The findings in this examination are factual although they are here provided for informational purposes only and are not to be construed as legal advice. The borrower or the reader, as the case may be, was or is advised to consult a competent legal professional in connection with the contents of this report and its proper use.
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SECURITIZATION, Part 2
8. 2. Acceptance of the Mortgage Loans
“(a) The Trustee acknowledges receipt of the documents identified in the Initial
Certification and declares that it holds and will hold such documents and the other
documents delivered to it constituting the Mortgage Files, and that it holds or will hold
such other assets as are included in the Trust Fund.
The Trustee agrees to execute and deliver on the Closing Date to the Depositor, the Master
Servicer and Countrywide an Initial Certification. Based on its review and examination,
the Trustee acknowledges that such documents appear regular on their face and relate to
such Initial Mortgage Loan. The Trustee shall be under no duty or obligation to inspect,
review or examine said documents, instruments, certificates or other papers to determine
that the same are genuine, enforceable or appropriate for the represented purpose or
that they have actually been recorded in the real estate records.
On or about the thirtieth day after the Closing Date, the Trustee shall deliver to the
Depositor, the Master Servicer and Countrywide a Delay Delivery Certification with respect
to the Mortgage Loans with any applicable exceptions noted thereon.
Not later than 90 days after the Closing Date, the Trustee shall deliver to the Depositor,
the Master Servicer and Countrywide a Final Certification with respect to the Initial
Mortgage Loans, with any applicable exceptions noted thereon.
If, in the course of such review, the Trustee finds any document constituting a part of a
Mortgage File which does not meet the requirements of Section 2.01, the Trustee shall list
such as an exception in the Final Certification; provided, however that the Trustee shall
not make any determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee thereof, in
and to that Mortgage Note or (ii) any assignment is in recordable form or is sufficient
to effect the assignment of and transfer to the assignee thereof under the mortgage to
which the assignment relates.
Countrywide shall promptly correct or cure such defect within 90 days from the date it
was so notified of such defect and, if Countrywide does not correct or cure such defect
within such period, Countrywide shall either (a) substitute for the related Mortgage Loan
a Substitute Mortgage Loan, which substitution shall be accomplished in the manner and
subject to the conditions set forth in Section 2.03, or (b) purchase such Mortgage Loan
from the Trustee within 90 days from the date Countrywide was notified of such defect in
writing at the Purchase Price of such Mortgage Loan.
(b) Upon delivery of the Supplemental Mortgage Loans pursuant to a Supplemental
Transfer Agreement, the Trustee shall acknowledge receipt of the documents identified in
any Supplemental Certification and declare that it will hold such documents and the other
documents delivered to it constituting the Mortgage Files, and that it will hold such other
assets as are included in the Trust Fund.
The Trustee agrees to execute and deliver on the Supplemental Transfer Date to the
Depositor, the Master Servicer and Countrywide a Supplemental Certification. Based on
its review and examination the Trustee shall acknowledge that such documents appear
regular on their face and relate to such Supplemental Mortgage Loan.
The Trustee shall be under no duty or obligation to inspect, review or examine said
documents, instruments, certificates or other papers to determine that the same are
genuine, enforceable or appropriate for the represented purpose or that they have
actually been recorded in the real estate records or that they are other than what they
purport to be on their face.
On or about the twentieth day after the Supplemental Transfer Date, the Trustee shall
deliver to the Depositor, the Master Servicer and Countrywide a Delay Delivery
Certification with respect to the Supplemental Mortgage Loans, with any applicable
exceptions noted thereon.
Not later than 90 days after the final Supplemental Transfer Date, the Trustee shall
deliver to the Depositor, the Master Servicer and Countrywide a Final Certification with
respect to the Supplemental Mortgage Loans, with any applicable exceptions noted
thereon.
