HSI ASSET SECURITIZATION CORPORATION, Depositor NC CAPITAL CORPORATION, Mortgage Loan Seller, WELLS FARGO BANK, N.A., Master Servicer and Securities Administrator JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, Servicer and DEUTSCHE BANK NATIONAL TRUST...
Execution
HSI
ASSET
SECURITIZATION CORPORATION,
Depositor
NC
CAPITAL CORPORATION,
Mortgage
Loan Seller,
XXXXX
FARGO BANK, N.A.,
Master
Servicer and Securities Administrator
JPMORGAN
CHASE BANK, NATIONAL ASSOCIATION,
Servicer
and
DEUTSCHE
BANK NATIONAL TRUST COMPANY,
Trustee
and Custodian
Dated
as
of February 1, 2006
HSI
ASSET
SECURITIZATION CORPORATION TRUST 2006-NC1
MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 2006-NC1
TABLE
OF
CONTENTS
|
Page
|
||
|
ARTICLE
I
|
||
|
DEFINITIONS
|
||
|
ARTICLE
II
|
||
|
CONVEYANCE
OF MORTGAGE LOANS;
|
||
|
REPRESENTATIONS
AND WARRANTIES
|
||
|
Section
2.01
|
Conveyance
of Mortgage Loans
|
46
|
|
Section
2.02
|
Acceptance
by the Custodian of the Mortgage Loans
|
50
|
|
Section
2.03
|
Representations,
Warranties and Covenants of the Mortgage Loan Seller and the
Servicer;
Remedies for Breaches of Representations and Warranties with
Respect to
the Mortgage Loans
|
51
|
|
Section
2.04
|
Execution
and Delivery of Certificates
|
55
|
|
Section
2.05
|
REMIC
Matters
|
55
|
|
Section
2.06
|
Representations
and Warranties of the Depositor
|
55
|
|
ARTICLE
III
|
||
|
ADMINISTRATION
AND SERVICING
|
||
|
OF
MORTGAGE LOANS
|
||
|
Section
3.01
|
Servicer
to Service Mortgage Loans
|
56
|
|
Section
3.02
|
Subservicing
Agreements between Servicer and Subservicers; Use of
Subcontractors
|
58
|
|
Section
3.03
|
Successor
Subservicers
|
60
|
|
Section
3.04
|
Liability
of the Servicer
|
60
|
|
Section
3.05
|
No
Contractual Relationship between Subservicers and the Master
Servicer
|
61
|
|
Section
3.06
|
Assumption
or Termination of Subservicing Agreements by Master
Servicer
|
61
|
|
Section
3.07
|
Collection
of Certain Mortgage Loan Payments
|
61
|
|
Section
3.08
|
Subservicing
Accounts
|
64
|
|
Section
3.09
|
Collection
of Taxes, Assessments and Similar Items; Escrow Accounts
|
65
|
|
Section
3.10
|
Collection
Account
|
66
|
|
Section
3.11
|
Withdrawals
from the Collection Account
|
67
|
|
Section
3.12
|
Investment
of Funds in the Collection Account, Escrow Accounts and the Distribution
Account
|
68
|
-i-
|
Section
3.13
|
Maintenance
of Hazard Insurance and Errors and Omissions and Fidelity
Coverage
|
70
|
|
Section
3.14
|
Enforcement
of Due-On-Sale Clauses; Assumption Agreements
|
71
|
|
Section
3.15
|
Realization
upon Defaulted Mortgage Loans
|
72
|
|
Section
3.16
|
Release
of Mortgage Files
|
73
|
|
Section
3.17
|
Title,
Conservation and Disposition of REO Property
|
74
|
|
Section
3.18
|
Notification
of Adjustments
|
76
|
|
Section
3.19
|
Access
to Certain Documentation and Information Regarding the Mortgage
Loans
|
76
|
|
Section
3.20
|
Documents,
Records and Funds in Possession of the Servicer to Be Held for
the
Trustee
|
77
|
|
Section
3.21
|
Servicing
Compensation
|
77
|
|
Section
3.22
|
Report
on Assessment of Compliance with Relevant Servicing
Criteria.
|
78
|
|
Section
3.23
|
Report
on Attestation of Compliance with Relevant Servicing
Criteria.
|
79
|
|
Section
3.24
|
Annual
Officer’s Certificates.
|
79
|
|
Section
3.25
|
Master
Servicer to Act as Servicer
|
80
|
|
Section
3.26
|
Compensating
Interest
|
81
|
|
Section
3.27
|
Credit
Reporting; Xxxxx-Xxxxx-Xxxxxx Act
|
81
|
|
Section
3.28
|
[Reserved]
|
81
|
|
Section
3.29
|
Obligations
of the Custodian; Indemnification.
|
81
|
|
Section
3.30
|
Notifications
to Parties.
|
82
|
|
ARTICLE
IV
|
||
|
DISTRIBUTIONS
AND
|
||
|
ADVANCES
BY THE SERVICER
|
||
|
Section
4.01
|
Advances
|
83
|
|
Section
4.02
|
Priorities
of Distribution
|
84
|
|
Section
4.03
|
Monthly
Statements to Certificateholders
|
89
|
|
Section
4.04
|
Certain
Matters Relating to the Determination of LIBOR
|
92
|
|
Section
4.05
|
Allocation
of Applied Realized Loss Amounts
|
93
|
|
Section
4.06
|
Supplemental
Interest Trust.
|
93
|
|
Section
4.07
|
Rights
of the Swap Counterparty.
|
94
|
|
Section
4.08
|
Termination
Receipts.
|
95
|
|
ARTICLE
V
|
||
|
THE
CERTIFICATES
|
||
|
Section
5.01
|
The
Certificates
|
96
|
|
Section
5.02
|
Certificate
Register; Registration of Transfer and Exchange of
Certificates
|
97
|
|
Section
5.03
|
Mutilated,
Destroyed, Lost or Stolen Certificates
|
103
|
|
Section
5.04
|
Persons
Deemed Owners
|
103
|
|
Section
5.05
|
Access
to List of Certificateholders’ Names and Addresses
|
103
|
|
Section
5.06
|
Maintenance
of Office or Agency
|
104
|
-ii-
|
ARTICLE
VI
|
||
|
THE
DEPOSITOR AND THE SERVICER
|
||
|
Section
6.01
|
Respective
Liabilities of the Depositor and the Servicer
|
104
|
|
Section
6.02
|
Merger
or Consolidation of the Depositor or the Servicer
|
104
|
|
Section
6.03
|
Limitation
on Liability of the Depositor, the Servicer and Others.
|
104
|
|
Section
6.04
|
Limitation
on Resignation of the Servicer.
|
105
|
|
Section
6.05
|
Additional
Indemnification by the Servicer; Third Party Claims.
|
105
|
|
Section
6.06
|
Compliance
with Regulation AB; Cooperation of Parties
|
106
|
|
ARTICLE
VII
|
||
|
DEFAULT
|
||
|
Section
7.01
|
Events
of Default
|
107
|
|
Section
7.02
|
Master
Servicer to Act; Appointment of Successor
|
109
|
|
Section
7.03
|
Notification
to Certificateholders
|
110
|
|
ARTICLE
VIII
|
||
|
CONCERNING
THE TRUSTEE
|
||
|
Section
8.01
|
Duties
of the Trustee
|
111
|
|
Section
8.02
|
Certain
Matters Affecting the Trustee
|
112
|
|
Section
8.03
|
Trustee
Not Liable for Certificates or Mortgage Loans
|
113
|
|
Section
8.04
|
Trustee
May Own Certificates
|
113
|
|
Section
8.05
|
Trustee’s
Fees Indemnification and Expenses
|
113
|
|
Section
8.06
|
Eligibility
Requirements for the Trustee
|
114
|
|
Section
8.07
|
Resignation
and Removal of the Trustee
|
115
|
|
Section
8.08
|
Successor
Trustee
|
115
|
|
Section
8.09
|
Merger
or Consolidation of the Trustee
|
116
|
|
Section
8.10
|
Appointment
of Co-Trustee or Separate Trustee
|
116
|
|
Section
8.11
|
Tax
Matters
|
117
|
|
Section
8.12
|
Commission
Reporting
|
121
|
|
Section
8.13
|
Tax
Classification of the Excess Reserve Fund Account and the Supplemental
Interest Trust
|
127
|
|
ARTICLE
IX
|
||
|
ADMINISTRATION
OF THE MORTGAGE LOANS
|
||
|
BY
THE MASTER SERVICER
|
||
|
Section
9.01
|
Duties
of the Master Servicer; Enforcement of Servicer
Obligations.
|
127
|
-iii-
|
Section
9.02
|
Assessment,
Attestation Annual Statement as to Compliance of the Master
Servicer
|
128
|
|
Section
9.03
|
[Reserved]
|
128
|
|
Section
9.04
|
Maintenance
of Fidelity Bond and Errors and Omissions Insurance.
|
128
|
|
Section
9.05
|
Representations
and Warranties of the Master Servicer
|
129
|
|
Section
9.06
|
Master
Servicer Events of Default
|
130
|
|
Section
9.07
|
Waiver
of Default.
|
132
|
|
Section
9.08
|
Successor
to the Master Servicer.
|
132
|
|
Section
9.09
|
Compensation
of the Master Servicer.
|
133
|
|
Section
9.10
|
Merger
or Consolidation.
|
133
|
|
Section
9.11
|
Resignation
of the Master Servicer.
|
133
|
|
Section
9.12
|
Assignment
or Delegation of Duties by the Master Servicer.
|
134
|
|
Section
9.13
|
Limitation
on Liability of the Master Servicer.
|
134
|
|
Section
9.14
|
Indemnification;
Third Party Claims.
|
135
|
|
ARTICLE
X
|
||
|
CONCERNING
THE SECURITIES ADMINISTRATOR
|
||
|
Section
10.01
|
Duties
of Securities Administrator.
|
136
|
|
Section
10.02
|
Certain
Matters Affecting the Securities Administrator.
|
137
|
|
Section
10.03
|
Securities
Administrator Not Liable for Certificates or Mortgage
Loans.
|
138
|
|
Section
10.04
|
Securities
Administrator May Own Certificates.
|
139
|
|
Section
10.05
|
Securities
Administrator’s Fees and Expenses.
|
139
|
|
Section
10.06
|
Eligibility
Requirements for Securities Administrator.
|
140
|
|
Section
10.07
|
Resignation
and Removal of Securities Administrator.
|
140
|
|
Section
10.08
|
Successor
Securities Administrator.
|
141
|
|
Section
10.09
|
Merger
or Consolidation of Securities Administrator.
|
142
|
|
Section
10.10
|
Assignment
or Delegation of Duties by the Securities Administrator.
|
142
|
|
Section
10.11
|
Attestation,
Annual Statement of Compliance of the Securities
Administrator
|
142
|
|
ARTICLE
XI
|
||
|
TERMINATION
|
||
|
Section
11.01
|
Termination
upon Liquidation or Purchase of the Mortgage Loans
|
143
|
|
Section
11.02
|
Final
Distribution on the Certificates
|
143
|
|
Section
11.03
|
Additional
Termination Requirements
|
145
|
|
ARTICLE
XII
|
||
|
MISCELLANEOUS
PROVISIONS
|
||
|
Section
12.01
|
Amendment
|
145
|
|
Section
12.02
|
Recordation
of Agreement; Counterparts
|
147
|
-iv-
|
Section
12.03
|
Governing
Law
|
148
|
|
Section
12.04
|
Intention
of Parties
|
148
|
|
Section
12.05
|
Notices
|
149
|
|
Section
12.06
|
Severability
of Provisions
|
150
|
|
Section
12.07
|
Assignment
|
150
|
|
Section
12.08
|
Limitation
on Rights of Certificateholders
|
150
|
|
Section
12.09
|
Inspection
and Audit Rights
|
151
|
|
Section
12.10
|
Certificates
Nonassessable and Fully Paid
|
151
|
|
Section
12.11
|
Rule of
Construction
|
152
|
|
Section
12.12
|
Waiver
of Jury Trial
|
152
|
-v-
|
SCHEDULES
|
|
|
Schedule I
|
Mortgage
Loan Schedule
|
|
Schedule II
|
Representations
and Warranties of JPMorgan Chase Bank, National Association, as
Servicer
|
|
Schedule III
|
Representations
and Warranties of NC Capital Corporation, as Mortgage Loan
Seller
|
|
Schedule IV
|
Representations
and Warranties of NC Capital Corporation as to the Individual 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
|
Form
of Rule 144A 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) with Form 10-K
|
|
Exhibit M
|
Form
of Servicer (or Servicing Function Participant) Back-Up
Certification
|
|
Exhibit
N-1
|
Form
of Monthly Remittance Advice
|
|
Exhibit
N-2
|
Standard
Layout for Monthly Defaulted Loan Report
|
|
Exhibit
N-3
|
Form
332 Realized Loss Report
|
-vi-
|
Exhibit
O
|
Form
of Swap Agreement
|
|
Exhibit
P
|
Form
of Cap Agreement
|
|
Exhibit
Q
|
Form
of Amended and Restated Master Mortgage Loan Purchase and Interim
Servicing Agreement
|
|
Exhibit
R
|
[Reserved]
|
|
Exhibit
S
|
Servicing
Criteria to be Addressed in Report on Assessment of
Compliance
|
|
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
|
-vii-
THIS
POOLING AND SERVICING AGREEMENT, dated as of February 1, 2006, among HSI ASSET
SECURITIZATION CORPORATION, as depositor (the “Depositor”),
NC
CAPITAL CORPORATION, a California Corporation, as mortgage loan seller (the
“Mortgage
Loan Seller”),
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as servicer (the “Servicer”),
XXXXX
FARGO BANK, N.A., a national banking association, as master servicer (in such
capacity, the “Master
Servicer”)
and
securities administrator (in such capacity, the “Securities
Administrator”),
and
DEUTSCHE BANK NATIONAL TRUST COMPANY, a national banking association, as trustee
(in such capacity, the “Trustee”)
and
custodian (in such capacity, the “Custodian”).
