Mortgage Loans and REO Properties. To the extent provided in
the
related Servicing Agreement, any Amounts Held for Future Distribution and so
used shall be appropriately reflected in the applicable Servicer’s records and
replaced by such Servicer by deposit in the Collection Account on or before
any
future Remittance Date to the extent required.
(c) To
the
extent provided in the related Servicing Agreement, the obligation of each
Servicer to make such P&I Advances is mandatory, notwithstanding any other
provision of this Agreement but subject to (d) below, and, with respect to
any Mortgage Loan or REO Property, shall continue until a Final Recovery
Determination in connection therewith or the removal thereof from coverage
under
this Agreement, except as otherwise provided in this Section.
(d) To
the
extent provided in the related Servicing Agreement, notwithstanding anything
herein to the contrary, no P&I Advance or Servicing Advance shall be
required to be made hereunder by any Servicer if such P&I Advance or
Servicing Advance would, if made, constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance. To the extent provided in the related
Servicing Agreement, the determination by any Servicer that it has made a
Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance or that any
proposed P&I Advance or Servicing Advance, if made, would constitute a
Nonrecoverable P&I Advance or a Nonrecoverable Servicing Advance,
respectively, shall be evidenced by a Servicing Officer’s certificate of the
applicable Servicer delivered to the Master Servicer. In addition, to the extent
provided in the related Servicing Agreement, the Servicer shall not be required
to advance any Relief Act Interest Shortfalls.
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(e) To
the
extent provided in the related Servicing Agreement, except as otherwise provided
herein, the Servicer shall be entitled to reimbursement pursuant the applicable
section of its related Servicing Agreement for Servicing Advances from
recoveries from the related Mortgagor or from all Liquidation Proceeds and
other
payments or recoveries (including Insurance Proceeds, Condemnation Proceeds
and
Subsequent Recoveries) with respect to the related Mortgage Loan.
ARTICLE
IV
DISTRIBUTIONS
Section
4.01 The
Distribution Account. On
each
Remittance Date, the Securities Administrator shall deposit in the Distribution
Account all funds remitted to it by the Servicers pursuant to the Servicing
Agreements and on each Master Servicer Remittance Date, the Securities
Administrator shall deposit in the Distribution Account all funds remitted
to it
by the Master Servicer pursuant to this Agreement. The Securities Administrator
may retain or withdraw from the Distribution Account, (i) amounts necessary
to
reimburse the Servicers pursuant to the Servicing Agreements, (ii) amounts
necessary to reimburse the Master Servicer for any previously unreimbursed
Advances and any Advances the Master Servicer deems to be nonrecoverable from
the related Mortgage Loan proceeds, (iii) an amount to indemnify the Master
Servicer or the Servicers for amounts due in accordance with this Agreement,
(iv) all amounts representing Prepayment Charges (payable to the Class P
Certificateholders), (v) to reimburse the Master Servicer, the Securities
Administrator, any Servicer or the Trustee, as the case may be, for expenses
reasonably incurred in respect of any breach or defect giving rise to the
repurchase obligation of a Mortgage Loan Seller under a Transfer Agreement
or
the Sponsor under this Agreement that were included in the Repurchase Price
of
the Mortgage Loan, including any expenses arising out of the enforcement of
the
repurchase obligation, to the extent not otherwise paid pursuant to the terms
hereof and (vi) any other amounts that each of the Depositor, Trustee, Master
Servicer and the Securities Administrator is entitled to receive hereunder
for
reimbursement, indemnification or otherwise.
