10-K/A 1 bsa06ac2_10ka-2006.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A Amendment No. 1 to (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, 2006 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 333-125422-44 Bear Stearns Asset Backed Securities I Trust 2006-AC2 (exact name of issuing entity as specified in its charter) Bear Stearns Asset Backed Securities I LLC. (exact name of the depositor as specified in its charter) EMC Mortgage Corporation (exact name of the sponsor as specified in its charter) New York 54-2195422 (State or other jurisdiction of 54-2195423 incorporation or organization) 54-2195424 54-2197863 54-2197864 (I.R.S. Employer Identification No.) c/o Wells Fargo Bank, N.A. 9062 Old Annapolis Road Columbia, MD 21045 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (410) 884-2000 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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ___ No X Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ___ No X 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 Exchange 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. Yes X No ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ( 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Not applicable. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer X Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ___ No X State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. Not applicable. Documents Incorporated by Reference List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1)Any annual report to security holders; (2) Any proxy or information statement; and (3)Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). See Item 15 (Part IV). EXPLANATORY NOTE This Amendment No. 1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 2, 2007 (Accession No. 0001056404-07-001577) by Bear Stearns Asset Backed Securities I Trust 2006-AC2 (the "Initial 10-K"), for the fiscal year ended December 31, 2006, is being filed for the sole purpose of restating the assessment of American Security Insurance Company, Standard Guaranty Insurance Company and TrackSure Insurance Agency, Inc. (the "Asserting Party") for the reporting period of January 1, 2006 through December 31, 2006. The restated assessment, provided to the registrant in February 2008, identifies a material instance of noncompliance with the servicing criteria set forth in Item 1122(d)(4)(xii) under Regulation AB. Specifically, the Asserting Party did not have, during the applicable reporting period, sufficient policies and procedures to capture the information with respect to the Platform Transactions necessary to determine compliance with Item 1122(d)(4)(xii). In response to a Securities and Exchange Commission comment, as of January 1, 2008, the Asserting Party has implemented practices and procedures to capture the information necessary to assess compliance with Item 1122(d)(4)(xii). PART I Item 1. Business. Omitted. Item 1A. Risk Factors. Omitted. Item 1B. Unresolved Staff Comments. None. Item 2. Properties. Omitted. Item 3. Legal Proceedings. Omitted. Item 4. Submission of Matters to a Vote of Security Holders. Omitted. PART II Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Omitted. Item 6. Selected Financial Data. Omitted. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Omitted. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Omitted. Item 8. Financial Statements and Supplementary Data. Omitted. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. Omitted. Item 9A. Controls and Procedures. Omitted. Item 9A(T). Controls and Procedures. Omitted. Item 9B. Other Information. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. Omitted. Item 11. Executive Compensation. Omitted. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Omitted. Item 13. Certain Relationships and Related Transactions, and Director Independence. Omitted. Item 14. Principal Accounting Fees and Services. Omitted. ADDITIONAL DISCLOSURE ITEMS FOR REGULATION AB Item 1112(b) of Regulation AB, Significant Obligor Financial Information. No single obligor represents more than 10% of the pool assets held by this transaction. Item 1114(b)(2) and 1115(b) of Regulation AB, Significant Enhancement Provider Financial Information. None. Item 1117 of Regulation AB, Legal Proceedings. The registrant knows of no material pending legal proceedings involving the Trust and all parties related to such Trust, other than routine litigation incidental to the duties of those respective parties. Item 1119 of Regulation AB, Affiliations and Certain Relationships and Related Transactions. On February 9, 2007, Bear Stearns Residential Mortgage Corporation, a wholly owned subsidiary of The Bear Stearns Companies Inc. and an affiliate of the Registrant, acquired certain assets used in the subprime wholesale mortgage banking division of Performance Credit Corporation (formerly known as Encore Credit Corp.) ("PCC"), a California corporation that, until February 9, 2007, originated and purchased one-to four-family residential mortgage loans offered to borrowers with a particular emphasis on "nonconforming" borrowers who generally do not satisfy the credit, collateral, documentation or other standards required by conventional mortgage lenders and loan buyers. Item 1122 of Regulation AB, Compliance with Applicable Servicing Criteria. The servicing criteria have been completed within the manner stated in the governing documents and are attached hereto under Item 15. Pursuant to Instruction 2 to Item 1122, this report on Form 10-K does not contain and is not required to contain the Item 1122 assessment and attestation of compliance for Waterfield Mortgage Company Incorporated ("Waterfield"), as a servicer of 5% or less of the pool assets for the Bear Stearns Asset Backed Securities I Trust 2006-AC2. Waterfield effectively ceased to operate as a going concern on October 16, 2006, at which time it also ceased all servicing and subservicing functions. Waterfield's servicing and subservicing functions for loans in the transaction were transferred to a successor servicer or servicers prior to October 2006. Although Waterfield contractually agreed to provide an 1122 assessment and attestation of compliance as Servicer in this transaction, it did not deliver them before ceasing its operations. The restated assessment of American Security