10-K 1 abfc02nc1_10k.txt ABFC 2002-NC1 10K 2002 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) [ x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended DECEMBER 31, 2002 or [ ] Transition Report Pursuant to Section 13 or 15d of the Securities Exchange Act of 1934 For the transition period from _____________ to ________ Commission file Number 333-90830 Asset Backed Funding Corporation (Exact name of registrant as specified in its charter) Delaware 75-2533468 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 214 North Tryon Street Charlotte, NC 28255 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: 704-386-2400 Asset Backed Funding Corporation Asset Backed Certificates Series 2002-NC1 (Title of each class of securities covered by this Form) Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X - Yes No PART I Item 1. Business Not applicable. Item 2. Properties Not applicable on reliance of Relief Letters Item 3. Legal Proceedings There were no legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of the Security Holders. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder matters There is no established public trading market for the notes. Below are the number of Noteholders or Certificateholders of record as of the end of the reporting year. Asset Backed Funding Corporation Asset Backed Certificates Series 2002-NC1 Class A-1 1 Series 2002-NC1 Class A-2 5 Series 2002-NC1 Class A-IO 4 Series 2002-NC1 Class M-1 4 Series 2002-NC1 Class M-2 3 Series 2002-NC1 Class M-3 5 Series 2002-NC1 Class M-4 3 Series 2002-NC1 Class B 1 Series 2002-NC1 Class CE 1 Series 2002-NC1 Class P 1 Item 6. Selected Financial Data. Not applicable. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Not applicable. Item 8. Financial Statements and Supplementary Data. Not applicable. Item 9. Changes in and Disagreements with Accountants on Accounting and Not applicable. PART III Item 10. Directors and Executive Officers of the Registrant Not applicable. Item 11. Executive Compensation Not applicable. Item 12. Security Ownership of Certain Beneficial Owners and Management Not applicable. Item 13. Certain Relationships and Related Transactions. Not applicable. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. Not Applicable 2. Not Applicable 3. Exhibits 99.1 Annual Summary Statement 99.2 Annual Statement as to Compliance. 99.3 Annual Independent Public Accountant's Servicing Report. 99.4 Management Assertion on USAP (b) Reports on Form 8-K The registrant has filed Current Reports on Form 8-K with the Securities and Exchange Commission dated: August 26, 2002; September 25, 2002; October 25, 2002; November 25, 2002; December 26, 2002 (c) See (a) 3 above (d) Not Applicable SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Asset Backed Funding Corporation /s/ George Ellison __________________________ George Ellison President Date: March 31, 2003 Sarbanes-Oxley Certification ABFC Asset-Backed Certificates, Series 2002-NC1 I, George Ellison, the President of Asset Backed Funding Corporation, certify that: 1) I have reviewed the annual report on Form 10-K, and all monthly current reports on Form 8-K containing a copy of the monthly statement to certificateholders delivered pursuant to Section 4.06 of the Pooling and Servicing Agreement (the "Agreement"), dated as of July 1, 2002, among Asset Backed Funding Corporation, as depositor, Ocwen Federal Bank FSB, as servicer (the "Servicer"), and U.S. Bank National Association, as trustee (the "Trustee"), filed in respect of periods included in the year covered by this annual report of the ABFC 2002-NC1 Trust; 2) Based on my knowledge, the information in these reports, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading as of the last day of the period covered by this annual report; 3) Based on my knowledge, the distribution or servicing information