(c) If, in the course of such review of the Mortgage Files relating to the Supplemental
Mortgage Loans, the Trustee finds any document constituting a part of a Mortgage File
which does not meet the requirements of Section 2.01, the Trustee shall list such as an
exception in the Final Certification; provided, however that the Trustee shall not make
any determination as to whether (i) any endorsement is sufficient to transfer all right,
title and interest of the party so endorsing, as noteholder or assignee thereof, in and to
that Mortgage Note or (ii) any assignment is in recordable form or is sufficient to effect
the assignment of and transfer to the assignee thereof under the mortgage to which the
assignment relates.
Countrywide shall promptly correct or cure such defect within 90 days from the date it
was so notified of such defect and, if Countrywide does not correct or cure such defect
within such period, Countrywide shall either (a) substitute for the related Mortgage Loan
a Substitute Mortgage Loan, which substitution shall be accomplished in the manner and
subject to the conditions set forth in Section 2.03, or (b) purchase such Mortgage Loan
from the Trustee within 90 days from the date Countrywide was notified of such defect in
writing at the Purchase Price of such Mortgage Loan.
(d) The Trustee shall retain possession and custody of each Mortgage File in accordance
with and subject to the terms and conditions set forth herein. The Master Servicer shall
promptly deliver to the Trustee, upon the execution or receipt thereof, the originals of
such other documents or instruments constituting the Mortgage File as come into the
possession of the Master Servicer from time to time.
(e) It is understood and agreed that the respective obligations of each Seller to substitute
for or to purchase any Mortgage Loan sold to the Depositor by it which does not meet the
requirements of Section 2.01 above shall constitute the sole remedy respecting such
defect available to the Trustee, the Depositor and any Certificateholder against that
Seller.” Pooling & Servicing Agreement; Section 2.02, Acceptance by Trustee of Mortgage Loans, page II-7, abridged.
9. Reports Pertaining to Compliance by the Trustee
The following are reports of compliance pertaining to the trustee that were on file with the
Securities and Exchange Commission under the name of the trust as of November 18, 2017, the
date of examination. These were filed together with the trust’s Annual Report under SEC
Form 10-K (see Securitization; About the Securitization Trust; 4. Links to the Trust Documents).
9 .1.1. Report Title
This report is titled “Assertion of Compliance with Applicable Servicing Criteria.”
9. 1.2. Excerpts, Main Report
Among others, the main report states:
“The Bank of New York and The Bank of New York Trust Co., NA, (collectively,
the "Company") is responsible for assessing compliance with the applicable
servicing criteria set forth in Item 1122(d) of Regulation AB of the SEC.
Applicable Servicing Criteria: All servicing criteria set forth in Item 1122(d), to
the extent required by the related transaction agreements as to any
transaction, except as set forth in the column titled "Not Applicable to
Platform" in Appendix 1 attached hereto.
Period: Twelve months ended December 31, 2007.”
Signatories: Authorized officers of The Bank of New York Trust Co., NA and The
Bank of New York.
9. 1.3. Selected Servicing Criteria
The following criteria were selected from those that were listed in Appendix 1, an
attachment to the main report. These criteria belong to the class labelled “Pool
Asset Administration.”
9. 2.1. Report Title
This report is titled “Report of Independent Registered Public Accounting Firm.”
9. 2.2. Excerpts
Among others, this report states that the firm has examined management's
assessment, included in the accompanying assertions of compliance that The Bank
of New York and The Bank of New York Trust Co., NA complied with the servicing
criteria set forth in Item 1122(d) of the Securities and Exchange Commission's
Regulation AB for the publicly issued residential mortgage-backed securities issued
on or after January 1, 2006 for which the Company provides trustee, securities
administration, paying agent, or custodial services (the Platform).
Signatory: KPMG, LLP.
