Pooling and Servicing Agreement (2006)Full Document 

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================================================================================ MORGAN STANLEY ABS CAPITAL I INC., as Depositor, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Master Servicer, Backup Servicer and Securities Administrator, SAXON MORTGAGE SERVICES, INC. as Servicer, MASTER FINANCIAL, INC., as Servicer, IXIS REAL ESTATE CAPITAL INC., as Unaffiliated Seller, and DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee and Custodian. POOLING AND SERVICING AGREEMENT Dated as of September 1, 2006 IXIS REAL ESTATE CAPITAL TRUST 2006-HE3 MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-HE3 ================================================================================ TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS....................................................................................20 ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES...................................69 Section 2.01 Conveyance of Mortgage Loans................................................................69 Section 2.02 Acceptance by the Custodian of the Mortgage Loans...........................................76 Section 2.03 Representations, Warranties and Covenants of the Unaffiliated Seller and the Servicers......77 Section 2.04 The Depositor and the Mortgage Loans........................................................82 Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Non-Qualified Mortgages...................................................................................82 Section 2.06 Execution and Delivery of Certificates......................................................82 Section 2.07 REMIC Matters...............................................................................83 Section 2.08 Representations and Warranties of the Depositor.............................................83 ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.................................................84 Section 3.01 Servicers to Service Mortgage Loans.........................................................84 Section 3.02 Subservicing Agreements Between the Servicers and Subservicers..............................87 Section 3.03 Successor Subservicers......................................................................89 Section 3.04 Liability of the Servicers..................................................................89 Section 3.05 No Contractual Relationship Between Subservicers and the Trustee............................90 Section 3.06 Assumption or Termination of Subservicing Agreements by Backup Servicer or Master Servicer..90 Section 3.07 Collection of Certain Mortgage Loan Payments; Establishment of Certain Accounts.............91 Section 3.08 Subservicing Accounts.......................................................................96 Section 3.09 Collection of Taxes, Assessments and Similar Items; Escrow Accounts.........................96 Section 3.10 Collection Accounts.........................................................................97 Section 3.11 Withdrawals from the Collection Accounts....................................................98 Section 3.12 Investment of Funds in the Accounts........................................................100 Section 3.13 Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.............102 Section 3.14 Enforcement of Due-On-Sale Clauses Assumption Agreements...................................103 Section 3.15 Realization Upon Defaulted Mortgage Loans..................................................104 Section 3.16 Release of Mortgage Files..................................................................106 Section 3.17 Title, Conservation and Disposition of REO Property........................................107 Section 3.18 Notification of Adjustments................................................................108 Section 3.19 Access to Certain Documentation and Information Regarding the Mortgage Loans...............109 Section 3.20 Documents, Records and Funds in Possession of each Servicer to be Held for the Securities Administrator...................................................................109 Section 3.21 Servicing Compensation.....................................................................109 Section 3.22 Annual Statement as to Compliance..........................................................110 i Section 3.23 Annual Independent Public Accountants' Servicing Statement; Financial Statements...........111 Section 3.24 Backup Servicer or Master Servicer to Act as Servicer......................................113 Section 3.25 Compensating Interest......................................................................114 Section 3.26 Credit Reporting; Gramm-Leach-Bliley Act...................................................114 Section 3.27 Advance Facilities.........................................................................114 ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICERS...................................................116 Section 4.01 Advances...................................................................................116 Section 4.02 Priorities of Distribution.................................................................118 Section 4.03 Monthly Statements to Certificateholders...................................................126 Section 4.04 Certain Matters Relating to the Determination of LIBOR.....................................130 Section 4.05 [Reserved].................................................................................131 Section 4.06 [Reserved].................................................................................131 Section 4.07 Allocation of Applied Realized Loss Amounts................................................131 ARTICLE V THE CERTIFICATES..............................................................................131 Section 5.01 The Certificates...........................................................................131 Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates................132 Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates..........................................137 Section 5.04 Persons Deemed Owners......................................................................138 Section 5.05 Access to List of Certificateholders' Names and Addresses..................................138 Section 5.06 Maintenance of Office or Agency............................................................138 