WITNESSETH:
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, (u) 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
and
(vi) the obligations 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 three real estate mortgage investment
conduits under Section 860D of the Code (each a “REMIC”
or,
in
the alternative, “REMIC
1,”
REMIC
2”
and
“REMIC
3,”;
REMIC
3 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 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 2, other than the Class LT2-R interest, and each such Lower Tier Interest
is hereby designated as a regular interest in REMIC 2 for purposes of the REMIC
Provisions. REMIC 2 shall hold as its assets the uncertificated Lower Tier
Interests in REMIC 1, 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 and REMIC 2 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
|
$
|
25,780,631.20
|
(1
|
)
|
|||
|
LT1-F1
|
$
|
3,834,949.26
|
(2
|
)
|
|||
|
LT1-V1
|
$
|
3,834,949.26
|
(3
|
)
|
|||
|
LT1-F2
|
$
|
4,392,183.35
|
(2
|
)
|
|||
|
LT1-V2
|
$
|
4,392,183.35
|
(3
|
)
|
|||
|
LT1-F3
|
$
|
4,930,349.57
|
(2
|
)
|
|||
|
LT1-V3
|
$
|
4,930,349.57
|
(3
|
)
|
|||
|
LT1-F4
|
$
|
5,443,289.45
|
(2
|
)
|
|||
|
LT1-V4
|
$
|
5,443,289.45
|
(3
|
)
|
|||
|
LT1-F5
|
$
|
5,924,612.01
|
(2
|
)
|
|||
|
LT1-V5
|
$
|
5,924,612.01
|
(3
|
)
|
|||
|
LT1-F6
|
$
|
6,368,494.20
|
(2
|
)
|
|||
|
LT1-V6
|
$
|
6,368,494.20
|
(3
|
)
|
|||
|
LT1-F7
|
$
|
6,071,750.18
|
(2
|
)
|
|||
|
LT1-V7
|
$
|
6,071,750.18
|
(3
|
)
|
|||
|
LT1-F8
|
$
|
5,776,668.58
|
(2
|
)
|
|||
|
LT1-V8
|
$
|
5,776,668.58
|
(3
|
)
|
|||
|
LT1-F9
|
$
|
5,495,927.68
|
(2
|
)
|
|||
|
LT1-V9
|
$
|
5,495,927.68
|
(3
|
)
|
|||
|
LT1-F10
|
$
|
5,228,830.54
|
(2
|
)
|
|||
|
LT1-V10
|
$
|
5,228,830.54
|
(3
|
)
|
|||
|
LT1-F11
|
$
|
4,974,714.07
|
(2
|
)
|
|||
|
LT1-V11
|
$
|
4,974,714.07
|
(3
|
)
|
|||
|
LT1-F12
|
$
|
4,732,947.44
|
(2
|
)
|
|||
|
LT1-V12
|
$
|
4,732,947.44
|
(3
|
)
|
|||
|
LT1-F13
|
$
|
4,502,930.45
|
(2
|
)
|
|||
|
LT1-V13
|
$
|
4,502,930.45
|
(3
|
)
|
|||
|
LT1-F14
|
$
|
4,284,092.08
|
(2
|
)
|
|||
|
LT1-V14
|
$
|
4,284,092.08
|
(3
|
)
|
|||
|
LT1-F15
|
$
|
4,077,346.63
|
(2
|
)
|
|||
|
LT1-V15
|
$
|
4,077,346.63
|
(3
|
)
|
|||
|
LT1-F16
|
$
|
3,879,032.23
|
(2
|
)
|
|||
|
LT1-V16
|
$
|
3,879,032.23
|
(3
|
)
|
|||
|
LT1-F17
|
$
|
6,962,774.90
|
(2
|
)
|
|||
|
LT1-V17
|
$
|
6,962,774.90
|
(3
|
)
|
|||
|
LT1-F18
|
$
|
6,326,980.58
|
(2
|
)
|
|||
|
LT1-V18
|
$
|
6,326,980.58
|
(3
|
)
|
|||
|
LT1-F19
|
$
|
5,723,968.20
|
(2
|
)
|
-2-
|
Class
Designation
|
Initial
Principal Balance
|
Interest
Rate
|
|||||
|
LT1-V19
|
$
|
5,723,968.20
|
(3
|
)
|
|||
|
LT1-F20
|
$
|
5,151,079.61
|
(2
|
)
|
|||
|
LT1-V20
|
$
|
5,151,079.61
|
(3
|
)
|
|||
|
LT1-F21
|
$
|
4,639,019.07
|
(2
|
)
|
|||
|
LT1-V21
|
$
|
4,639,019.07
|
(3
|
)
|
|||
|
LT1-F22
|
$
|
2,699,234.04
|
(2
|
)
|
|||
|
LT1-V22
|
$
|
2,699,234.04
|
(3
|
)
|
|||
|
LT1-F23
|
$
|
2,514,317.96
|
(2
|
)
|
|||
|
LT1-V23
|
$
|
2,514,317.96
|
(3
|
)
|
|||
|
LT1-F24
|
$
|
2,370,595.08
|
(2
|
)
|
|||
|
LT1-V24
|
$
|
2,370,595.08
|
(3
|
)
|
|||
|
LT1-F25
|
$
|
3,059,691.97
|
(2
|
)
|
|||
|
LT1-V25
|
$
|
3,059,691.97
|
(3
|
)
|
|||
|
LT1-F26
|
$
|
2,815,452.51
|
(2
|
)
|
|||
|
LT1-V26
|
$
|
2,815,452.51
|
(3
|
)
|
|||
|
LT1-F27
|
$
|
2,578,987.17
|
(2
|
)
|
|||
|
LT1-V27
|
$
|
2,578,987.17
|
(3
|
)
|
|||
|
LT1-F28
|
$
|
2,364,027.49
|
(2
|
)
|
|||
|
LT1-V28
|
$
|
2,364,027.49
|
(3
|
)
|
|||
|
LT1-F29
|
$
|
1,133,930.01
|
(2
|
)
|
|||
|
LT1-V29
|
$
|
1,133,930.01
|
(3
|
)
|
|||
|
LT1-F30
|
$
|
1,730,842.06
|
(2
|
)
|
|||
|
LT1-V30
|
$
|
1,730,842.06
|
(3
|
)
|
|||
|
LT1-F31
|
$
|
1,308,461.62
|
(2
|
)
|
|||
|
LT1-V31
|
$
|
1,308,461.62
|
(3
|
)
|
|||
|
LT1-F32
|
$
|
1,223,918.26
|
(2
|
)
|
|||
|
LT1-V32
|
$
|
1,223,918.26
|
(3
|
)
|
|||
|
LT1-F33
|
$
|
1,149,695.58
|
(2
|
)
|
|||
|
LT1-V33
|
$
|
1,149,695.58
|
(3
|
)
|
|||
|
LT1-F34
|
$
|
1,079,969.16
|
(2
|
)
|
|||
|
LT1-V34
|
$
|
1,079,969.16
|
(3
|
)
|
|||
|
LT1-F35
|
$
|
1,014,466.88
|
(2
|
)
|
|||
|
LT1-V35
|
$
|
1,014,466.88
|
(3
|
)
|
|||
|
LT1-F36
|
$
|
15,688,704.61
|
(2
|
)
|
|||
|
LT1-V36
|
$
|
15,688,704.61
|
(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-
|
(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
Premiums collected during the preceding Prepayment Period to the Class LT1-V36
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 Class LT2-R
interest) is hereby designated as a regular interest in REMIC 2 (the “REMIC 2
Regular Interests”):
|
REMIC
2
Lower
Tier
Class
Designation
|
REMIC
2
Lower
Tier
Interest
Rate
|
Initial
Class
Principal
Amount
|
Corresponding
Class of Certificate(s)
|
|||
|
Class
LT2-I-A
|
(1)
|
(4)
|
I-A
|
|||
|
Class
LT2-II-A
|
(1)
|
(4)
|
II-A
|
|||
|
Class
LT2-M1
|
(1)
|
(4)
|
M-1
|
|||
|
Class
LT2-M2
|
(1)
|
(4)
|
M-2
|
|||
|
Class
LT2-M3
|
(1)
|
(4)
|
M-3
|
|||
|
Class
LT2-M4
|
(1)
|
(4)
|
M-4
|
|||
|
Class
LT2-M5
|
(1)
|
(4)
|
M-5
|
|||
|
Class
LT2-M6
|
(1)
|
(4)
|
M-6
|
|||
|
Class
LT2-M7
|
(1)
|
(4)
|
M-7
|
|||
|
Class
LT2-M8
|
(1)
|
(4)
|
M-8
|
|||
|
Class
LT2-M9
|
(1)
|
(4)
|
M-9
|
|||
|
Class
LT2-M10
|
(1)
|
(4)
|
M-10
|
|||
|
Class
LT2-M11
|
(1)
|
(4)
|
M-11
|
|||
|
Class
LT2-Q
|
(1)
|
(5)
|
N/A
|
|||
|
Class
LT2-IO
|
(2)
|
(2)
|
N/A
|
|||
|
Class
LT2-R
|
(3)
|
(3)
|
R
|
___________________________
|
(1)
|
For
any Distribution Date (and the related Interest Accrual Period) the
interest rate for each of these Lower Tier Interests in REMIC 2 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 Class LT2-IO Interest
is
entitled to a portion of the interest accruals on a Lower Tier Interest
in
REMIC 1 having an “F” in its class designation, as described in footnote
two 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)
|
The
Class LT2-IO 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 Class LT2-IO shall be entitled to interest accrued
on
the Lower Tier Interest in REMIC 1 listed in 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
|
-5-
|
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
|
|
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
|
|
2-31
|
Class
LT1-F29
|
|
2-32
|
Class
LT1-F30
|
|
2-33
|
Class
LT1-F31
|
|
2-34
|
Class
LT1-F32
|
|
2-35
|
Class
LT1-F33
|
|
2-36
|
Class
LT1-F34
|
|
2-37
|
Class
LT1-F35
|
|
2-38
|
Class
LT1-F36
|
|
(3)
|
The
Class LT2-R interest is the sole class of residual interests in REMIC
2.
It does not have an interest rate or a principal balance.
|
|
(4)
|
This
Lower Tier Interest shall have an initial class principal amount
equal to
one-half of the initial Class Principal Amount of its Corresponding
Class
of Certificates.
|
|
(5)
|
This
Lower Tier Interest shall have an initial class principal amount
equal to
the excess of (i) the Pool Stated Principal Balance as of the Cut-off
Date, over (ii) the aggregate initial Class Principal Amount of each
other
regular interest in REMIC 2 (other than any interest-only Lower Tier
Interest).
|
On
each
Distribution Date, interest shall be distributed on the Lower Tier Interests
in
REMIC 2 based on the above-described interest rates; provided,
however,
that
interest that accrues on the Class LT2-Q Interest shall be deferred in an amount
equal to one-half of the increase, if any, in the Overcollateralization Amount
for such Distribution Date. Any interest so deferred shall itself bear interest
at the interest rate for the Class LT2-Q Interest. An amount equal to the
interest so deferred shall be distributed as additional principal on the other
Lower Tier Interests in REMIC 2 having a principal balance in the manner
described under priority (a) below.