Section
4.02 Priorities
of Distribution. (a) On
each Distribution Date (or, in the case of deposits into the Supplemental
Interest Trust, on the Derivative Payment Date), the Securities Administrator
shall make the disbursements and transfers from amounts then on deposit in
the
Distribution Account and from amounts that are available for payment to the
Swap
Counterparty, and shall allocate such amounts to the interests issued in respect
of each REMIC created pursuant to this Agreement and shall distribute such
amounts in the following order of priority and to the extent of the Available
Funds remaining:
(i) to
the
Final Maturity Reserve Fund, the Supplemental Interest Trust and the holders
of
each Class of LIBOR Certificates and the Class A-IO Certificates in the
following order of priority:
(A) On
the
Distribution Date in December 2016 and each Distribution Date thereafter until
the Final Maturity Reserve Funding Date, from the Interest Remittance Amount,
for deposit into the Final Maturity Reserve Fund, any required Final Maturity
Required Deposit;
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(B) from
the
Interest Remittance Amount related to both Loan Groups, for deposit into the
Supplemental Interest Trust Account, the amount of any Net Derivative Payment
or
Swap Termination Payment (other than a Swap Termination Payment resulting from
a
Swap Counterparty Trigger Event) owed to the Derivative Counterparty, including
any such amounts remaining unpaid from previous Distribution Dates;
(C)
from
the
Interest Remittance Amount related to both Loan Groups, to the Class A-IO
Certificates, the related Senior Interest Payment Amount for such Class;
(D) concurrently:
(1)
from
the remaining Interest Remittance Amount related to the Group I Mortgage Loans,
to the Class I-A Certificates, the related Senior Interest Payment Amount for
such Class of Certificates on such Distribution Date; and
(2)
from
the remaining Interest Remittance Amount related to the Group II Mortgage Loans,
to the Class II-A-1, Class II-A-2, Class II-A-3 and Class II-A-4 Certificates,
pro
rata,
based
on the amounts distributable under this clause (i)(D)(2), the related Senior
Interest Payment Amount for each such Class of Certificates on such Distribution
Date;
provided, that,
if the
Interest Remittance Amount for either Loan Group is insufficient to make the
related payments set forth in clauses (i)(D)(1) or (i)(D)(2) above, any Interest
Remittance Amount relating to the other Loan Group remaining after payment
of
the Senior Interest Payment Amount to the related Certificate Group will be
available to cover that shortfall, such amounts to be allocated to those Classes
experiencing such shortfall on a pro
rata
basis in
proportion to the amounts of such shortfall; and
(E) from
any
remaining Interest Remittance Amount after taking into account the distributions
made under clauses (i)(A) through (i)(D) above, sequentially, to each Class
of
Class M Certificates, in ascending order by numerical Class designation, the
Interest Payment Amount for such Class and such Distribution Date;
(ii) (A) on
each Distribution Date (or, in the case of deposits into the Supplemental
Interest Trust, on the Derivative Payment Date) (1) before the Stepdown
Date or (2) with respect to which a Trigger Event is in effect, to the
Supplemental Interest Trust and to the holders of the Class or Classes of
LIBOR Certificates then entitled to distributions of principal as set forth
below, from amounts remaining on deposit in the Distribution Account after
making distributions pursuant to paragraph (a)(i) of this Section 4.02, an
amount equal to, in the aggregate, the Principal Payment Amount, in the
following amounts and order of priority:
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(a) for
deposit into the Supplemental Interest Trust Account, any Net Derivative Payment
or Swap Termination Payment (other than a Swap Termination Payment resulting
from a Swap Counterparty Trigger Event) owed to the Derivative Counterparty
to
the extent unpaid pursuant to clause (a)(i)(B) of this Section
4.02;
(b) concurrently,
(1) to the Class I-A Certificates, the Group I Principal Payment Amount, until
the Class Certificate Balance of the Class I-A Certificates is reduced to zero
and (2) to the Group II Certificates, the Group II Principal Payment Amount,
until their respective Class Certificate Balances are reduced to zero, allocated
in each case among such Classes of a Certificate Group as set forth in Section
4.02(c);
(c) sequentially,
to each Class of Class M Certificates, in ascending order by numerical
Class designation, until their respective Class Certificate Balances are
reduced to zero; and
(B) on
each
Distribution Date (or, in the case of deposits into the Supplemental Interest
Trust, on the Derivative Payment Date) on and after the Stepdown Date and as
long as a Trigger Event is not in effect, to the Supplemental Interest Trust
and
to the holders of the Class or Classes of LIBOR Certificates then entitled
to distributions of principal, from amounts remaining on deposit in the
Distribution Account after making distributions pursuant to paragraph (a)(i)
of
this Section 4.02, an amount equal to, in the aggregate, the Principal Payment
Amount, in the following amounts and order of priority:
(a) for
deposit into the Supplemental Interest Trust Account, any Net Derivative Payment