10. Other Provisions Governing the Transfer of Mortgage Loans
The loan should have been conveyed by the originating lender to the seller, by the seller to the
depositor and by the depositor to the trustee. Thus, the Fixed Rate Note should have been
endorsed and the Mortgage should have been assigned by the originating lender to the seller, by
the seller to the depositor and by the depositor to the trustee. These transactions should have
occurred on or before December 28, 2007, or three months after the trust’s closing date on
September 28, 2007 in order for:
10.1. The loan to be classified as a qualified mortgage, which is defined as follows:
“For any obligation to qualify for inclusion into a REMIC, it must be a qualified
mortgage as it is defined in the Internal Revenue Code, Section 860G, paragraph a-3,
viz.;
A ‘qualified mortgage’ means any obligation which is principally secured by an
interest in real property and which is transferred to the REMIC on the start-up day in
exchange for regular or residual interests in the REMIC, or is purchased by the REMIC
within the three-month period beginning on the start-up day.”
10.2. The trust, which was established in accordance with the laws of the state of New York, to
comply with the New York Estates, Powers, and Trusts Law § 7-2.4 which states that:
“If the trust is expressed in the instrument creating the estate of the trustee, every
sale, conveyance or other act of the trustee in contravention of the trust, except as
authorized by this article and by any other provision of law, is void.”
Other Trusts in Which The Bank of New York is Trustee
The following are some of the securitization trusts that were established in the year 2007 in which The Bank of New York is Trustee aside from CHL Mortgage Pass-Through Trust 2007-18. In all of these trusts, Countrywide Home Loans, Inc. is the seller or one of the sellers.
The following are some of the securitization trusts that were established in the year 2007 in which The Bank of New York is Trustee aside from CHL Mortgage Pass-Through Trust 2007-18. In all of these trusts, Countrywide Home Loans, Inc. is the seller or one of the sellers.
Name of Trust: Alternative Loan Trust 2007-23CB; Closing Date: July 30, 2007; Depositor:
CWALT, Inc.; Number of Loans in Portfolio: 4,602; Total Amount of Loans in Portfolio:
$993,589,354
Alternative Loan Trust 2007-25; September 28, 2007; CWALT, Inc.; 955; $534,158,390;
Alternative Loan Trust 2007-HY9; July 31, 2007; CWALT, Inc.; 874; $581,012,001;
CHL Mortgage Pass-Through Trust 2007-16; August 30, 2007; CWMBS, Inc.; 1,090; $655,313,143;
CHL Mortgage Pass-Through Trust 2007-19; October 30, 2007; CWMBS, Inc.; 713;
$444,986,556;
CHL Mortgage Pass-Through Trust 2007-21; December 28, 2007; CWMBS, Inc.; 1,056;
$631,925,329;
CHL Mortgage Pass-Through Trust 2007-HY6; September 28, 2007; CWMBS, Inc.; 1,923
$1,218,570,771;
CHL Mortgage Pass-Through Trust 2007-HY7; October 30, 2007; CWMBS, Inc.; 754;
$559,978,366;
CHL Mortgage Pass-Through Trust 2007-J3; June 29, 2007; CWMBS, Inc.; 336;
$183,199,896;
CWABS Asset-Backed Certificates Trust 2007-12; August 13, 2007; CWABS, Inc.; 7,437;
$1,459,985,056;
CWABS Asset-Backed Certificates Trust 2007-13; October 30, 2007; CWABS, Inc.; 3,359;
$799,999,980;
CWABS Asset-Backed Certificates Trust 2007-BC3; June 29, 2007; CWABS, Inc.; 2,843;
$574,992,638;
CWHEQ Revolving Home Equity Loan Trust 2007-G; August 15, 2007; CWHEQ, Inc.; 18,927;
$586,299,758;
Examiner’s Comments
1. The subject loan is purported to have been securitized into CHL Mortgage Pass-Through Trust
2007-18. The trustee for this trust is The Bank of New York Mellon, formerly known as The Bank
of New York.
The trust is a common law trust that is governed in accordance with the laws of the state of
New York. It was established under a Pooling and Servicing Agreement dated as of September
1, 2007 in order for its assets to qualify as a REMIC. The cut-off and closing dates of the trust
were on September 1, 2007 and September 28, 2007, respectively.
1. The subject loan is purported to have been securitized into CHL Mortgage Pass-Through Trust
2007-18. The trustee for this trust is The Bank of New York Mellon, formerly known as The Bank
of New York.