On
each
Distribution Date principal shall be distributed, and Realized Losses shall
be
allocated, among the Lower Tier Interests in REMIC 2 in the following order
of
priority:
(a) First,
to
the Class LT2-I-A, Class LT2-II-A, Class LT2-II-A4, Class LT2-M1, Class
LT2-M2, Class LT2-M3, Class LT2-M4, Class LT2-M5, Class LT2-M6, Class LT2-M7,
Class LT2-M8, Class LT2-M9, Class LT2-M10, Class LT2-M11 and Class LT2-M12
Interests until the principal balance of each such Lower Tier Interest equals
one-half of the Class Principal Amount of the Corresponding Class of
Certificates immediately after such Distribution Date; and
-6-
(b) Second,
to the Class LT2-Q Interests, any remaining amounts.
On
each
Distribution Date, the Securities Administrator shall be deemed to have
distributed the Prepayment Premiums passed through with respect to REMIC 1
on
such Distribution Date to the Class LT2-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.
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
|
Corresponding
Class of
Certificates
|
|||
|
Class I-A
|
(1)
|
$119,285,000
|
Class I-A(7)
|
|||
|
Class II-A
|
(2)
|
$146,131,000
|
Class II-A-1(7)
|
|||
|
Class M-1
|
(3)
|
$
11,504,000
|
Class M-1(7)
|
|||
|
Class M-2
|
(3)
|
$
10,353,000
|
Class M-2(7)
|
|||
|
Class M-3
|
(3)
|
$
6,409,000
|
Class M-3(7)
|
|||
|
Class M-4
|
(3)
|
$
5,587,000
|
Class M-4(7)
|
|||
|
Class M-5
|
(3)
|
$
5,423,000
|
Class M-5(7)
|
|||
|
Class M-6
|
(3)
|
$
4,930,000
|
Class M-6(7)
|
|||
|
Class M-7
|
(3)
|
$
4,601,000
|
Class M-7(7)
|
|||
|
Class M-8
|
(3)
|
$
3,779,000
|
Class M-8(7)
|
|||
|
Class M-9
|
(3)
|
$
2,958,000
|
Class M-9(7)
|
|||
|
Class M-10
|
(3)
|
$
2,300,000
|
Class M-10(7)
|
|||
|
Class M-11
|
(3)
|
$
3,286,000
|
Class M-11(7)
|
|||
|
Class X
|
(4)
|
(4)
|
Class X
|
|||
|
Class R
|
(5)
|
(5)
|
Class R
|
|||
|
Class P
|
(6)
|
(6)
|
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 2 Net Funds Cap; therefore,
on
any Distribution Date on which the Interest Rate for the Class I-A
Certificates exceeds the REMIC 2 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 2 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.
|
-7-
|
(2)
|
The
Class II-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 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 2 Net Funds Cap; therefore,
on
any Distribution Date on which the Interest Rate for the Class II-A
Certificates exceeds the REMIC 2 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
Certificates is based on the Group II Available Funds Cap, the amount
of
interest that would have accrued on the Class II-A Certificates if
the
REMIC 2 Net Funds Cap were substituted for the Group II Available
Funds
Cap shall be treated as having been paid by the Class II-A
Certificateholders to the Supplemental Interest Trust, all pursuant
to and
as further provided in Section 8.11
hereof.
|
|
(3)
|
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, Class M-10 and Class M-11 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
2
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, M-10
or
M-11 Certificates, as applicable, exceeds the REMIC 2 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, M-10 or
M-11
Certificates, as applicable, is based on the Class M Available Funds
Cap,
the amount of interest that would have accrued on such applicable
Class of
Certificates if the REMIC 2 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, M-10 or M-11 Certificateholders,
as applicable, to the Supplemental Interest Trust, all pursuant to
and as
further provided in Section 8.11 hereof.
|
|
(4)
|
For
purposes of the REMIC Provisions the Class X Certificate shall reflect
beneficial ownership of the Class X Interest in the Upper Tier REMIC.
The
Class X Interest shall have an initial principal balance of $2,143,000.35,
and the right to receive distributions of such amount represents
a regular
interest in the Upper Tier REMIC. The Class X Interest shall also
comprise
two 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 Principal Amounts
of
the Lower Tier Interests in REMIC 2, 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 2 (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 LT2-IO
Interest
in REMIC 2 (the “LT3-I” interest). 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 and (iii) an interest in the
notional
principal contracts described in Section 8.11
hereof.
|
|
(5)
|
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.
|
-8-
|
(6)
|
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, and the Class P Certificate
shall reflect beneficial ownership of the Class P Interest. The Class
P
Certificate will have a Class P Principal Amount of
$100.
|
|
(7)
|
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 an a notional principal contract
written by the Class X
Certificateholders.
|
The
minimum denomination for each Class of Certificates, other than the
Class P, Class R and the Class X Certificates, will be $25,000
($100,000 with respect to initial investors resident in a Member State of the
European Economic Area subject to 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 I-A
and Class II-A 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,
Class M-10 and Class M-11 Certificates.
|
|
|
Delay
Certificates
|
None.
|
|
|
ERISA-Restricted
|
||
|
Certificates
|
Class
M10, Class M-11, Class P, Class X and Class R Certificates; any
Certificate with a rating which falls below the lowest applicable
permitted rating under the Underwriters’ Exemption.
|
|
|
ERISA-Restricted
|
||
|
Derivative
Certificates
|
Any
Offered Certificate prior to the termination of the Cap Agreement
and the
Swap Agreement.
|
|
|
LIBOR
Certificates
|
Collectively,
Class A and Class M Certificates.
|
|
|
Non-Delay
Certificates
|
Class A,
Class M and Class X Certificates.
|
|
|
Offered
Certificates
|
All
Classes of Certificates other than the Private
Certificates.
|
-9-
|
Physical
Certificates
|
Class P,
Class X and Class R Certificates.
|
|
|
Private
Certificates
|
Class
M10, Class M-11, Class P, Class X and Class R
Certificates.
|
|
|
Rating
Agencies
|
Moody’s
and Standard & Poor’s.
|
|
|
Regular
Certificates
|
All
Classes of Certificates other than the Class R
Certificates.
|
|
|
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).
Accepted
Servicing Practices:
With
respect to any Mortgage Loan and the Servicer, the servicing and administration
of such Mortgage Loan (i) in the same manner in which, and with the same
care, skill, prudence and diligence with which the Servicer generally services
and administers similar mortgage loans with similar mortgagors (A) for
other third parties, giving due consideration to customary and usual standards
of practice of prudent institutional residential mortgage lenders servicing
their own mortgage loans or (B) held in the Servicer’s own portfolio,
whichever standard is higher, and (ii) in accordance with applicable local,
state and federal laws, rules and regulations.
Account:
Any of
the Collection Account, the Distribution Account, any Escrow Account, the Excess
Reserve Fund Account, and with respect to the Supplemental Interest Trust,
the
Supplemental Interest Trust Account. Each Account shall be an Eligible
Account.
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
Servicer:
Any
affiliate of the Servicer that Services any of the Mortgage Loans and each
Person that is not an affiliate of the Servicer that Services 10% or more of
the
Mortgage Loans. For clarification purposes, for purposes of this Agreement,
the
Master Servicer and the Securities Administrator are Additional Servicers.
Additional
Termination Event:
As
defined in the Swap Agreement.
Adjustable
Rate Mortgage Loan:
A
Mortgage Loan which provides for the adjustment of the Mortgage Rate payable
in
respect thereto.
-10-
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 LT2-I-A, LT2-II-A, LT2-M-1, LT2-M-2, LT2-M-3,
LT2-M-4, LT2-M-5, LT2-M-6, LT2-M-7, LT2-M-8, LT2-M-9, LT2-M-10, LT2-M-11 and
LT2-Q Interests, weighted in proportion to their Class Principal Amounts as
of
the beginning of the related Accrual Period and computed by subjecting the
rate
on the Class LT2-Q Interest to a cap of 0.00%, and by subjecting the rate on
each of the Class LT2-I-A, LT2-II-A, LT2-M-1, LT2-M-2, LT2-M-3, LT2-M-4,
LT2-M-5, LT2-M-6, LT2-M-7, LT2-M-8, LT2-M-9, LT2-M-10 and LT2-M-11 Interests
to
a cap that corresponds to the Interest Rate (determined by substituting the
REMIC 2 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 an amount equal to (a) the actual number of days in the Interest
Accrual Period, divided by (b) 30.
Adjustment
Date:
As to
any Adjustable Rate Mortgage Loan, the first Due Date on which the related
Mortgage Rate adjusts as set forth in the related Mortgage Note and each Due
Date thereafter on which the Mortgage Rate adjusts as set forth in the related
Mortgage Note.
Advance:
Any
P&I Advance or Servicing Advance.
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 Account 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.
-11-
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 Servicer
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 Servicer 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 Servicer during the related Prepayment
Period together with all Compensating Interest paid by the Servicer 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 the Originator 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
the Servicer, the Depositor, the Master Servicer, the Securities Administrator,
the Swap Counterparty or the Trustee are entitled to be paid or reimbursed
pursuant to this Agreement.
Back-up
Certification:
As
defined in Section 3.24.
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 rate been calculated (x) 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
at, with respect to the Class I-A Certificates, the Group I Available
Funds Cap, at, with respect to the Class II-A Certificates, the
Group II Available Funds Cap, and, at, with respect to the Class M
Certificates, the Class M Available Funds Cap, as applicable, for such
Distribution Date 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.
-12-
Basis
Risk Payment:
For any
Distribution Date, an amount equal to the lesser of (i) the aggregate of
the Basis Risk Carryover Amounts for such Distribution Date and (ii) the
Class X Distributable Amount (prior to any reduction for Basis Risk
Payments).
Best’s:
Best’s
Key Rating Guide, as the same shall be amended from time to time.
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) or any other State in which the 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.
Cap
Account:
The
account created pursuant to Section 4.06(b).
Cap
Agreement:
The
interest rate cap agreement entered into by the Supplemental Interest Trust
and
the Cap Counterparty, dated March 7, 2006, which agreement provides for the
monthly payment specified to the Securities Administrator (for the benefit
of
Certificateholders) commencing with the Distribution Date in September 2006
and
ending on the Distribution Date in December 2011, by the Cap Counterparty,
but
subject to the conditions set forth therein together with any schedule,
confirmations or other agreements relating thereto, attaches 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
Bear Xxxxxxx Financial Products Inc.
Cap
Payment:
With
respect to each Distributing 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 Trustee.
-13-
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 by the Securities Administrator in substantially
the forms attached hereto as exhibits.
Certificate
Balance:
With
respect to the Certificates, other than the Class X, Class P or
Class R Certificates, 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.
Certificate
Group:
The
Group I Certificates or the Group II Certificates, as
applicable.
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 3.24.
Certifying
Person:
As
defined in Section 3.24.
Class:
All
Certificates bearing the same class designation as set forth in the Preliminary
Statement.
-14-
Class I-A
Certificates:
All
Certificates bearing the Class designation of “Class I-A”.
Class II-A
Certificates:
All
Certificates bearing the Class designation of “Class II-A”.
Class A
Certificates:
As
specified in the Preliminary Statement.
Class Certificate
Balance:
With
respect to any Class of LIBOR Certificate 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 X, Class P and Class
R Certificates, zero. With respect to any Lower Tier Interest, 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 Class I Shortfall for any Distribution Date shall
equal
the amount payable to the Swap 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 1 Mortgage Loans and the Group Subordinate Amount for
the
Group II Mortgage Loans.
Class M
Certificates:
As
specified in the Preliminary Statement.
Class M
Principal Payment Amount:
With
respect to any Distribution Date and any Class of Class M Certificates
is 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 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) 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:
-15-
|
Class
|
Percentage
|
|
|
M-1
|
68.50%
|
|
|
M-2
|
74.80%
|
|
|
M-3
|
78.70%
|
|
|
M-4
|
82.10%
|
|
|
M-5
|
85.40%
|
|
|
M-6
|
88.40%
|
|
|
M-7
|
91.20%
|
|
|
M-8
|
93.50%
|
|
|
M-9
|
95.30%
|
|
|
M-10
|
96.70%
|
|
|
M-11
|
98.70%
|
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.
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”.
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”.
-16-
Class M-11
Certificates:
All
Certificates bearing the Class designation of “Class M-11”.
Class P
Certificates:
All
Certificates bearing the Class designation of “Class P”.
Class R
Certificates:
All
Certificates bearing the Class designation of “Class R”.
Class P
Principal Amount:
As of
the Closing Date, $100.00.
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 $2,143,000.35 ($2,143,100.35
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:
March
7, 2006.
Code:
The
Internal Revenue Code of 1986, including any successor or amendatory
provisions.
Collection
Account:
As
defined in Section 3.10(a).
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 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.
Controlling
Person:
With
respect to any Person, any other Person who “controls” such Person within the
meaning of the Securities Act.