or Swap Termination Payment (other than a Swap Termination Payment resulting
from a Swap Counterparty Trigger Event) owed to the Derivative Counterparty
to
the extent unpaid pursuant to clause (a)(i)(B) of this Section
4.02;
(b) concurrently
(1) to the Class I-A Certificates, the Group I Senior Principal Payment Amount,
until the Class Certificate Balance of the Class I-A Certificates is reduced
to
zero and (2) to the Group II Certificates, the Group II Senior Principal Payment
Amount, until their respective Class Certificate Balances are reduced to zero,
allocated in each case among such Classes of a Certificate Group as described
in
Section 4.02(c);
(c) sequentially,
to each Class of Class M Certificates, in the order set forth in the
definition of Class M Principal Payment Amount, the Class M Principal
Payment Amount for the related Class of Class M certificates, until their
respective Class Certificate Balances are reduced to zero;
(iii) any
amounts remaining after the distributions in paragraphs (i) and (ii) of
this Section 4.02(a), plus, as specifically indicated below, from amounts on
deposit in the Excess Reserve Fund Account, shall be distributed in the
following order of priority:
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(A) to
the
Class A-IO Certificates, any Senior Interest Payment Amount not paid pursuant
to
clause (a)(i)(C) of this Section 4.02;
(B) to
the
Class A Certificates, any Senior Interest Payment Amount not paid pursuant
to
clause (a)(i)(D) of this Section 4.02 allocated pro
rata
among
such Classes in proportion to the amount of the unpaid Senior Interest Payment
Amount for such Classes;
(C) sequentially,
to the holders of the Class M Certificates, in ascending order by numerical
Class designation, first,
any
Interest Payment Amount for any such Class not paid for such Distribution Date
pursuant to clause (a)(i)(E) of this Section 4.02, second,
any
Interest Carry Forward Amount for any such Class, and third,
any
Unpaid Realized Loss Amount for any such Class;
(D) to
the
Excess Reserve Fund Account, the amount of any Basis Risk Payment for such
Distribution Date;
(E) from
amounts on deposit in the Excess Reserve Fund Account with respect to such
Distribution Date, an amount equal to any unpaid Basis Risk Carryover Amount
with respect to each Class of LIBOR Certificates and the Class A-IO Certificates
for such Distribution Date, allocated in the same order and priority as set
forth in clauses (a)(i)(C), (a)(i)(D) and (a)(i)(E) of this Section
4.02;
(F) if
a
Final Maturity OC Trigger Event is in effect, in the following order of
priority:
|
(1)
|
pro
rata,
based on the aggregate Class Certificate Balance of the Group I
Certificates and the aggregate Class Certificate Balance of the Group
II
Certificates,
|
|
(x)
|
to
the Class I-A Certificates until the Class Certificate Balance thereof
has
been reduced to zero;
|
|
(y)
|
to
the Class II-A-1, Class II-A-2 Class II-A-3 and Class II-A-4 Certificates,
sequentially, in that order, until the Class Certificate Balances
thereof
have been reduced to zero;
|
|
(2)
|
sequentially
to each class of Class M Certificates, in ascending order by numerical
class designation, until their respective Class Certificate Balances
are
reduced to zero;
|
(G) to
the
Credit Risk Manager, the Credit Risk Manager Fee;
(H) On
the
Distribution Date occurring in December 2011 (or the next succeeding
Distribution Date on which sufficient funds are available in the Distribution
Account to make such distributions to the Class P Certificates), $100 to the
Class P Certificates in payment of its Class P Principal Amount;
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(I) to
the
Swap Counterparty, any Swap Termination Payment resulting from a Swap
Counterparty Trigger Event;
(J) to
the
holders of the Class X Certificates, the remainder of the Class X
Distributable Amount not distributed pursuant to Sections 4.02(a)(iii)(A)
through (I); and
(K) to
the
holders of the Class R Certificates, any remaining amount;
If
on any
Distribution Date, as a result of the foregoing allocation rules, any
Class of Class A Certificates does not receive in full the related
Senior Interest Payment Amount, then such shortfall will be allocated to the
Holders of such Class, with interest thereon, on future Distribution Dates,
as
Interest Carry Forward Amounts, subject to the priorities described
above.
(b) On
each
Distribution Date, prior to any distributions on any other Class of
Certificates, all amounts representing Prepayment Charges from the Mortgage
Loans received during the related Prepayment Period shall be distributed by
the
Securities Administrator to the holders of the Class P
Certificates.
(c) All
principal distributions to the holders of the Class A Certificates (other than
the Class A-IO Certificates) on any Distribution Date prior to the Stepdown
Date
will be allocated concurrently to (i) the Group I Certificates and (ii) the
Group II Certificates based on the Group Principal Allocation Percentage for
the
Group I Certificates and the Group II Certificates, as applicable, for that
Distribution Date. On or after the Stepdown Date, as long as no Trigger Event
is
in effect, principal distributions to the holders of the Certificates of either
Certificate Group will be determined based on the Group I Senior Principal
Payment Amount or Group II Senior Principal Payment Amount, as applicable.