required to be provided to the Trustee by the Servicer under the Agreement for inclusion in these reports is included in these reports; 4) Based on my knowledge and upon the annual compliance statement included in the report and required to be delivered to the Trustee in accordance with the terms of the Agreement, and except as disclosed in the reports, the Servicer has fulfilled its obligations under the Agreement; 5) The reports disclose all significant deficiencies relating to the Servicer's compliance with the minimum servicing standards based upon the report provided by an independent public accountant, after conducting a review in compliance with the Uniform Single Attestation Program for Mortgage Bankers or similar procedure as set forth in the Agreement, that is included in these reports; and 6) In giving the certifications above, I have reasonably relied on information provided to me by the following unaffiliated parties: Ocwen Federal Bank FSB and U.S. Bank National Association. By: /s/ George Ellison Name: George Ellison Title: President EXHIBIT INDEX Exhibit Number Description 99.1 Annual Summary Statement 99.2 Annual Statement of Compliance 99.3 Report of Independent Accountants 99.4 Management Assertion on USAP EXHIBIT 99.1 -- Summary of Aggregate Amounts or End of Year Amounts for the period ending December 31, 2002 Asset Backed Funding Corporation Asset Backed Certificates Series 2002-NC1 STATEMENT TO CERTIFICATEHOLDERS 12/25/02 Class Cusip A-1 04542BAW2 A-2 04542BAX0 A-IO 04542BAY8 M-1 04542BAZ5 M-2 04542BBA9 M-3 04542BBB7 M-4 04542BBC5 B 04542BBD3 CE N/A P N/A R N/A Beginning Certificate Class Bal(1) A-1 290,280,000.00 A-2 95,892,000.00 A-IO 48,272,000.00 M-1 32,584,000.00 M-2 28,963,000.00 M-3 19,308,000.00 M-4 8,448,000.00 B 3,620,000.00 CE 3,621,032.64 P 0.00 R 0.00 Total 482,716,032.64 Class Prin A-1 19,492,315.32 A-2 5,553,000.62 A-IO 0.00 M-1 0.00 M-2 0.00 M-3 0.00 M-4 0.00 B 0.00 CE 0.00 P 0.00 R 0.00 Total 25,045,315.94 Class Int A-1 2,383,848.92 A-2 805,636.06 A-IO 1,307,366.65 M-1 324,403.15 M-2 356,681.36 M-3 297,714.62 M-4 140,751.30 B 105,583.35 CE 10,507,189.66 P 507,514.43 R 0.00 Total 16,736,689.50 Class Losses A-1 0.00 A-2 0.00 A-IO 0.00 M-1 0.00 M-2 0.00 M-3 0.00 M-4 0.00 B 0.00 CE 0.00 P 0.00 R 0.00 Total 0.00 Ending Certificate Class Bal A-1 270,787,684.68 A-2 90,338,999.38 A-IO 48,272,000.00 M-1 32,584,000.00 M-2 28,963,000.00 M-3 19,308,000.00 M-4 8,448,000.00 B 3,620,000.00 CE 3,621,032.64 P 0.00 R 0.00 Total 457,670,716.70 AMOUNTS PER $1,000 UNIT Class Prin A-1 67.150046 A-2 57.908904 A-IO 0.000000 M-1 0.000000 M-2 0.000000 M-3 0.000000 M-4 0.000000 B-1 0.000000 CE 0.000000 P 0.000000 R 0.000000 Class Int A-1 8.212240 A-2 8.401494 A-IO 27.083333 M-1 9.955903 M-2 12.315070 M-3 15.419237 M-4 16.660902 B-1 29.166671 CE 2901.710839 P 0.000000 R 0.000000 Class Total A-1 75.36229 A-2 66.31040 A-IO 27.08333 M-1 9.95590 M-2 12.31507 M-3 15.41924 M-4 16.66090 B-1 29.16667 CE 2901.71084 P 0.00000 R 0.00000 Ending Certificate Class Bal A-1 932.849954 A-2 942.091096 A-IO 1000.000000 M-1 1000.000000 M-2 1000.000000 M-3 1000.000000 M-4 1000.000000 B-1 1000.000000 CE 1000.000000 P 0.000000 R 0.000000 Class Losses A-1 0.000000 A-2 0.000000 A-IO 0.000000 M-1 0.000000 M-2 0.000000 M-3 0.000000 M-4 0.000000 B-1 0.000000 CE 0.000000 P 0.000000 R 0.000000 Current Pass-Through Class Int Rate A-1 1.68000% A-2 1.71000% A-IO 6.50000% M-1 2.06000% M-2 2.63000% M-3 3.38000% M-4 3.68000% B-1 7.00000% CE 5.53611% P 0.00000% R 0.00000% Section 4.06 (xiv.)