-17-
Corporate
Trust Office:
With
respect to the Securities Administrator, (i) for transfer, presentation or
surrender of Certificates, the office at Xxxxx Fargo Center, Xxxxx Xxxxxx xxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Corporate Trust
Services - (HASCO) HASCO 2006-NC1, and (ii) for all other purposes, 0000 Xxx
Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Services
-
(HASCO) HASCO 2006-NC1 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 - TBP, 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
described in the Preliminary Statement.
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.
Credit
Risk Manager:
Not
applicable.
Credit
Risk Management Agreement:
Not
applicable.
Credit
Risk Manager’s Fee Rate:
Not
applicable.
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:
-18-
|
Distribution
Date Occurring In:
|
Loss
Percentage:
|
|
|
March
2008 through
|
1.10%
for the first month, plus an additional 1/12th of
|
|
|
February
2009
|
1.35%
for each month thereafter
|
|
|
March
2009 through
|
2.45%
for the first month, plus an additional 1/12th of
|
|
|
February
2010
|
1.35%
for each month thereafter
|
|
|
March
2010 through
|
3.80%
for the first month, plus an additional 1/12th of
|
|
|
February
2011
|
1.10%
for each month thereafter
|
|
|
March
2011 through
|
4.90%
for the first month, plus an additional 1/12th of
|
|
|
February
2012
|
0.50%
for each month thereafter
|
|
|
March
2012 and thereafter
|
5.40%
|
Custodial
File:
The
meaning assigned to such term in Section 2.01(a).
Custodian:
Initially, Deutsche Bank, or any successor custodian appointed
hereunder.
Cut-off
Date:
February 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 Master MLPISA, with such additions and modifications as
agreed upon by the Originator and the Depositor. A copy of the Master MLPISA
is
attached as Exhibits 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.
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.
-19-
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:
As
defined in Section 2.03.
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, 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.
Delinquency
Trigger Event:
With
respect to any Distribution Date, the circumstances in which the Rolling Three
Month Delinquency Rate as of the last day of the immediately preceding calendar
month exceeds 38.95% of the Credit Enhancement Percentage for the Class A
Certificates.
Denomination:
With
respect to each Certificate, the amount set forth on the face thereof as the
“Initial Certificate Balance of this Certificate” 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.
Derivative
Counterparty:
Collectively, the Cap Counterparty and the Swap Counterparty.
-20-
Derivative
Counterparty Trigger Event:
A
Derivative 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 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.
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.
Deutsche
Bank:
Deutsche Bank National Trust Company.
Determination
Date:
With
respect to each Remittance Date, the 15th day (or if such day is not a Business
Day, the immediately preceding Business Day) in the calendar month in which
such
Remittance Date occurs.
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 3.07(d) in the name of the Securities Administrator as
paying agent for the benefit of the Trustee and the Certificateholders and
designated “Xxxxx Fargo Bank, N.A. as paying agent in trust for registered
holders of HSI Asset Securitization Corporation Trust 2006-NC1 Mortgage
Pass-Through Certificates, Series 2006-NC1”. Funds in the Distribution
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
Distribution
Account Deposit Date:
As to
any Distribution Date, 12:00 noon New York City time on the third Business
Day
immediately preceding such Distribution Date.
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 March 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.
-21-
XXXXX:
The
Commission’s Electronic Data Gathering and Retrieval System.
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
Servicer 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
Derivative Certificate:
As
specified in the Preliminary Statement.
Escrow
Account:
The
Eligible Account or Accounts established and maintained by the Servicer pursuant
to Section 3.09(b).
Escrow
Payments:
As
defined in Section 3.09(b).
Event
of Default:
As
defined in Section 7.01.
Excess
Overcollateralization
Amount:
With
respect to any Distribution Date, the excess, if any, of (a) the
Overcollateralization Amount on such Distribution Date over (b) the
Overcollateralization Target Amount for such Distribution Date.
-22-
Excess
Reserve Fund Account:
The
separate Eligible Account created and maintained by the Securities Administrator
pursuant to Sections 3.07(b) and 3.07(c) in the name of the Securities
Administrator as paying agent for the benefit of the LIBOR Certificateholders
and the Class X Certificateholders and designated “Xxxxx Fargo Bank, N.A. as
paying agent in trust for registered holders of HSI Asset Securitization
Corporation Trust 2006-NC1, Mortgage Pass-Through Certificates,
Series 2006-NC1”. 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 Trust
Fund but not the part of any REMIC.
Exchange
Act:
The
Securities Exchange Act of 1934, as amended.
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 sum of the Servicing Fee
Rate
and the Master Servicing Fee Rate.
Expense
Fees:
As to
each Mortgage Loan and any Distribution Date, the sum of the Servicing Fee
and
the Master 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
Mae:
The
Federal National Mortgage Association, or any successor thereto.
FDIC:
The
Federal Deposit Insurance Corporation, or any successor thereto.
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 or the Purchase Agreement, as
applicable), a determination made by the 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. The Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
Final
Scheduled Distribution Date:
The
Final Scheduled Distribution Date for each Class of Certificates is the
Distribution Date occurring in November 2035.
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(c) 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-NC1), or such other address as Fitch may hereafter
furnish to the Depositor and the Securities Administrator.
-23-
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).
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
on
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 portion of the Net Derivative Payment or Swap Termination Payment
allocated to the Group I Mortgage Loans based on the applicable Group Percentage
(other than a Swap Termination Payment caused by the Derivative Counterparty)
made to the Derivative Counterparty and the denominator of which is equal to
the
Stated Principal Balance of the Group I Mortgage Loans and (ii) 12.
Group I
Certificates:
The
Class I-A Certificates.
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) 61.50% 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.
-24-
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 of the Group II Mortgage Loans 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 portion of the Net Derivative Payment or Swap Termination Payment
allocated to the Group II Certificates based on the applicable Group Percentage
(other than a Swap Termination Payment caused by the Derivative Counterparty)
made to the Derivative Counterparty and the denominator of which is equal to
the
aggregate Stated Principal Balance of the Group II Mortgage Loans and (ii)
12.
Group II
Certificates:
The
Class II-A Certificates.
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) 61.50% 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
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
-25-
(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 Class I-A Certificates immediately prior to the current
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 Class II-A Certificates immediately
prior to such 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 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.
Initial
Sale Date:
The
date the Mortgage Loan was purchased by the Sponsor from the Mortgage Loan
Seller under the Master MLPISA.
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 the Corresponding
Class of Lower Tier REMIC Regular Interests 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.
-00-
Xxxxxxxx
Xxxxx Xxxxxxx Xxxxxx:
As of
any Distribution Date and any Class of LIBOR Certificates, the sum of (i)
the excess of (a) the sum of (x) the Interest Payment Amount with respect
to the current Distribution Date (excluding any Basis Risk Carryover Amount
with
respect to such Class), plus (y) 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, over (b) the amount
actually paid to such Class with respect to interest on such prior
Distribution Dates, 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
Regular Certificates, the following percentages: Class I-A Certificates,
0.210%; Class II-A Certificates, 0.220%; Class M-1 Certificates,
0.400%; Class M-2 Certificates, 0.420%; Class M-3 Certificates,
0.440%; Class M-4 Certificates, 0.540%; Class M-5 Certificates,
0.570%; Class M-6 Certificates, 0.700%, Class M-7 Certificates,
1.000%, Class M-8 Certificates, 1.000%, Class M-9 Certificates,
1.000%, Class M-10 Certificates, 1.000% and Class M-11 Certificates,
1.000% 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, 0.210%; Class II-A Certificates,
0.220%; Class M-1 Certificates, 0.400%; Class M-2 Certificates,
0.420%; Class M-3 Certificates, 0.440%; Class M-4 Certificates,
0.540%; Class M-5 Certificates, 0.570%; Class M-6 Certificates,
0.700%, Class M-7 Certificates, 1.000%, Class M-8 Certificates,
1.000%, Class M-9 Certificates, 1.000%, Class M-10 Certificates,
1.500% and Class M-11 Certificates, 1.500%.
Interest
Payment Amount:
With
respect to any Distribution Date for each Class of LIBOR Certificates, the
amount of interest accrued during the related Interest Accrual Period at the
applicable Interest Rate on the related Class Certificate Balance
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 Certificates, each Class of Upper Tier REMIC Regular
Interest and each Class of Lower Tier REMIC Regular 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 Mortgage Loans
in that Loan Group.
Investment
Account:
As
defined in Section 3.12(a).
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.
-27-
JPMorgan:
JPMorgan Chase Bank, National Association and its successors and
assigns.
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 rate
determined by the Securities Administrator on the related LIBOR Determination
Date on the basis of the offered rate for one-month U.S. dollar deposits as
such
rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such
date; provided,
that if
such rate does not appear on Telerate Page 3750, the rate for such date
will be determined on the basis of the rates at which one-month U.S. dollar
deposits are offered by the Reference Banks at approximately 11:00 a.m.
(London time) on such date to prime banks in the London interbank market. In
such event, the Securities Administrator shall request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If
at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Securities Administrator
(after consultation with the Depositor), at approximately 11:00 a.m. (New
York City time) on such date for one-month U.S. dollar loans to leading European
banks.
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 the 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.
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.
-00-
Xxxxxx
Xxxxxxxx Day:
Any day
on which dealings in deposits of United States dollars are transacted in the
London interbank market.
Lower
Tier REMIC:
As
described in the Preliminary Statement.
Master
MLPISA:
The
Amended and Restated Master Mortgage Loan Purchase and Interim Servicing
Agreement, among the Mortgage Loan Seller, New Century Mortgage Corporation,
as
interim servicer, and the Sponsor, as initial purchaser, dated as of March
1,
2006 (for first and second lien, fixed and adjustable rate mortgage
loans).
Master
Servicer:
Xxxxx
Fargo, and if a successor master servicer is appointed hereunder, such
successor.
Master
Servicer Event of Default:
As
defined in Section 9.06.
Master
Servicing Fee:
As to
any Distribution Date and each Mortgage Loan, an amount equal to
1/12th
the
product of (a) the Master Servicing Fee Rate and (b) the outstanding Stated
Principal Balance of such Mortgage Loan as of the prior Distribution Date (or
as
of the Cut-off Date in the case of the first Distribution Date).
Master
Servicing Fee Rate:
With
respect to any Mortgage Loan, a per annum rate equal to 0.005%.
Master
Servicing Officer:
Any
officer of the Master Servicer involved in, or responsible for, the
administration and master servicing of the Mortgage Loans.
Maximum
Mortgage Rate:
With
respect to each Adjustable Rate Mortgage Loan, a rate that (i) is set forth
on the Data Tape Information and in the related Mortgage Note and (ii) is
the maximum interest rate to which the Mortgage Rate on such Mortgage Loan
may
be increased during the lifetime of such Mortgage Loan.
MERS:
Mortgage Electronic Registration Systems, Inc., a Delaware corporation, and
its
successors in interest.
MERS
Designated Mortgage Loan:
Mortgage Loans for which (a) the Originator has designated or will
designate MERS as, and has taken or will take such action as is necessary to
cause MERS to be, the mortgagee of record, as nominee for the Originator, in
accordance with the MERS Procedure Manual and (b) the Originator has
designated or will designate the Trustee as the Investor on the MERS
System.
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.
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MIN:
The
Mortgage Identification Number of Mortgage Loans registered with MERS on the
MERS® System.
Minimum
Mortgage Rate:
With
respect to each Adjustable Rate Mortgage Loan, a rate that (i) is set forth
on the Data Tape Information and in the related Mortgage Note and (ii) is
the minimum interest rate to which the Mortgage Rate on such Mortgage Loan
may
be decreased during the lifetime of such Mortgage Loan.
Monthly
Statement:
The
statement delivered to the Certificateholders 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(c) 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-NC1), or such
other address as Moody’s may hereafter furnish to the Depositor and the
Securities Administrator.
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 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 for each Loan Group 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.
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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 sum of (1) the corresponding floating amount
payable by the Derivative Counterparty under the terms of the Swap Agreement
and
(2) 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 sum of (1) of the floating amount payable by the Derivative
Counterparty under the terms of the Swap Agreement and (2) 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.
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 Net 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.
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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 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.
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.
Officer’s
Certificate:
A
certificate signed by an officer of the Servicer or the Master Servicer, as
applicable, with responsibility for the servicing of the Mortgage Loans and
listed on a list delivered to the Trustee and the Securities Administrator
pursuant to this Agreement.
Opinion
of Counsel:
A
written opinion of counsel, who may be in-house counsel for the Servicer or
any
Subservicer, reasonably acceptable to the Trustee and/or the Securities
Administrator, as applicable (and/or such other Persons as may be set forth
herein); provided,
that
any Opinion of Counsel relating to (a) qualification of any REMIC created
hereby or (b) compliance with the REMIC Provisions, must be (unless
otherwise stated in such Opinion of Counsel) an opinion of counsel who
(i) is in fact independent of the Servicer or the Master Servicer,
(ii) does not have any material direct or indirect financial interest in
the Servicer or the Master Servicer or in an affiliate of either and
(iii) is not connected with the Servicer or the Master Servicer as an
officer, employee, director or person performing similar functions.