However, if the Class Certificate Balances of the Certificates in either
Certificate Group are reduced to zero before the Stepdown Date, then the
remaining amount of principal distributions distributable to the Certificates
of
the retired Certificate Group on that Distribution Date, and on all subsequent
Distribution Dates, will be distributed to the holders of the Certificates
in
the other Certificate Group remaining outstanding, in accordance with the
principal distribution priorities described in Section 4.02(a)(ii)(A)(b) for
such Certificate Group and this Section 4.02(c). If the Class Certificate
Balances of the Certificates in either Certificate Group are reduced to zero
on
or after the Stepdown Date, then the remaining amount of principal distributions
distributable to the Certificates of the retired Certificate Group on that
Distribution Date, and all subsequent Distribution Dates, will be distributed
to
the holders of the Certificates of the Certificate Group remaining outstanding,
in accordance with the priorities described in Section 4.02(a)(ii)(B)(b) for
such Certificate Group and this Section 4.02(c), but without regard to the
related Certificate Group’s Senior Principal Payment Amount.
Any
principal distributions allocated to the Group II Certificates will be allocated
sequentially as follows:
(i) to
the
Class II-A-1 Certificates, until the Class Certificate Balance of such Class
has
been reduced to zero;
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(ii)
to the
Class II-A-2 Certificates, until the Class Certificate Balance of such Class
has
been reduced to zero;
(iii) to
the
Class II-A-3 Certificates, until the Class Certificate Balance of such Class
has
been reduced to zero; and
(iv) to
the
Class II-A-4 Certificates, until the Class Certificate Balance of such Class
has
been reduced to zero.
Notwithstanding
the above paragraph, on and after the Distribution Date on which the aggregate
Class Certificate Balances of the Class M Certificates and the
Overcollateralization Amount have been reduced to zero, any principal
distributions allocated to the Group II Certificates are required to be
allocated pro
rata
among
the Classes of Group II Certificates, based upon their respective Class
Certificate Balances.
(d) On
any
Distribution Date, any Relief Act Shortfalls and Net Prepayment Interest
Shortfalls for such Distribution Date shall be allocated by the Securities
Administrator as a reduction in the following order:
(i) First,
to the
amount of interest payable to the Class X Certificates; and
(ii) Second,
pro
rata,
as a
reduction of the Interest Payment Amount for the Class A and Class M
Certificates, based on the amount of interest to which such Classes would
otherwise be entitled.
(e) On
any
Distribution Date (or any Derivative Payment Date, as applicable), the
Securities Administrator shall distribute any Swap Amount and Cap Amount for
such date as follows:
(i) to
the
Derivative Counterparty, any Net Derivative Payment owed to the Derivative
Counterparty pursuant to the Swap Agreement for such Derivative Payment Date
to
the extent not previously paid pursuant to Sections 4.02(a)(i)(B),
4.02(a)(ii)(A) or 4.02(a)(ii)(B);
(ii) to
the
Swap Counterparty, any Swap Termination Payment not resulting from a Swap
Counterparty Trigger Event owed to the Swap Counterparty pursuant to the Swap
Agreement for such Derivative Payment Date;
(iii) to
the
extent not paid and in the order of priority provided in clauses (a)(i)(C),
(a)(i)(D) and (a)(i)(E) of this Section 4.02, to the Class A Certificates any
Senior Interest Payment Amounts, and to the Class M Certificates, in ascending
order by numerical class designation, any Interest Payment Amounts;
(iv) to
the
Class A Certificates (other than the Class A-IO Certificates) and the Class
M
Certificates in the order of priority set forth in clauses (a)(ii)(A)(b),
(a)(ii)(A)(c), (a)(ii)(B)(b) and (a)(ii)(B)(c) of this Section 4.02, an amount
necessary to maintain the Overcollateralization Target Amount for such
Distribution Date after giving effect to distributions pursuant to such
clauses;
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(v) to
the
extent not paid pursuant to clause (a)(iii)(C) of this Section 4.02,
sequentially, to the each Class of Class M Certificates, in ascending order
by
numerical Class designation, first,
any
Interest Carry Forward Amount for that Class, and second,
any
Unpaid Realized Loss Amount for that Class;
(vi) to
the
extent not paid pursuant to clause (a)(iii)(D) of this Section 4.02, to the
Excess Reserve Fund Account, the amount of any Basis Risk Payment for such
Distribution Date;
(vii) to
the
extent not paid pursuant to clause (a)(iii)(E) of this Section 4.02, to the
LIBOR Certificates and the Class A-IO Certificates, any remaining unpaid Basis
Risk Carryover Amount with respect to such Certificates for that Distribution
Date, allocated in the same order and priority as set forth in such
clause;
(viii) to
the
extent not paid pursuant to clause (a)(iii)(G) of this Section 4.02, to the
Credit Risk Manager, the Credit Risk Manager Fee;
(ix) if
applicable, to the Swap Termination Receipts Account or Cap Termination Receipts
Account for application to the purchase of a replacement swap agreement or
replacement cap agreement pursuant to Section 4.08;
(x) to
the
extent not paid pursuant to clause (a)(iii)(I) of this Section 4.02, to the
Swap
Counterparty, any Swap Termination Payment resulting from a Swap Counterparty
Trigger Event; and
(xi) to
the
extent not paid pursuant to clause (a)(iii)(J) of this Section 4.02, to the
holders of the Class X Certificates, the remainder of the Class X
Distributable Amount.