(xv) Interest Unpaid Reduction from the Allocation of: Distribution Interest Realized Class Amount Amount Losses A-1 2,383,848.92 0 0 A-2 805,636.06 0 0 A-IO 1,307,366.65 0 0 M-1 324,403.15 0 0 M-2 356,681.36 0 0 M-3 297,714.62 0 0 M-4 140,751.30 0 0 B 105,583.35 0 0 CE 10,507,189.66 0 5898.52 P 507,514.43 NA 0 TOTAL 16,736,689.50 0 5898.52 Cap Relief Act Prepayment Carryover Interest Interest Accrued Class Amount Shortfalls Shortfalls Interest A-1 0 0 0.00 2,383,848.92 A-2 0 0 0.00 805,636.06 A-IO 0 0 0.00 1,307,366.65 M-1 0 0 0.00 324,403.15 M-2 0 0 0.00 356,681.36 M-3 0 0 0.00 297,714.62 M-4 0 0 0.00 140,751.30 B 0 0 0.00 105,583.35 CE 0 0 0.00 10,513,088.18 P 0 0 0.00 507,514.43 TOTAL 0 0 0.00 16,742,588.02 Section 4.06 (iii.)(xviii) Overcollateralization Amount 3,621,032.64 Overcollateralization Release Amount 0.00 Overcollateralization Deficiency 0.00 Overcollateralization Target amount 3,621,032.64 Monthly Excess Interest Amount 10,513,088.18 Monthly Excess Cashflow Amount 10,513,088.18 Section 4.06 (vi) BALANCES AS OF: 12/26/02 Stated Principal Balance of Mortgage Loans 457,670,716.70 Ending Count 3141 Section 4.06 (vii.) Group 1 Group 2 Weighted Avg Term to Maturity 352.94 357.35 Weighted Average Mortgage Rate 8.81409% 8.44809% Section 4.06 (v) P&I ADVANCES Aggregate Advances for the Collection Period 569,797.37 Cumulative Unreimbursed Advances 0.00 Servicing Advances 0.00 Cumulative Nonrecoverable Advances 0.00 * P&I Advances made on Mortgage Loans Delinquent as of the Determ Date Section 4.06 (viii.) DELINQUENCY INFORMATION Unpaid Prin Stated Prin Number Balance Balance 30-59 days del 78 11,371,172.19 11,352,311.47 60-89 days del 11 1,859,609.89 1,855,443.02 90 + del 0 0.00 0.00 Foreclosures 70 8,796,033.63 8,775,029.94 Bankruptcies 19 2,311,145.19 2,307,016.27 Section 4.06 (ix.) REO INFORMATION Loans that became REO properties in the preceding calendar month: Unpaid Prin Stated Prin Loan Number Balance Balance 593860 78,702.11 78,578.23 590649 92,740.38 92,586.26 Section 4.06 (x.) REO INFORMATION Number of REO Loans 2.00 Stated Principal Balance of REO Properties 171,107.26 Total Book Value of REO Properties: 174,245.91 Section 4.06 (xix.) Stepdown Date Occurrence NO Trigger Event Occurrence NO Realized Loss as a Percentage of the Original Pool Balance 0.00122% Section 4.06 (xvi.),(iv.) Trustee Fee 19,808.89 Servicing Fee 990,429.49 Credit Risk Manager Fee 34,665.07 Section 4.02(xviii.) Prepayment Penalties Loan # Penalty Loan # Penalty 584492 $483.99 607618 $2,946.09 604935 $1,796.67 600968 $3,015.39 609093 $1,826.79 592381 $3,061.91 605483 $2,023.21 603778 $3,211.38 599702 $2,178.43 604293 $3,288.23 600684 $2,313.32 610404 $3,886.98 612137 $2,813.07 609851 $4,071.28 597310 $2,864.21 607534 $4,296.04 585171 $4,556.06 595525 $6,209.66 596043 $4,590.04 575011 $7,544.41 587043 $4,616.87 591039 $9,228.40 607043 $5,029.68 577692 $10,562.11 597252 $5,240.93 577688 $10,745.34 617583 $5,243.51 598779 $10,814.33 571451 $5,744.52 609950 $11,771.96 600311 $5,937.07 614223 $12,099.34 591639 $14,218.27 Total 178,229.50 Section 4.06 (xx.)(xii)(i)(xi) Group 1 Group 2 Total Scheduled Principal 1,182,491.18 393,453.42 1,575,944.60 Curtailments 252,674.74 20,349.46 273,024.20 Realized Loss 5,898.52 0.00 5,898.52 Payoffs 18,057,149.40 5,139,197.74 23,196,347.14 Prepayment Penalties 409,025.55 98,488.89 507,514.44 Net Interest 12,360,951.61 3,928,595.94 16,289,547.55 Total Available Funds 32,256,393.96 9,580,085.45 41,836,479.41 Current Loss 5,898.52 Aggregate Realized Losses 5,898.52 Section 4.06 (xxii.) Liquidation Report Loan # Beg Bal Loss Amt 594679 241,947.37 5,898.52 Section 4.06 (xxiii.) Aggregate Balance of Loans Purchased by the Servicer or Seller 0 EXHIBIT 99.2 -- Servicer's Annual Statement of Compliance OFFICER'S CERTIFICATION ON ANNUAL STATEMENT AS TO COMPLIANCE March 13,2003 Pursuant to the applicable sections of the Servicing Agreements, I, Scott w. Anderson as officer of Ocwen Federal Bank FSB (the "Bank") confirm that a review of the activities of the Bank during the calendar year ending December 31, 2002 and of the performance under the Servicing Agreements has been made under my supervision. To the best of my