Option
to Purchase:
On the
first Optional Termination Date and any Distribution Date thereafter, the Master
Servicer, upon the instruction of the Depositor, shall have the option to
purchase
the Mortgage Loans; provided,
however,
if on
the first Optional Termination Date and any Date thereafter, the Depositor
fails
to instruct the Master Servicer to purchase the Mortgage Loans, the Servicer
may
exercise its option to purchase the Mortgage Loans on the first Distribution
Date following the 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 5.00% of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date and on each Distribution Date thereafter;
provided,
further,
if the
Servicer fails to exercise its Option to Purchase pursuant to the immediately
preceding proviso, the Master Servicer has the right, in its own discretion,
to
purchase the Mortgage Loans on any Distribution Date, with respect to which
the
Servicer fails to so exercise its Option to Purchase.
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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.
Originator:
New
Century Mortgage Corporation and its successors in interest, as originator
of
the Mortgage Loans.
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.
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 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 0.65% of the aggregate Stated Principal
Balance of the Mortgage Loans as of the Cut-off Date. On and after the Stepdown
Date, an amount equal to the greater of (i) 1.30% 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.
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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 the Servicer in respect
of any Remittance Date representing the aggregate of all payments of principal
and interest, net of the 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
Section 4.01.
PCAOB:
The
Public Company Accounting Oversight Board.
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.
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 Servicer, 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;
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(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 or advised by the
Trustee, the Securities Administrator or an Affiliate thereof, that have been
rated “Aaa” by Moody’s, “AAAm” or “AAAm-G” 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;
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 either the Lower
Tier REMIC or the Upper Tier REMIC 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.
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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 the 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, any interest collected by the Servicer with
respect to any Mortgage Loan as to which a Principal Prepayment in Full 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.
Prepayment
Interest Shortfall:
With
respect to any Distribution Date, the sum of, for each Mortgage Loan that was,
during the portion of the related Prepayment Period from the first day of such
Prepayment Period through the last day of the month preceding the month in
which
such Distribution Date occurs, the subject of a Principal Prepayment which
is
not accompanied by an amount equal to one month of interest that would have
been
due on such Mortgage Loan on the Due Date that occurs during such Prepayment
Period and which was applied by the Servicer to reduce the outstanding principal
balance of such Mortgage Loan on a date preceding such Due Date, an amount
equal
to the product of (a) the Mortgage Rate net of the Servicing Fee Rate for
such Mortgage Loan, (b) the amount of the Principal Prepayment for such
Mortgage Loan, (c) 1/360 and (d) the number of days commencing on the
date on which such Principal Prepayment was applied and ending on the last
day
of the calendar month in which the related Prepayment Period
begins.
Prepayment
Period:
With
respect to any Distribution Date and any Principal Prepayment in Full, the
period commencing on the 16th day of the month preceding the month in which
such
Distribution Date occurs (or in the case of the first Distribution Date,
commencing on the Cut-off Date) and ending on the 15th day of the month in
which
that Distribution Date occurs. With respect to Principal Prepayments in part,
the calendar month preceding the month in which the Distribution Date
occurs.
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 originator,
the lender or the borrower.
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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 Servicer on or prior to the related Determination
Date or advanced by the Servicer 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 Servicer during the related Prepayment
Period; (iv) the portion of the Repurchase Price allocable to principal
with respect to each Mortgage Loan repurchased by the 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; (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.
Prospectus
Supplement:
The
Prospectus Supplement, dated March 6, 2006, relating to the Offered
Certificates.
PTCE:
As
defined in Section 5.02(b).
Purchase
Agreement:
The
Mortgage Loan Purchase Agreement, dated as of February 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(c), 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.
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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 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, the close of business on the Business Day
immediately preceding such Distribution Date; provided,
however,
that,
for any Certificate issued in definitive form, 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).
Reference
Bank:
As
defined in Section 4.04.
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.
Regular
Certificates:
As
specified in the Preliminary Statement.
Relevant
Servicing Criteria:
The
Servicing Criteria applicable to the Servicer or any Servicing Function
Participant, 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 a Servicing Function Participant engaged
by
the Master Servicer, the Securities Administrator, the Custodian, the Trustee
or
the 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
2 Net Funds Cap:
For any
Distribution Date (and the related Interest Accrual Period) and any Class of
Certificates, an amount equal to (i) the weighted average of the interest rates
on the Lower Tier Interests in REMIC 2 (other than any interest-only regular
interest), weighted in proportion to their Class Principal Amounts as of the
beginning of the related Interest Accrual Period, multiplied by (ii) an amount
equal to (a) 30, divided by (b) the actual number of days in the Interest
Accrual Period.
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REMIC
3:
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.
Remittance
Date:
With
respect to any Distribution Date, the 21st
day of
the month in which such Distribution Date occurs, or, if the 21st
is not a
Business Day, the immediately succeeding Business Day.
REO
Disposition:
The
final sale by the Servicer of any REO Property.
REO
Imputed Interest:
As to
any REO Property, for any period, an amount equivalent to interest (at the
Mortgage Rate net of the applicable Servicing Fee Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof
(as
such balance is reduced pursuant to Section 3.17 by any income from the REO
Property treated as a recovery of principal).
REO
Mortgage Loan:
A
Mortgage Loan where title to the related Mortgaged Property has been obtained
by
the Servicer in the name of the Trustee on behalf of the
Certificateholders.
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 and
(iv) all expenses incurred by the Master Servicer, the Servicer or Trustee
arising out of the Master Servicer’s, the Servicer’s or Trustee’s enforcement of
the Mortgage Loan Seller’s or Sponsor’s repurchase obligation
hereunder.
Request
for Release:
The
Request for Release submitted by the Servicer to the Trustee, substantially
in
the form of Exhibit J.
-39-
Residual
Certificates:
As
specified in the Preliminary Statement.
Responsible
Officer:
When
used with respect to the Trustee, the Securities Administrator, 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 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
Letter:
As
defined in Section 5.02(b).
Xxxxxxxx-Xxxxx
Certification:
As
defined in Section 3.24.
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.
Securities
Administrator:
Xxxxx
Fargo, 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:
JPMorgan Chase Bank, National Association, and its successors in interest,
and
if a successor servicer is appointed hereunder, such successor.
Servicer
Remittance Report:
The
reports submitted by the Servicer pursuant to Section 4.03(d).
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.
-40-
Servicing
Advances:
The
reasonable “out-of-pocket” costs and expenses (including legal fees) incurred by
the Servicer in the performance of its servicing obligations in connection
with
a default, delinquency or other unanticipated event, including, but not limited
to, the cost of (i) the maintenance, preservation, restoration, inspection
and protection of a Mortgaged Property, (ii) any enforcement or judicial
proceedings, including foreclosures and litigation, in respect of a particular
Mortgage Loan, (iii) the management (including reasonable fees in
connection therewith) and liquidation of any REO Property and (iv) the
performance of its obligations under Sections 3.01, 3.09, 3.13 and 3.15.
The Servicing Advances shall also include any reasonable “out-of-pocket” costs
and expenses (including legal fees) incurred by the Servicer in connection
with
executing and recording instruments of satisfaction, deeds of reconveyance
or
Assignments of Mortgage in connection with any satisfaction or foreclosure
in
respect of any Mortgage Loan to the extent not recovered from the Mortgagor
or
otherwise payable under this Agreement and obtaining or correcting any legal
documentation required to be included in the Mortgage File and necessary for
the
Servicer to perform its obligations under this Agreement. The Servicer shall
not
be required to make any Nonrecoverable Servicing Advances.
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 Mortgage Loan and for any calendar month, an amount equal to
one
month’s interest (or in the event of any payment of interest which accompanies a
Principal Prepayment made by the Mortgagor during such calendar month, interest
for the number of days covered by such payment of interest) at the Servicing
Fee
Rate on the applicable Stated Principal Balance of such Mortgage Loan as of
the
first day of such calendar month. Such fee shall be payable monthly, and shall
be prorated for any portion of a month during which the Mortgage Loan is
serviced by the Servicer under this Agreement. The Servicing Fee is payable
solely from the interest portion (including recoveries with respect to interest
from Liquidation Proceeds, Subsequent Recoveries, Insurance Proceeds,
Condemnation Proceeds and proceeds received with respect to REO Properties)
of such Scheduled Payment collected by the Servicer, or as otherwise provided
under Section 3.11.
Servicing
Fee Rate:
0.50%
per annum.
Servicing
File:
With
respect to each Mortgage Loan, the file retained by the Servicer consisting
of
originals or copies of all documents in the Mortgage File which are not
delivered to the Custodian on behalf of the Trustee in the Custodial File and
copies of the Mortgage Loan Documents set forth in Exhibit K
hereto.
Servicing
Function Participant:
Any
Sub-Servicer or Subcontractor, or any other Person other than the Servicer,
the
Master Servicer, the Trustee and the Securities Administrator determined by
the
party utilizing such Sub-Servicer, Subcontractor or such other Person to be
a
“participant in the servicing function” within the meaning of Item 1122 of
Regulation AB (without regard to the 5.00% threshold contained
therein).
-41-
Servicing
Officer:
Any
officer of the Servicer involved in, or responsible for, the administration
and
servicing of the Mortgage Loans whose name and facsimile signature appear on
a
list of servicing officers furnished to the Master Servicer and the Trustee
by
the Servicer on the Closing Date pursuant to this Agreement, as such list may
from time to time be amended.
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 (without
giving effect to any grace period), each Mortgage Loan in foreclosure, each
Mortgage Loan related to REO Property and each Mortgage Loan where the related
Mortgagor has filed for bankruptcy.
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(c) 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-NC1, 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.
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
Servicer on or prior to the related Determination Date or advanced by the
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 March 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 Amounts to the Certificates
on that Distribution Date) is greater than or equal to 38.50%.
-42-
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 Sub-Servicer of any Servicer),
the Master Servicer, the Trustee 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.
Sub-Servicer:
Any
Person that (i) is considered to be a Servicing Function Participant, (ii)
services Mortgage Loans on behalf of any Servicer, and (iii) is responsible
for
the performance (whether directly or through sub-servicers or Subcontractors)
of
Servicing functions required to be performed under this Agreement, any related
servicing agreement or any sub-servicing agreement that are identified in Item
1122(d) of Regulation AB.
Subservicing
Account:
As
defined in Section 3.08.
Subservicing
Agreement:
As
defined in Section 3.02(a).
Substitute
Mortgage Loan:
A
Mortgage Loan substituted by the Originator or the Sponsor for a Deleted
Mortgage Loan which must, on the date of such substitution, as confirmed in
a
Request for Release, substantially in the form of Exhibit 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) comply with each
representation and warranty set forth in Section 2.03.
Substitution
Adjustment Amount: As
defined in Section 2.03.
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 Swap Account, the Cap Agreement, the Cap Account, the right
to
receive the Class X Distributable Amount as provided in Section 4.02(a)(iii)(F),
the Class LT3-I Interest in REMIC 3 and the right to receive Class I
Shortfalls.
Swap
Agreement:
The
interest rate swap agreement entered into by the Supplemental Interest Trust
and
the Swap Counterparty, dated March 7, 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 April 2006 and ending on
the
Distribution Date in April 2009 , together with any schedules, confirmations
or
other agreements relating thereto, attached hereto as Exhibit
O.
-00-
Xxxx
Xxxxxx:
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
Bear Xxxxxxx Financial Products Inc..
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.
Tax
Service Contract:
As
defined in Section 3.09.
-44-
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
Price:
As
defined in Section 11.01.
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 Servicer on or prior to the related Determination Date or
advanced by the Servicer 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 (C) 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).
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 Account,
Excess Reserve Fund 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; (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.
-45-
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 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.
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.
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
Securities Administrator 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
Servicer, the Mortgage Loan Seller 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 Securities Administrator 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.
-46-
Concurrently
with the execution and delivery of this Agreement, the Depositor does hereby
assign to the Trustee all of its rights and interest under the Purchase
Agreement, including the right to enforce the Sponsor’s obligation to repurchase
or substitute defective Mortgage Loans under Section 5 of the Purchase
Agreement. The Trustee hereby accepts such assignment, and as set forth herein
in Section 2.03(k), 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 Mortgage Loan
Seller 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 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;
-47-
(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 Mortgage Loan Seller
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 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 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.
-48-
To
the
extent not previously delivered to the Sponsor pursuant to the Master MLPISA,
the Mortgage Loan Seller shall promptly upon receipt from the respective
recording office cause to be delivered to the Custodian the original recorded
document described in clauses (iv) and (vi) above.