ARTICLE VI THE DEPOSITOR AND THE SERVICER................................................................139 Section 6.01 Respective Liabilities of the Depositor and the Servicers..................................139 Section 6.02 Merger or Consolidation of the Depositor or the Servicers..................................139 Section 6.03 Limitation on Liability of the Depositor, the Servicers and Others.........................139 Section 6.04 Limitation on Resignation of the Servicers.................................................141 Section 6.05 Additional Indemnification by the Servicers; Third Party Claims............................141 ARTICLE VII DEFAULT.......................................................................................143 Section 7.01 Events of Default..........................................................................143 Section 7.02 Backup Servicer and Master Servicer to Act; Appointment of Successor.......................145 Section 7.03 Notification to Certificateholders.........................................................147 ARTICLE VIII CONCERNING THE TRUSTEE........................................................................147 Section 8.01 Duties of the Trustee......................................................................147 Section 8.02 Certain Matters Affecting the Trustee and the Custodian....................................148 Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans......................................150 Section 8.04 Trustee May Own Certificates...............................................................151 Section 8.05 Trustee's and Custodian's Fees and Expenses................................................151 Section 8.06 Eligibility Requirements for the Trustee...................................................151 Section 8.07 Resignation and Removal of the Trustee.....................................................152 Section 8.08 Successor Trustee..........................................................................152 Section 8.09 Merger or Consolidation of the Trustee.....................................................153 Section 8.10 Appointment of Co-Trustee or Separate Trustee..............................................153 ii Section 8.11 Tax Matters................................................................................155 Section 8.12 Periodic Filings...........................................................................157 Section 8.13 Tax Classification of the Supplemental Interest Trust, the Excess Reserve Fund Account and the Swap Account.......................................................................163 Section 8.14 Interest Rate Swap Agreement...............................................................164 ARTICLE IX ADMINISTRATION OF THE MORTGAGE LOANS BY THE MASTER SERVICER...................................164 Section 9.01 Duties of the Master Servicer; Enforcement of the Servicers' Obligations...................164 Section 9.02 Maintenance of Fidelity Bond and Errors and Omissions Insurance............................165 Section 9.03 Representations and Warranties of the Master Servicer and the Backup Servicer..............165 Section 9.04 Master Servicer Events of Default..........................................................167 Section 9.05 Waiver of Default..........................................................................168 Section 9.06 Successor to the Master Servicer or Backup Servicer........................................168 Section 9.07 Compensation of the Master Servicer and Backup Servicer....................................170 Section 9.08 Merger or Consolidation....................................................................170 Section 9.09 Resignation of the Master Servicer or Backup Servicer......................................170 Section 9.10 Assignment or Delegation of Duties by the Master Servicer or Backup Servicer...............171 Section 9.11 Limitation on Liability of the Master Servicer and Backup Servicer.........................171 Section 9.12 Indemnification; Third Party Claims........................................................172 ARTICLE X CONCERNING THE SECURITIES ADMINISTRATOR.......................................................173 Section 10.01 Duties of Securities Administrator.........................................................173 Section 10.02 Certain Matters Affecting the Securities Administrator.....................................174 Section 10.03 Securities Administrator Not Liable for Certificates or Mortgage Loans.....................176 Section 10.04 Securities Administrator May Own Certificates..............................................176 Section 10.05 Securities Administrator's Fees and Expenses...............................................176 Section 10.06 Eligibility Requirements for Securities Administrator......................................177 Section 10.07 Resignation and Removal of Securities Administrator........................................178 Section 10.08 Successor Securities Administrator.........................................................179 Section 10.09 Merger or Consolidation of Securities Administrator........................................179 Section 10.10 Assignment or Delegation of Duties by the Securities Administrator.........................180 ARTICLE XI TERMINATION...................................................................................180 Section 11.01 Termination upon Liquidation or Purchase of the Mortgage Loans.............................180 Section 11.02 Final Distribution on the Certificates.....................................................181 Section 11.03 Additional Termination Requirements........................................................183 ARTICLE XII MISCELLANEOUS PROVISIONS......................................................................183 Section 12.01 Amendment..................................................................................183 Section 12.02 Recordation of Agreement; Counterparts.....................................................186 Section 12.03 Governing Law..............................................................................186 Section 12.04 Intention of Parties.......................................................................186 Section 12.05 Notices....................................................................................187 Section 12.06 Severability of Provisions.................................................................188 