knowledge, based on such review, the Bank has fulfilled all of its obligations under the Servicing Agreements throughout such calendar year. /s/ Scott W. Anderson Scott w. Anderson Senior Vice President, Residential Assets Ocwen Federal Bank FSB 1675 Palm Beach Lakes Boulevard, West Palm Beach, FL 33401 Mail to: P. 0. Box 24737, West Palm Beach, FL 33416-4737 EXHIBIT 99.3 -- Report of Independent Auditors Pricewaterhouse Coopers LLP 222 Lakeview Avenue Suite 360 West Palm Beach, FL 33401 Telephone (561) 832 0038 Facsimile (561) 805 8181 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT To the Board of Directors of Ocwen Federal Bank FSB We have examined management's assertion, included in the accompanying Management Assertion on Compliance with USAP, that, except for the noncompliance related to interest on escrows described in the third paragraph, Ocwen Federal Bank FSB (the "Bank") complied with the minimum servicing standards identified in the Mortgage Bankers Association of America's ("MBA's") Uniform Single Attestation Program for Mortgage Bankers ("USAP") as of and for the year ended December 31, 2002. Management is responsible for the Bank's compliance with those minimum servicing standards. Our responsibility is to express an opinion on management's assertion about the Bank's compliance based on our examination. Our examination was made in accordance with standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Bank's compliance with the minimum servicing standards and performing such other procedures as we consider necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Bank's compliance with the minimum servicing standards. Our examination disclosed noncompliance with minimum servicing standards in certain states related to interest on escrows applicable to the Bank during the year ended December 31, 2002. Such noncompliance is described in the accompanying Management Assertion on Compliance with USAP. In our opinion, management's assertion that the Bank complied with the aforementioned minimum servicing standards, except for noncompliance as described in the accompanying Management Assertion on Compliance with USAP, as of and for the year ended December 31, 2002 is fairly stated, in all material respects. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP March 14, 2003 EXHIBIT 99.4 -- Management Assertion on USAP MANAGEMENT ASSERTION ON COMPLIANCE WITH USAP March 14, 2003 As of and for the year ended December 31, 2002, except as specifically noted below, Ocwen Federal Bank FSB (the "Bank") has complied in all material respects with the minimum servicing standards set forth in the Mortgage Bankers Association of America's ("MBA's") Uniform Single Attestation Program for Mortgage Bankers ("USAP"). Standard: Interest on escrow accounts shall be paid, or credited, to mortgagors in accordance with the applicable state laws. Interest on escrow accounts in certain states was not paid, or credited, to mortgagors in accordance with the applicable state laws during the year ended December 31, 2002. The Bank is currently implementing an enhancement to its REALServicingTM servicing system to ensure that, for loans collateralized by properties located in states that require the payment of interest on escrow accounts, the payment or crediting of such interest is in accordance with applicable state laws. As of and for this same period, the Bank had in effect a fidelity bond in the amount of $15,000,000 and an errors and omissions policy in the amount of $10,000,000. /s/ Ronald M. Faris Ronald M. Faris President /s/ Scott W. Anderson Scott W. Anderson Senior Vice President of Residential Assets /s/ James D. Campbell James D. Campbell Director of Investor Reporting Ocwen Federal Bank FSB 1675 Palm Beach Lakes Boulevard West Palm Beach, FL 33401 Mail to: P.O. Box 24737 West Palm Beach, FL 33416-4737