From
time
to time, the Mortgage Loan Seller, the Depositor or the 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 upon receipt
of
such documents. All such mortgage documents held by the Custodian as to each
Mortgage Loan shall constitute the “Custodial
File”.
To
the
extent not previously delivered to the Sponsor pursuant to the Master MLPISA,
on
or prior to the Closing Date, the Mortgage Loan Seller shall deliver to the
Custodian Assignments of Mortgages, in blank, for each Mortgage Loan. No later
than thirty (30) Business Days following the later of the Closing Date and
the
date of receipt by the Servicer of the complete recording information for a
Mortgage, the Servicer shall promptly submit or cause to be submitted for
recording, at the expense of the Mortgage Loan Seller and at no expense to
the
Trust Fund, the Trustee, the Servicer or the Depositor, in the appropriate
public office for real property records, each Assignment of Mortgage referred
to
in Section 2.01(b)(ii). Notwithstanding the foregoing, however, for
administrative convenience and facilitation of servicing and to reduce closing
costs, the 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, 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, at the expense of the Mortgage Loan Seller, to
“Deutsche Bank National Trust Company, as trustee under the Pooling and
Servicing Agreement dated as of February 1, 2006, for HSI Asset Securitization
Corporation Trust 2006-NC1”. In the event that any such Assignment of Mortgage
is lost or returned unrecorded because of a defect therein, the Mortgage Loan
Seller shall promptly cause to be delivered a substitute Assignment of Mortgage
to cure such defect and thereafter cause each such assignment to be duly
recorded at no expense to the Trust Fund.
In
the
event that such original or copy of any document submitted for recordation
to
the appropriate public recording office is not so delivered to the Trustee
within 180 days (or such other time period as may be required by any Rating
Agency) following the Closing Date, and in the event that the Mortgage Loan
Seller does not cure such failure within 30 days of discovery or receipt of
written notification of such failure from the Depositor, the related Mortgage
Loan shall, upon the request of the Depositor, be repurchased by the Mortgage
Loan Seller at the price and in the manner specified in Section 2.03. The
foregoing repurchase obligation shall not apply in the event that the Mortgage
Loan Seller cannot deliver such original or copy of any document submitted
for
recordation to the appropriate public recording office within the specified
period due to a delay caused by the recording office in the applicable
jurisdiction; provided,
that
the Mortgage Loan Seller shall instead deliver a recording receipt of such
recording office or, if such recording receipt is not available, an officer’s
certificate of an officer of the Mortgage Loan Seller, confirming that such
document has been accepted for recording.
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Notwithstanding
anything to the contrary contained in this Section 2.01, in those instances
where the public recording office retains or loses the original Mortgage or
assignment after it has been recorded, the obligations of the Mortgage Loan
Seller shall be deemed to have been satisfied upon delivery by the Mortgage
Loan
Seller to the Trustee, prior to the Closing Date of a copy of such Mortgage
or
assignment, as the case may be, certified (such certification to be an original
thereof) by the public recording office to be a true and complete copy of the
recorded original thereof.
(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-NC1”
and Deutsche Bank National Trust Company is hereby appointed as Trustee and
Xxxxx Fargo Bank, N.A. 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 State of
[California] 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
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.
Within
90 days after 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 Mortgage Loan Seller and the Servicer 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.
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The
Custodian shall retain possession and custody of each Custodial File in
accordance with and subject to the terms and conditions set forth herein. The
Servicer shall promptly deliver to the Custodian, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting
the
Custodial File as come into the possession of the Servicer from time to
time.
The
Mortgage Loan Seller shall deliver to the Servicer copies of all trailing
documents required to be included in the Custodial File at the same time the
original or certified copies thereof are delivered to the Custodian, including
but not limited to such documents as the title insurance policy and any other
Mortgage Loan documents upon return from the public recording office. The
documents shall be delivered by the Mortgage Loan Seller at the Mortgage Loan
Seller’s expense to the Servicer.
Section
2.03 Representations,
Warranties and Covenants of the Mortgage Loan Seller and the Servicer; Remedies
for Breaches of Representations and Warranties with Respect to the Mortgage
Loans.
(a) JPMorgan, in its capacity as Servicer makes the representations and
warranties set forth in Schedule II
hereto,
to the Depositor, the Master Servicer, the Securities Administrator and the
Trustee as of the Closing Date.
(b) NC
Capital Corporation, in its capacity as Mortgage Loan Seller, makes the
representations and warranties set forth in Schedule III and Schedule IV
hereto, to the Depositor, the Master Servicer, the Securities Administrator
and
the Trustee as of the date specified therein.
(c) It
is
understood and agreed by the Servicer and the Mortgage Loan Seller that the
representations and warranties set forth in this Section 2.03 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 Depositor, the Trustee
and
the Trust Fund notwithstanding any restrictive or qualified endorsement on
any
Mortgage Note or Assignment of Mortgage or the examination or failure to examine
any Mortgage File. Upon discovery by the Mortgage Loan Seller, the Depositor,
the Securities Administrator, the Trustee, the Master Servicer or the Servicer
of a breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the
others.
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(d) Within
30 days of the earlier of either discovery by or notice to the Mortgage
Loan Seller that any Mortgage Loan does not conform to the requirements as
determined in the Custodian’s review of the related Custodial File or within
60 days of the earlier of either discovery by or notice to the Mortgage
Loan Seller of any breach of a representation or warranty referred to in
Section 2.03(b) that materially and adversely affects the value of any
Mortgage Loan or the interest of the Trustee or the Certificateholders therein,
the Mortgage Loan Seller shall use its best efforts to cause to be remedied
a
material defect in a document constituting part of a Mortgage File or promptly
to cure such breach in all material respects and, if such defect or breach
cannot be remedied, the Mortgage Loan Seller shall, at the Depositor’s option as
specified in writing and provided to the Mortgage Loan Seller and the Trustee,
(i) if such 30- or 60-day period, as applicable, expires prior to the
second anniversary of the Closing Date, remove such Mortgage Loan (a
“Deleted
Mortgage Loan”)
from
the Trust Fund and substitute in its place a Substitute Mortgage Loan, in the
manner and subject to the 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. Notwithstanding
the
foregoing, a breach (i) which causes a Mortgage Loan not to constitute a
“qualified mortgage” within the meaning of Section 860G(a)(3) of the Code
or (ii) of any of the representations and warranties set forth in items number
(44), (45), (47), (54), (55), (56), (57), (58), (59), (60), (63) and (82)
of Schedule IV with respect to any Group I Mortgage Loan, will be deemed
automatically to materially and adversely affect the value of such Mortgage
Loan
and the interests of the Trustee and Certificateholders in such Mortgage Loan,
requiring the repurchase or substitution of such Mortgage Loan by the Mortgage
Loan Seller irrespective of the Mortgage Loan Seller’s actual knowledge of the
breach of such representation and warranty. In the event that the Trustee
receives notice of a breach by the Mortgage Loan Seller of any of the
representations and warranties described in the immediately preceding sentence,
the Trustee shall give notice of such breach to the Mortgage Loan Seller and
request the Mortgage Loan Seller to substitute such Mortgage Loan or to
repurchase such Mortgage Loan at the Repurchase Price within sixty
(60) days of the receipt of such notice. The Mortgage Loan Seller shall
repurchase each such Mortgage Loan within 60 days of the earlier of
discovery or receipt of notice with respect to each such Mortgage
Loan.
(e) With
respect to any Substitute Mortgage Loan or Loans, the Mortgage Loan Seller
shall
deliver to the Custodian for the benefit of the Certificateholders the Mortgage
Note, the Mortgage, the related assignment of the Mortgage, and such other
documents and agreements as are required by Section 2.01, with the Mortgage
Note endorsed and the Mortgage assigned as required by Section 2.01. No
substitution is permitted to be made with respect to any Distribution Date
after
the end of the related Prepayment Period. Scheduled Payments due with respect
to
Substitute Mortgage Loans in the Due Period of substitution shall not be part
of
the Trust Fund and will be retained by the Mortgage Loan Seller on the next
succeeding Distribution Date. For the Due Period of substitution, distributions
to Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and thereafter the Mortgage Loan Seller shall
be entitled to retain all amounts received in respect of such Deleted Mortgage
Loan.
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(f) The
Servicer shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and
the
substitution of the Substitute Mortgage Loan or Loans and the Servicer shall
deliver the amended Mortgage Loan Schedule to the Trustee and the Custodian.
Upon such substitution, the Substitute Mortgage Loan or Loans shall be subject
to the terms of this Agreement in all respects, and the Mortgage Loan Seller
shall be deemed to have made with respect to such Substitute Mortgage Loan
or
Loans, as of the date of substitution, the representations and warranties made
pursuant to Section 2.03(b) with respect to such Mortgage Loan. Upon any
such substitution and the deposit to the Collection Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph, the Custodian shall release the Mortgage
File held for the benefit of the Certificateholders relating to such Deleted
Mortgage Loan to the 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(f) have been deposited in the Collection
Account, shall execute and deliver at the Mortgage Loan Seller’s direction such
instruments of transfer or assignment prepared by the Mortgage Loan Seller
in
each case without recourse, as shall be necessary to vest title in the Mortgage
Loan Seller of the Trustee’s interest in any Deleted Mortgage Loan substituted
for pursuant to this Section 2.03.
(g) For
any
month in which the Mortgage Loan Seller substitutes one or more Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer will
determine the amount (if any) by which the aggregate unpaid principal balance
of
all such Substitute Mortgage Loans as of the date of substitution is less than
the aggregate unpaid principal balance of all such Deleted Mortgage Loans.
The
amount of such shortage plus an amount equal to the aggregate of any
unreimbursed Advances with respect to such Deleted Mortgage Loans (collectively,
the “Substitution
Adjustment Amount”)
shall
be remitted by the Mortgage Loan Seller to the Servicer for deposit into the
Collection Account on or before the Distribution Account Deposit Date for the
Distribution Date in the month succeeding the calendar month during which the
related Mortgage Loan became required to be purchased or replaced
hereunder.
(h) In
addition to the repurchase or substitution obligations referred to in
Section 2.03(d) above and Section 2.03 (k) below, the Mortgage Loan
Seller or the Sponsor, as applicable, shall indemnify the Depositor, any of
its
Affiliates, the Master Servicer, the 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 Mortgage Loan Seller or the Sponsor, as applicable, of
any
of its representations and warranties or obligations contained in this
Agreement.
(i) The
Servicer shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and
the
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee, the
Custodian, the Master Servicer and the Securities Administrator.
(j) In
the
event that a Mortgage Loan shall have been repurchased pursuant to this
Agreement or the Purchase Agreement, the proceeds from such repurchase shall
be
deposited by the Servicer in the Collection Account pursuant to
Section 3.10 on or before the Remittance Date for the Distribution Date in
the month following the month during which the Mortgage Loan Seller or Sponsor
became obligated to repurchase or replace such Mortgage Loan and upon such
deposit of the Repurchase Price, and receipt of a Request for Release in the
form of Exhibit J hereto, the Custodian shall release the related Custodial
File held for the benefit of the Certificateholders to the Mortgage Loan Seller
or the Sponsor, as applicable, as directed by the 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), the Securities Administrator shall promptly notify each
Rating Agency of a purchase of a Mortgage Loan pursuant to this
Section 2.03.
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It
is
understood and agreed that the obligation of the Mortgage Loan Seller 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 Mortgage Loan Seller set
forth in Section 2.03(h), shall constitute the sole remedies against such
Person respecting such breach available to Certificateholders, the Depositor
and
any of its Affiliates, or the Trustee on their behalf.
(k) 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 the 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 the 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 that apply to repurchases or substitutions of Mortgage
Loans by the Mortgage Loan Seller 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. In the event of
any
such repurchase or substitution of a Mortgage Loan by the Sponsor, the
procedures set forth in Sections 2.03(e), (f), (g), (h), (i) and (j) shall
apply
to the Sponsor in the same manner and to the same extent that they are
applicable to the Mortgage Loan Seller. 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(h), 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.
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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.
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 in November 2039, which is the Distribution Date
in
the month following the month in which the latest Mortgage Loan maturity 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;
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(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;
(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 Servicer
to Service Mortgage Loans.(a) For
and on behalf of the Certificateholders, the Servicer shall service and
administer the Mortgage Loans in accordance with the terms of this Agreement
and
the respective Mortgage Loans and, to the extent consistent with such terms,
in
accordance with Accepted Servicing Practices, but without regard
to:
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(i) any
relationship that the Servicer, any Subservicer or any Affiliate of the Servicer
or any Subservicer may have with the related Mortgagor;
(ii) the
ownership or non-ownership of any Certificate by the Servicer or any Affiliate
of the Servicer;
(iii) the
Servicer’s obligation to make P&I Advances or Servicing Advances;
or
(iv) the
Servicer’s or any Subservicer’s right to receive compensation for its services
hereunder or with respect to any particular transaction.