With
respect to each Distribution Date, the sum of all amounts distributed pursuant
to priorities (e)(iv) and (e)(v) second
of this
Section 4.02(e) cannot exceed the amount of cumulative Realized Losses incurred
up to such Distribution Date minus any distributions made on previous
Distribution Dates pursuant to such priorities.
(f) On
the
earlier of the Distribution Date in December 2036 and the termination of the
Trust Fund, all amounts on deposit in the Final Maturity Reserve Fund will
be
distributed in the following order of priority:
(i) pro
rata,
based on the aggregate Class Certificate Balance of the Group I Certificates
and
the aggregate Class Certificate Balance of the Group II
Certificates:
(A) to
the
Class I-A Certificates until the Class Certificate Balance thereof has been
reduced to zero;
(B) to
the
Class II-A-1, Class II-A-2, Class II-A-3 and Class II-A-4 Certificates,
sequentially, in that order, until their respective Class Certificate Balances
have been reduced to zero;
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(ii) sequentially,
to each class of the Class M Certificates, in ascending order by numerical
class
designation, until their respective Class Certificate Balances have been reduced
to zero; and
(iii) to
the
Class X Certificates, all remaining amounts.
Section
4.03 Monthly
Statements to Certificateholders. (a) Not
later than each Distribution Date, the Securities Administrator shall make
available to each Certificateholder, the Master Servicer, the Servicers, the
Credit Risk Manager, the Depositor, the Trustee, the Derivative Counterparty
and
each Rating Agency a statement, based on information provided by the Servicers
and the Derivative Counterparty, setting forth with respect to the related
distribution:
(i) the
amount thereof allocable to principal (other than with respect to the
Interest-Only Certificates), separately identifying the aggregate amount of
any
Principal Prepayments, Liquidation Proceeds and Subsequent
Recoveries;
(ii) the
amount thereof allocable to interest, any Interest Carry Forward Amounts
included in such distribution and any remaining Interest Carry Forward Amounts
after giving effect to such distribution, any Basis Risk Carryover Amount for
such Distribution Date and the amount of all Basis Risk Carryover Amount covered
by withdrawals from the Excess Reserve Fund Account on such Distribution
Date;
(iii) if
the
distribution to the Holders of such Class of Certificates is less than the
full amount that would be distributable to such Holders if there were sufficient
funds available therefor, the amount of the shortfall and the allocation thereof
as between principal and interest, including any Basis Risk Carryover Amount
not
covered by amounts in the Excess Reserve Fund Account;
(iv) the
Class Certificate Balance of each Class of Certificates after giving
effect to the distribution of principal on such Distribution Date;
(v) the
Pool
Stated Principal Balance for the following Distribution Date;
(vi) the
amount of the Expense Fees (in the aggregate and separately stated) paid to
or
retained by the Servicers and any Subservicer with respect to such Distribution
Date;
(vii) the
Interest Rate for each such Class of Certificates with respect to such
Distribution Date;
(viii) the
amount of P&I Advances included in the distribution on such Distribution
Date and the aggregate amount of P&I Advances outstanding as of the close of
business on the Determination Date immediately preceding such Distribution
Date;
(ix) by
Loan
Group and in the aggregate, the number and aggregate outstanding principal
balances of Mortgage Loans (except those Mortgage Loans that are liquidated
as
of the end of the related Prepayment Period) (1) as to which the Scheduled
Payment is delinquent 31 to 60 days, 61 to 90 days and 91 or
more days, (2) that have become REO Property, (3) that are in
foreclosure and (4) that are in bankruptcy, in each case as of the close of
business on the last Business Day of the immediately preceding
month;