Section 12.07 Assignment.................................................................................188 iii Section 12.08 Limitation on Rights of Certificateholders.................................................188 Section 12.09 Inspection and Audit Rights................................................................189 Section 12.10 Certificates Nonassessable and Fully Paid..................................................189 Section 12.11 [Reserved].................................................................................190 Section 12.12 Third Party Beneficiary....................................................................190 Section 12.13 Waiver of Jury Trial.......................................................................190 Section 12.14 Regulation AB Compliance; Intent of the Parties; Reasonableness............................190 SCHEDULES Schedule I Mortgage Loan Schedule Schedule IA Schedule of Master Financial Serviced Loans Schedule IB Schedule of Saxon Serviced Loans Schedule II Representations and Warranties of Master Financial Schedule IIA Further Representations and Warranties of Master Financial Schedule III Representations and Warranties of Saxon Schedule IIIA Further Representations and Warranties of Saxon Schedule IV Representations and Warranties as to the Unaffiliated Seller EXHIBITS Exhibit A Form of Class A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class B-2 , Class B-3 and Class B-4 Certificate Exhibit B Form of Class B-5 Certificate Exhibit C Form of Class P Certificate Exhibit D Form of Class R Certificate Exhibit E Form of Class X Certificate Exhibit F Form of Initial Certification of Custodian Exhibit G Form of Final Certification of Custodian Exhibit H Form of Residual Transfer Affidavit Exhibit I Form of Transferor Certificate Exhibit J Form of Rule 144A Letter Exhibit K Form of Request for Release Exhibit L Form of Subsequent Transfer Agreement Exhibit M Depositor Certification Exhibit N-1 Servicer Certification to be provided to Depositor Exhibit N-2 Master Servicer Certification to be provided to Depositor Exhibit O Trustee Certification to be provided to Depositor Exhibit P Form for Calculation of Realized Loss/Gain Exhibit Q Servicing Criteria Exhibit R Additional Form 10-D Disclosure Exhibit S Additional Form 10-K Disclosure Exhibit T Form 8-K Disclosure Information Exhibit U Interest Rate Swap Agreement Exhibit V Form of Advance Reimbursement Notice Exhibit W Form of Master Servicer's Report iv THIS POOLING AND SERVICING AGREEMENT, dated as of September 1, 2006, among MORGAN STANLEY ABS CAPITAL I INC., a Delaware corporation, as depositor (the "Depositor"), WELLS FARGO BANK, NATIONAL ASSOCIATION, a banking association organized under the laws of the United States, as master servicer, backup servicer and securities administrator (in each such capacity, respectively, the "Master Servicer", "Backup Servicer" and the "Securities Administrator"), SAXON MORTGAGE SERVICES, INC., a Texas corporation ("Saxon"), MASTER FINANCIAL, INC., a California corporation ("Master Financial" and together with Saxon, the "Servicers"), IXIS REAL ESTATE CAPITAL INC. (f/k/a CDC Mortgage Capital Inc.), a New York corporation, as unaffiliated seller (the "Unaffiliated Seller") and DEUTSCHE BANK NATIONAL TRUST COMPANY, a national banking association, as trustee and custodian (in each such capacity respectively, the "Trustee" and the "Custodian"). W I T N E S S E T H: In consideration of the mutual agreements herein contained, the parties hereto agree as follows: PRELIMINARY STATEMENT The Securities Administrator on behalf of the Trustee shall elect that five segregated asset pools within the Trust Fund be treated for federal income tax purposes as comprising five REMICs (each a "REMIC" or, in the alternative, REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V, respectively). Each Class of Certificates, other than the Class P and Class R Certificates and other than the right of each Class of LIBOR Certificates to receive Basis Risk Carry Forward Amounts and the right of the Class X Certificates to receive payments from the Interest Rate Swap Agreement and the Pre-Funding Reserve Account, represents ownership of one or more regular interests in REMIC V for purposes of the REMIC Provisions. Additionally, the Class X Certificates represent the obligation to make certain payments of Basis Risk Carry Forward Amounts to Holders of LIBOR Certificates, and the LIBOR Certificates represent the obligation to make certain payments to the Class X Certificateholder to the extent that the interest accrued on its corresponding REMIC V Regular Interest is in excess of the interest accrued on such LIBOR Certificate. The Class P Certificates represent beneficial ownership of the Prepayment Charges, which portion of the Trust Fund shall be treated as a grantor trust. The Class I Interests are uncertificated REMIC V Regular Interests and are designed to fund net swap payments, in full or in part, on the Interest Rate Swap Agreement. The Class R Certificate represents ownership of the sole class of residual interest in each of REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V for purposes of the REMIC Provisions. The Class R-V, Class R-IV, Class R-III, Class R-II and Class R-I Interests comprise the Class R Certificate. The Startup Day for each REMIC described herein is the Closing Date. The latest possible maturity date for each regular interest is the date referenced for such regular interest in this preliminary statement. REMIC V shall hold as assets the several classes of uncertificated REMIC IV Regular Interests. Each such REMIC IV Regular Interest is hereby designated as a regular interest in REMIC IV. The Class IV-A-1, Class IV-A-2, Class IV-A-3, Class IV-A-4, Class IV-M-1, Class IV-M-2, Class IV-M-3, Class IV-M-4, Class IV-M-5, Class IV-M-6, Class IV-B-1, 1 Class IV-B-2, Class IV-B-3, and Class IV-B-4 Interests are hereby designated the REMIC IV Accretion Directed Classes. REMIC IV shall hold as assets the several classes of uncertificated REMIC III Regular Interests. Each such REMIC III Regular Interest is hereby designated as a regular interest in REMIC III. REMIC III shall hold as assets the several classes of uncertificated REMIC II Regular Interests. Each such REMIC II Regular Interest is hereby designated as a regular interest in REMIC II. REMIC II shall hold as assets the several classes of uncertificated REMIC I Regular Interests. Each such REMIC I Regular Interest is hereby
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