To
the
extent consistent with the foregoing, the Servicer shall seek to maximize the
timely and complete recovery of principal and interest on the Mortgage Notes.
Subject only to the above-described servicing standards and the terms of this
Agreement and of the respective Mortgage Loans, the Servicer shall have full
power and authority, acting alone or through Subservicers as provided in
Section 3.02, to do or cause to be done any and all things in connection
with such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of a Subservicer is hereby authorized and empowered by the
Trustee when the Servicer believes it appropriate in its best judgment in
accordance with Accepted Servicing Practices to execute and deliver any and
all
instruments of satisfaction or cancellation, or of partial or full release
or
discharge, and all other comparable instruments, with respect to the Mortgage
Loans and the Mortgaged Properties and to institute foreclosure proceedings
or
obtain a deed-in-lieu of foreclosure so as to convert the ownership of such
properties, and to hold or cause to be held title to such properties, on behalf
of the Trustee. The Servicer shall at its own expense be responsible for
preparing and recording all lien releases and mortgage satisfactions in
accordance with state and local regulations. The Servicer shall service and
administer the Mortgage Loans in accordance with applicable state and federal
law and shall provide to the Mortgagors any reports required to be provided
to
them thereby. The Servicer shall also comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under
any
standard hazard insurance policy or any Primary Mortgage Insurance Policy (if
applicable). Subject to Section 3.16, the Trustee shall execute, at the
written request of the Servicer, and furnish to the Servicer and any Subservicer
such documents provided to the Trustee as are necessary or appropriate to enable
the Servicer or any Subservicer to carry out their servicing and administrative
duties hereunder, and the Trustee hereby grants to the Servicer, and this
Agreement shall constitute, a power of attorney to carry out such duties
including a power of attorney to take title to Mortgaged Properties after
foreclosure on behalf of the Trustee. The Trustee shall execute a separate
power
of attorney, furnished to it by the Servicer, in favor of the Servicer for
the
purposes described herein to the extent necessary or desirable to enable the
Servicer to perform its duties hereunder. The Trustee shall not be liable for
the actions of the Servicer or any Subservicers under such powers of attorney.
Notwithstanding anything contained herein to the contrary, no Servicer or
Subservicer shall without the Trustee’s consent: (i) initiate any action, suit
or proceeding solely under the Trustee’s name without indicating the Servicer’s
or Subservicer’s, as applicable, representative capacity, or (ii) knowingly take
any action with the intent to, or which actually does cause, the Trustee to
be
registered to do business in any state.
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(b) Subject
to Section 3.09(b), in accordance with the standards of the preceding
paragraph, the Servicer shall advance or cause to be advanced funds as necessary
for the purpose of effecting the timely payment of taxes and assessments on
the
Mortgaged Properties, which advances shall be Servicing Advances reimbursable
in
the first instance from the collection from the Mortgagors pursuant to
Section 3.09(b), and further as provided in Section 3.11. Any cost
incurred by the Servicer or by Subservicers in effecting the timely payment
of
taxes and assessments on a Mortgaged Property shall not be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit.
(c) Notwithstanding
anything in this Agreement to the contrary, the Servicer may not make any future
advances with respect to a Mortgage Loan (except as provided in
Section 4.01) and the Servicer shall not (i) permit any modification
with respect to any Mortgage Loan that would change the Mortgage Rate, reduce
or
increase the principal balance (except for reductions resulting from actual
payments of principal) or change the final maturity date on such Mortgage Loan
(except for a reduction of interest payments resulting from the application
of
the Servicemembers Civil Relief Act or any similar state statutes) or
(ii) permit any modification, waiver or amendment of any term of any
Mortgage Loan that would both (A) effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the Code (or final, temporary or
proposed Treasury regulations promulgated thereunder) and (B) cause either
the Upper Tier REMIC or a Lower Tier REMIC to fail to qualify as a REMIC under
the Code or the imposition of any tax on “prohibited transactions” or
“contributions after the startup day” under the REMIC Provisions, or
(iii) except as provided in Section 3.07(a), waive any Prepayment
Charges.
(d) The
Servicer may delegate its responsibilities under this Agreement; provided,
however,
that no
such delegation shall release the Servicer from the responsibilities or
liabilities arising under this Agreement.
(e) As
of the
Closing Date, JPMorgan has engaged Chase Home Finance LLC (“CHF”) to act as
subservicer with respect to JPMorgan’s servicing obligations under this
Agreement. So long as JPMorgan is not a ranked servicer by any Rating Agency,
JPMorgan agrees that prior to replacing CHF as subservicer, other than with
an
affiliate of JPMorgan that is a ranked servicer, it will obtain written
confirmation from each Rating Agency that such replacement of CHF as subservicer
with respect to JPMorgan’s servicing obligations related to the Mortgage Loans
will not cause the current rating on the Certificates to be withdrawn or lowered
by such Rating Agency and agrees that any replacement subservicer shall agree
to
subservice in accordance with the terms of this Agreement, including but not
limited to the consideration of whether to waive a Prepayment Charge
thereunder.
Section
3.02 Subservicing
Agreements between Servicer and Subservicers; Use of
Subcontractors.(a)
The
Servicer may enter into a subservicing agreement with a Subservicer, for the
servicing and administration of the Mortgage Loans (“Subservicing
Agreement”)
without obtaining the prior consent of the Trustee, the Depositor, the Master
Servicer, Securities Administrator or other parties hereto to the utilization
of
any such Subservicer, provided the provisions of such Subservicing Agreement
comply with the requirements set forth of this Section 3.02. None of the
Trustee, the Master Servicer or the Depositor shall be required to review or
consent to such Subservicing Agreement and shall have no liability in connection
therewith.
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(b) Each
Subservicer shall be (i) authorized to transact business in the state or
states in which the related Mortgaged Properties it is to service are situated,
if and to the extent required by applicable law to enable the Subservicer
to
perform its obligations hereunder and under the Subservicing Agreement and
(ii)
a Xxxxxxx Mac or Xxxxxx Mae approved mortgage servicer. The Servicer shall
examine each Subservicing Agreement and will be familiar with the terms thereof.
The Servicer and the Subservicers may enter into and make amendments to the
Subservicing Agreements or enter into different forms of Subservicing
Agreements; provided,
however,
that
any such amendments or different forms shall be consistent with and not violate
the provisions of this Agreement, and that no such amendment or different
form
shall be made or entered into which could be reasonably expected to be
materially adverse to the interests of the Trustee, the Depositor, the Master
Servicer or the Securities Administrator without their prior written consent.
The Servicer shall deliver to the Master Servicer and the Securities
Administrator copies of any additional Subservicing Agreements relating to
the
Mortgage Loans entered into after the Closing Date, and any and all
amendments thereto
promptly
upon the Servicer’s execution and delivery of such instruments.
(c) As
part
of its servicing activities hereunder, the Servicer (except as otherwise
provided in the last sentence of this paragraph) shall enforce the obligations
of each Subservicer under the related Subservicing Agreement, including, without
limitation, (i) any obligation to make advances in respect of delinquent
payments as required by a Subservicing Agreement, (ii) the obligation to
establish Subservicing Accounts meeting the criteria of Section 3.08 and (iii)
the reporting obligations set forth under Section 3.22, 3.23, 3.24 and 3.30
hereof to the same extent as if such Subservicer were the Servicer and a party
to this Agreement. The Servicer shall be responsible for obtaining from each
Subservicer and delivering to the Master Servicer, the Securities Administrator
and the Depositor (i) any servicer annual compliance statement required to
be
delivered by such Subservicer under Section 3.24(b); (ii) any report on
assessments and attestations of compliance with Relevant Servicing Criteria
required to be delivered by the Subservicer pursuant to Sections 3.22 and 3.23;
and (iii) any certifications required to be delivered under Section 3.24(a)
to
the Master Servicer or such other Person that will be responsible for signing
the Xxxxxxxx-Xxxxx Certification as and where required to be delivered
hereunder. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such
an
extent and at such time as the Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Servicer
shall pay the costs of such enforcement at its own expense, and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts
due
in respect of the related Mortgage Loans or (ii) from a specific recovery
of costs, expenses or attorneys’ fees against the party against whom such
enforcement is directed.
(d) It
shall
not be necessary for the Servicer to seek the consent of the Depositor, the
Trustee, the Master Servicer, the Securities Administrator or other parties
hereto to the utilization of a Subcontractor. The Servicer shall give prompt
written notice to the Master Servicer and the Depositor of the appointment
of
any Subcontractor and provide a written description (in form and substance
satisfactory to the Depositor) of the role and function of each Subcontractor
specifying (i) which, if any, of such Subcontractors are Servicing Function
Participants, (ii) which elements of the Servicing Criteria set forth under
Item
1122(d) of Regulation AB will be addressed in assessments and attestations
of
compliance with Relevant Servicing Criteria provided by such Subcontractor
identified pursuant to clause (i) of this paragraph.
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(e) As
a
condition to the utilization of any Subcontractor determined by the Servicer
to
be a Servicing Function Participant, the Servicer shall cause any such
Subcontractor used by the Servicer (or by any Subservicer) to comply with
the
provisions of Sections 3.22, 3.23, 3.24, 3.30, 6.05, 6.06, 7.01(i) and Exhibit
S
of this Agreement to the same extent as if such Subcontractor were the Servicer.
The Servicer shall be responsible for obtaining from each Subcontractor and
delivering the Securities Administrator, the Master Servicer and the Depositor
any assessments and attestations of compliance required to be delivered by
such
Subcontractor pursuant to Sections 3.22 and 3.23, in each case as and when
required to be delivered.
Section
3.03 Successor
Subservicers.The
Servicer shall be entitled to terminate any Subservicing Agreement and the
rights and obligations of any Subservicer pursuant to any Subservicing Agreement
in accordance with the terms and conditions of such Subservicing Agreement.
In
the event of termination of any Subservicer, all servicing obligations of such
Subservicer shall be assumed simultaneously by the Servicer without any act
or
deed on the part of such Subservicer or Servicer, and the Servicer either shall
service directly the related Mortgage Loans or shall enter into a Subservicing
Agreement with a successor subservicer which qualifies under
Section 3.02.
Any
Subservicing Agreement shall include the provision that such agreement may
be
immediately terminated by the Master Servicer without fee, in accordance with
the terms of this Agreement, in the event that the Servicer shall, for any
reason, no longer be the Servicer (including termination due to an Event of
Default).
Section
3.04 Liability
of the Servicer.Notwithstanding
any subservicing agreement or the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Subservicer, Subcontractor
or other third party or reference to actions taken through a Subservicer, a
Subcontractor, another third party or otherwise, the Servicer shall remain
obligated and primarily liable to the Trustee and the Trust Fund for the
servicing and administering of the Mortgage Loans in accordance with the
provisions hereof without diminution of such obligation or liability by virtue
of any subservicing, subcontracting or other agreements or arrangements or
by
virtue of indemnification from a Subservicer, Subcontractor or a third party
and
to the same extent and under the same terms and conditions as if the Servicer
alone were servicing the Mortgage Loans, including with respect to compliance
with Item 1122 of Regulation AB. The Servicer shall be entitled to enter into
any agreement with a Subservicer, Subcontractor or other third party for
indemnification of the Servicer by such Subservicer, Subcontractor or third
party and nothing contained in the Agreement shall be deemed to limit or modify
such indemnification.
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Section
3.05 No
Contractual Relationship between Subservicers and the Master
Servicer.Any
Subservicing Agreement that may be entered into and any transactions or services
relating to the Mortgage Loans involving a Subservicer in its capacity as such
shall be deemed to be between the Subservicer and the Servicer alone, and none
of the Trustee, the Depositor, the Securities Administrator, or the Master
Servicer (nor any successor master servicer) shall be deemed a party thereto
and
shall have no claims, rights, obligations, duties or liabilities with respect
to
the Subservicer except as set forth in Section 3.06. The Servicer shall be
solely liable for all fees owed by it to any Subservicer, irrespective of
whether the Servicer’s compensation pursuant to this Agreement is sufficient to
pay such fees.
Section
3.06 Assumption
or Termination of Subservicing Agreements by Master Xxxxxxxx.Xx
the
event the Servicer at any time shall for any reason no longer be the Servicer
(including by reason of the occurrence of an Event of Default), the Master
Servicer, or its designee or the successor servicer if the successor is not
the
Master Servicer, shall thereupon assume all of the rights and obligations of
the
Servicer under each Subservicing Agreement that the Servicer may have entered
into, with copies thereof provided to the Master Servicer or the successor
servicer if the successor is not the Master Servicer, prior to the Master
Servicer or the successor servicer if the successor is not the Master Servicer,
assuming such rights and obligations, unless the Master Servicer elects to
terminate any Subservicing Agreement in accordance with its terms as provided
in
Section 3.03.