The trust is a common law trust that is governed in accordance with the laws of the state of
New York. It was established under a Pooling and Servicing Agreement dated as of September
1, 2007 in order for its assets to qualify as a REMIC. The cut-off and closing dates of the trust
were on September 1, 2007 and September 28, 2007, respectively.
2. A loan that was securitized into CHL Mortgage Pass-Through Trust 2007-18 must have been
acquired by The Bank of New York, the trustee, from CWMBS, Inc., the depositor. A loan that
was not acquired from CWMBS, Inc. but in which the note is in the possession of The Bank of
New York may only be said to be owned by The Bank of New York itself or as trustee for some
other trust, but not for CHL Mortgage Pass-Through Trust 2007-18.
The PSA specifically states that Countrywide Home Loans, Inc., the seller shall sell the
mortgage loans to the depositor. In order for the seller to sell the mortgage loans to the
depositor, it must first acquire the mortgage loans from Countrywide Bank, FSB, the originator.
Thus, the note must be endorsed by the originating lender in favor of the seller, by the seller in
favor of the depositor and by the depositor in favor of the trustee on behalf of this trust. If the
note does not bear such endorsements, as when it has only been endorsed in blank, the
trustee, at least, must be able to prove that it acquired the note from the depositor with the
intention to transfer the note to this trust.
3. The transfer should have occurred on or before December 28, 2007, or within three months of
the trust’s closing date on September 28, 2007, in order for the loan to be classified as a
qualified mortgage under the Internal Revenue Code, Section 860G, paragraph a-3.
3. The transfer should have occurred on or before December 28, 2007, or within three months of
the trust’s closing date on September 28, 2007, in order for the loan to be classified as a
qualified mortgage under the Internal Revenue Code, Section 860G, paragraph a-3.
4. The PSA requires that the loan should have been certified by the trustee as having been in its
possession as of December 28, 2007 or three months after the trust’s Closing Date if the loan
was acquired as an Initial Mortgage Loan or three months after the trust’s final Supplemental
Transfer Date if the loan was acquired as a Supplemental Mortgage Loan.
5. The certification by the trustee and the independent accountant’s attestation that are on file
with the SEC in the name of the trust are proof that the trustee has complied with the transfer
and maintenance requirements of the mortgage loan documents as prescribed in the PSA (The
certification refers to the PSA as [one of the] “transaction agreements”). It is thus to be
expected that the proofs of this compliance are borne by the documents pertinent to the
mortgage loans that are purported to have been acquired by the trust.
6. A loan in which the related documents do not bear evidence of the trustee’s compliance of the
requirements mentioned in paragraph 5 cannot be said to be owned by this trust. A request to
produce such evidence is totally different from a question being raised on the trustee’s failure
to comply with certain provisions of the PSA.
7. Aside from being the trustee for CHL Mortgage Pass-Through Trust 2007-18, The Bank of New
York also acts as trustee for several other securitization trusts. The Bank of New York as trustee,
therefore, must be able to distinguish the Fixed Rate Note from the multitudes of notes
that are in its possession on behalf of the numerous other trusts in which it is the trustee, not to
mention those that are owned by The Bank of New York itself.
8. The trust was established in order for its assets to qualify as a REMIC. Any acquisition by the
trustee on behalf of the trust that did not qualify the loan for inclusion into a REMIC is void
according to the New York Estates, Powers and Trusts Law.
(See also Examiner’s Comments, Chain of Title)
End of article
7. Aside from being the trustee for CHL Mortgage Pass-Through Trust 2007-18, The Bank of New
York also acts as trustee for several other securitization trusts. The Bank of New York as trustee,
therefore, must be able to distinguish the Fixed Rate Note from the multitudes of notes
that are in its possession on behalf of the numerous other trusts in which it is the trustee, not to
mention those that are owned by The Bank of New York itself.
8. The trust was established in order for its assets to qualify as a REMIC. Any acquisition by the
trustee on behalf of the trust that did not qualify the loan for inclusion into a REMIC is void
according to the New York Estates, Powers and Trusts Law.
End of article
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