Upon
such
assumption, the Master Servicer, its designee or the successor servicer shall
be
deemed, subject to Section 3.03, to have assumed all of the Servicer’s
interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement
had
been assigned to the assuming party, except that (i) the Servicer shall not
thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of
the Trustee, the Depositor, the Master Servicer, the Securities Administrator,
their designees or any successor servicer shall be deemed to have assumed any
liability or obligation of the Servicer that arose before it ceased to be the
Servicer.
The
Servicer at its expense shall, upon request of the Master Servicer, its designee
or the successor servicer deliver to the assuming party all documents and
records relating to the Subservicing Agreement and the Mortgage Loans then
being
serviced and an accounting of amounts collected and held by or on behalf of
it,
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Subservicing Agreements to the assuming party.
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Section
3.07 Collection
of Certain Mortgage Loan Payments.(a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of any applicable Insurance Policies, follow such collection procedures as
it
would follow with respect to mortgage loans comparable to the Mortgage Loans
and
held for its own account. Consistent with the foregoing and Accepted Servicing
Practices, the Servicer may (i) waive any late payment charge or, if
applicable, any penalty interest, or (ii) extend the due dates for the
Scheduled Payments due on a Mortgage Note for a period of not greater than
180 days; provided,
that
any extension pursuant to clause (ii) above shall not affect the
amortization schedule of any Mortgage Loan for purposes of any computation
hereunder, except as provided below. In the event of any such arrangement
pursuant to clause (ii) above, the Servicer shall make timely advances
on such Mortgage Loan during such extension pursuant to Section 4.01 and in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, subject to
Section 4.01(d) pursuant to which the Servicer shall not be required to
make any such advances that are Nonrecoverable P&I Advances. Notwithstanding
the foregoing, in the event that any Mortgage Loan is in default or in the
judgment of the Servicer, such default is reasonably foreseeable, the Servicer,
consistent with the standards set forth in Section 3.01, may also waive,
modify or vary any term of such Mortgage Loan (including modifications that
would change the Mortgage Rate, forgive the payment of principal or interest,
extend the final maturity date of such Mortgage Loan or waive, in whole or
in
part, a Prepayment Charge), accept payment from the related Mortgagor of an
amount less than the Stated Principal Balance in final satisfaction of such
Mortgage Loan, or consent to the postponement of strict compliance with any
such
term or otherwise grant indulgence to any Mortgagor (any and all such waivers,
modifications, variances, forgiveness of principal or interest, postponements,
or indulgences collectively referred to herein as “Forbearance”);
provided,
however,
that
the Servicer’s approval of a modification of a Due Date shall not be considered
a modification for purposes of this sentence; provided,
further,
that
the final maturity date of any Mortgage Loan may not be extended beyond the
Final Scheduled Distribution Date for the LIBOR Certificates. The Servicer’s
analysis supporting any Forbearance and the conclusion that any Forbearance
meets the standards of Section 3.01 shall be reflected in writing in the
Servicing File or on the Servicer’s servicing records. In addition,
notwithstanding the foregoing, the Servicer may also waive (or permit a
Subservicer to waive), in whole or in part, a Prepayment Charge if such waiver
would, in the Servicer’s judgment, maximize recoveries on the related Mortgage
Loan or if such Prepayment Charge is (i) not permitted to be collected by
applicable law, or the collection of the Prepayment Charge would be considered
“predatory” pursuant to written guidance published by any applicable federal,
state or local regulatory authority having jurisdiction over such matters,
or
(ii) the enforceability of such Prepayment Charge is limited (1) by
bankruptcy, insolvency, moratorium, receivership or other similar laws relating
to creditors’ rights or (2) due to acceleration in connection with a
foreclosure or other involuntary payment. If a Prepayment Charge is waived
other
than as permitted in this Section 3.07(a), then the Servicer is required to
pay the amount of such waived Prepayment Charge, for the benefit of the Holders
of the Class P Certificates, by depositing such amount into the Collection
Account together with and at the time that the amount prepaid on the related
Mortgage Loan is required to be deposited into the Collection Account;
provided,
however,
that
the Servicer shall not have an obligation to pay the amount of any uncollected
Prepayment Charge if the failure to collect such amount is the direct result
of
inaccurate or incomplete information on the Mortgage Loan Schedule in effect
at
such time. The Master Servicer shall have no responsibility for verifying the
accuracy of the amount of Prepayment Charges waived or remitted by the
Servicer.
(b) (i) The
Securities Administrator shall establish and maintain the Excess Reserve Fund
Account, 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 Basis Risk Carryover Amounts.
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(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.
(c) (i) On
each
Distribution Date on which there exists a Basis Risk Carryover Amount on any
Class of 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)(C), 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 (E)) 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 the
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)(D).
(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 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. 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 3.07(c) and
Sections 4.02(a)(iii)(C) and (D).
(d) The
Securities Administrator shall establish and maintain the Distribution Account
on behalf of the Certificateholders. The Master Servicer shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the
following:
(i) the
aggregate amount remitted by the Servicer to the Master Servicer pursuant to
Section 3.11;
(ii) any
amount deposited by the Servicer pursuant to Section 3.12(b) in connection
with any losses on Permitted Investments; and
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(iii) any
other
amounts deposited hereunder which are required to be deposited in the
Distribution Account.
In
the
event that the 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.
(e) The
Securities Administrator may invest the funds in the Distribution Account during
the Securities Administrator Float Period in one or more Permitted Investments
in accordance with Section 3.12. The Securities Administrator may withdraw
from the Distribution Account any income or gain earned from the investment
of
funds deposited therein for its own benefit.
(f) The
Servicer shall give notice to the Securities Administrator of any proposed
change of the location of the Collection Account not later than 30 days and
not more than 45 days prior to any change thereof and the Securities
Administrator shall forward such notice to each Rating Agency and the
Depositor.
(g) To
help
fight the funding of terrorism and money laundering activities, the Trustee
will
obtain, verify, and record information that identifies individuals or entities
that establish a relationship or open an account with the Trustee. The Trustee
will ask for the name, address, tax identification number and other information
that will allow the Trustee to identify the individual or entity who is
establishing the relationship or opening the account. The Trustee may also
ask
for formation documents such as articles of incorporation, an offering
memorandum, or other identifying documents to be provided.
Section
3.08 Subservicing
Xxxxxxxx.Xx
those
cases where a Subservicer is servicing a Mortgage Loan pursuant to a
Subservicing Agreement, the Subservicer will be required to establish and
maintain one or more segregated accounts (collectively, the “Subservicing
Account”).
The
Subservicing Account shall be an Eligible Account and shall otherwise be
acceptable to the Servicer. The Subservicer shall deposit in the clearing
account (which account must be an Eligible Account) in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Subservicer’s receipt thereof, all proceeds of
Mortgage Loans received by the Subservicer less its servicing compensation
to
the extent permitted by the Subservicing Agreement, and shall thereafter deposit
such amounts in the Subservicing Account, in no event more than two Business
Days after the deposit of such funds into the clearing account. The Subservicer
shall thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Subservicing Account.
For purposes of this Agreement, the Servicer shall be deemed to have received
payments on the Mortgage Loans when the Subservicer receives such payments.
Funds in the clearing account and any Subservicing Account may, in the
discretion of the Servicer, be invested in Permitted Investments pending their
deposit in the Subservicing Account and the Collection Account, as applicable;
however, the Servicer shall be responsible for reimbursement of any losses
incurred on such investments.
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Section
3.09 Collection
of Taxes, Assessments and Similar Items; Escrow Accounts.
(a) The
Servicer shall enforce the obligations under each paid-in-full, life-of-the-loan
tax service contract in effect with respect to each Mortgage Loan (each, a
“Tax
Service Contract”).
Each
Tax Service Contract shall be transferred to a successor Servicer, at the
Servicer’s expense in the event that the Servicer is terminated for cause as
Servicer of the related Mortgage Loan; otherwise such expense will be borne
by
the successor servicer.
(b) To
the
extent that the services described in this paragraph (b) are not
otherwise provided pursuant to the Tax Service Contracts described in
paragraph (a) hereof, the Servicer undertakes to perform such
functions. To the extent the related Mortgage provides for Escrow Payments,
the
Servicer shall establish and maintain, or cause to be established and
maintained, one or more segregated accounts (the “Escrow
Accounts”),
which
shall be Eligible Accounts. The Servicer shall deposit in the clearing account
(which account must be an Eligible Account) in which it customarily deposits
payments and collections on mortgage loans in connection with its mortgage
loan
servicing activities on a daily basis, and in no event more than one Business
Day after the Servicer’s receipt thereof, all collections from the Mortgagors
(or related advances from Subservicers) for the payment of taxes, assessments,
hazard insurance premiums and comparable items for the account of the Mortgagors
(“Escrow
Payments”)
collected on account of the Mortgage Loans and shall thereafter deposit such
Escrow Payments in the Escrow Accounts, in no event more than two Business
Days
after the deposit of such funds in the clearing account, for the purpose of
effecting the payment of any such items as required under the terms of this
Agreement. Withdrawals of amounts from an Escrow Account may be made only to
(i) effect payment of taxes, assessments, hazard insurance premiums, and
comparable items; (ii) reimburse the Servicer (or a Subservicer to the
extent provided in the related Subservicing Agreement) out of the collection
for
any advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.13 (with respect to hazard insurance);
(iii) refund to Mortgagors any sums as may be determined to be overages;
(iv) pay interest, if required and as described below, to Mortgagors on
balances in the Escrow Account; (v) clear and terminate the Escrow Account
at the termination of the Servicer’s obligations and responsibilities in respect
of the Mortgage Loans under this Agreement; or (vi) recover amounts
deposited in error. As part of its servicing duties, the Servicer or
Subservicers shall pay to the Mortgagors interest on funds in Escrow Accounts,
to the extent required by law and, to the extent that interest earned on funds
in the Escrow Accounts is insufficient, to pay such interest from its or their
own funds, without any reimbursement therefor. To the extent that a Mortgage
does not provide for Escrow Payments, the Servicer shall determine whether
any
such payments are made by the Mortgagor in a manner and at a time that avoids
the loss of the Mortgaged Property due to a tax sale or the foreclosure of
a tax
lien. The Servicer assumes full responsibility for the payment of all such
bills
within such time and shall effect payments of all such bills irrespective of
the
Mortgagor’s faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments; provided,
however,
that
such advances are deemed to be Servicing Advances.
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Section
3.10 Collection
Account.
(a) On behalf of the Trustee, the Servicer shall establish and
maintain, or cause to be established and maintained, one or more segregated
Eligible Accounts (such account or accounts, the “Collection
Account”),
held
in trust for the benefit of the Trustee. On behalf of the Trustee, the Servicer
shall deposit or cause to be deposited in the clearing account (which account
must be an Eligible Account) in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Servicer’s receipt thereof, and shall thereafter deposit into the Collection
Account, in no event more than two Business Days after the deposit of such
funds
into the clearing account, as and when received or as otherwise required
hereunder, the following payments and collections received or made by it
subsequent to the Cut-off Date (other than in respect of principal or interest
on the related Mortgage Loans due on or before the Cut-off Date), or payments
(other than Principal Prepayments) received by it on or prior to the Cut-off
Date but allocable to a Due Period subsequent thereto:
(i) all
payments on account of principal, including Principal Prepayments, on the
Mortgage Loans;
(ii) all
payments on account of interest (net of the related Servicing Fee) on each
Mortgage Loan;
(iii) all
Insurance Proceeds and Condemnation Proceeds to the extent such Insurance
Proceeds and Condemnation Proceeds are not to be applied to the restoration
of
the related Mortgaged Property or released to the related Mortgagor in
accordance with the express requirements of law or in accordance with Accepted
Servicing Practices, Liquidation Proceeds and Subsequent
Recoveries;
(iv) any
amounts required to be deposited pursuant to Section 3.12 in connection
with any losses realized on Permitted Investments with respect to funds held
in
the Collection Account;
(v) any
amounts required to be deposited by the Servicer pursuant to the second
paragraph of Section 3.13(a) in respect of any blanket policy
deductibles;
(vi) all
proceeds of any Mortgage Loan repurchased or purchased in accordance with this
Agreement; and
(vii) all
Prepayment Charges collected by the Servicer.
The
foregoing requirements for deposit in the Collection Account shall be exclusive,
it being understood and agreed that, without limiting the generality of the
foregoing, payments in the nature of late payment charges, NSF fees,
reconveyance fees, assumption fees and other similar fees and charges need
not
be deposited by the Servicer in the Collection Account and shall, upon
collection, belong to the Servicer as additional compensation for its servicing
activities. In the event the Servicer shall deposit in the Collection Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.