Insurance Company, Standard Guaranty Insurance Company and TrackSure Insurance Agency, Inc. (the "Asserting Party") for the reporting period of January 1, 2006 through December 31, 2006, provided to the registrant in February 2008, identifies a material instance of noncompliance with the servicing criteria set forth in Item 1122(d)(4)(xii) under Regulation AB. Specifically, the Asserting Party did not have, during the applicable reporting period, sufficient policies and procedures to capture the information with respect to the Platform Transactions necessary to determine compliance with Item 1122(d)(4) (xii). In response to a Securities and Exchange Commission comment, as of January 1, 2008, the Asserting Party has implemented practices and procedures to capture the information necessary to assess compliance with Item 1122(d)(4)(xii). The 1122 statements for Wells Fargo Bank, National Association (Corporate Trust Services) has disclosed material noncompliance with criterion 1122(d)(3)(i), as applicable to the Company during the twelve months ended December 31, 2006. Certain monthly investor or remittance reports included errors in the calculation and/or the reporting of delinquencies for the pool assets. The 1122 statements for Wells Fargo Bank, N.A. (servicer) has disclosed the following instances of material noncompliance with certain servicing criteria applicable to the Company during the year ended December 31, 2006: 1. 1122(d)(3)(i) - Delinquency Reporting - The Company provided incomplete data to some third parties who use such data to calculate delinquency ratios and determine the status of loans with respect to bankruptcy, foreclosure or real estate owned. Instead of the actual due date being provided for use in calculating delinquencies, the date of the first payment due to the security was provided. 2. 1122(d)(4)(vii) - Notification of Intent to Foreclose - The Company, as required by certain servicing agreements, did not provide investors with prior notification of intent to foreclose. Item 1123 of Regulation AB, Servicer Compliance Statement. The servicer compliance statements have been completed within the manner stated in the governing documents and are attached hereto under Item 15. PART IV Item 15. Exhibits, Financial Statement Schedules. (a) Exhibits (4.1) Pooling and Servicing Agreement, dated as of February 1, 2006, among Bear Stearns Asset Backed Securities I LLC, as depositor, EMC Mortgage Corporation, as sponsor and as company, Wells Fargo Bank, National Association, as master servicer and securities administrator and U.S. Bank National Association, as trustee (As previously filed on Form 8-K filed on March 15, 2006 and is hereby incorporated by reference into this report on Form 10-K). (10.1) Terms Agreement, dated February 28, 2006, between Bear, Stearns & Co. Inc., as underwriter and Bear Stearns Assets Backed Securities I LLC, as depositor, relating to the Underwriting Agreement, dated February 17, 2006, between Bear, Stearns & Co. Inc., as underwriter and Bear Stearns Assets Backed Securities I LLC, as depositor (As previously filed on Form 8-K filed on March 15, 2006 and is hereby incorporated by reference into this report on Form 10-K). (10.2) Assignment, Assumption and Recognition Agreement made as of February 28, 2006, among EMC Mortgage Corporation (the "Assignor"), U.S. Bank National Association, not individually but solely as trustee for the holders of the Bear Stearns Asset Backed Securities I Trust 2006-AC2, Asset-Backed Certificates, Series 2006-AC2 (the "Assignee") and HSBC Mortgage Corporation (USA) (the "Company") (10.3) Assignment, Assumption and Recognition Agreement, dated as of February 28, 2006, by EMC Mortgage Corporation, a Delaware corporation (the "Assignor"), U.S. Bank National Association, not individually but solely as trustee for the holders of Bear Stearns Asset Backed Securities I Trust 2006-AC2, Asset-Backed Certificates, Series 2006-AC2 (the "Assignee") and Wells Fargo Bank, N.A. (the "Company"). (10.4) Assignment, Assumption and Recognition Agreement made as of February 28, 2006, among EMC Mortgage Corporation (the "Assignor"), U.S. Bank National Association, not individually but solely as trustee for the holders of Bear Stearns Asset Backed Securities I Trust 2006-AC2, Asset-Backed Certificates, Series 2006-AC2 (the Assignee") and Savannah Bank, NA dba Harbourside Mortgage Corporation (the "Company"). (31) Rule 13a-14(d)/15d-14(d) Certifications. (33) Reports on assessment of compliance with servicing criteria for asset-backed securities.
a) American Home Mortgage Servicing, Inc., as Servicer b) Restated report on assessment of compliance with servicing criteria for Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation c) EMC Mortgage Corporation, as Servicer d) First American Real Estate Solutions of Texas, L.P. as Sub-Contractor for HSBC Mortgage Corporation, USA e) Harborside Mortgage Corporation, as Servicer f) HSBC Mortgage Corporation, USA, as Servicer g) LandAmerica Tax and Flood Services as Sub-Contractor for EMC Mortgage Corporation h) Regulus Group LLC as Sub-Contractor for Wells Fargo Bank, N.A. i) Waterfield Mortgage Company, Incorporated, as Servicer j) Wells Fargo Bank, N.A., as Servicer k) Wells Fargo Bank, N.A., as Master Servicer l) Wells Fargo Bank, N.A., as Securities Administrator m) Wells Fargo Bank, N.A., as Custodian n) ZC Sterling Insurance Agency, Inc. as Sub-Contractor for Wells Fargo Bank, N.A.
(34) Attestation reports on assessment of compliance with servicing criteria for asset-backed securities.
a) American Home Mortgage Servicing, Inc., as Servicer b) Restated report on assessment of compliance with servicing criteria for Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation c) EMC Mortgage Corporation, as Servicer d) First American Real Estate Solutions of Texas, L.P. as Sub-Contractor for HSBC Mortgage Corporation, USA e) Harborside Mortgage Corporation, as Servicer f) HSBC Mortgage Corporation, USA, as Servicer g) LandAmerica Tax and Flood Services as Sub-Contractor for EMC Mortgage Corporation h) Regulus Group LLC as Sub-Contractor for Wells Fargo Bank, N.A. i) Waterfield Mortgage Company, Incorporated, as Servicer j) Wells Fargo Bank, N.A., as Servicer k) Wells Fargo Bank, N.A., as Master Servicer l) Wells Fargo Bank, N.A., as Securities Administrator m) Wells Fargo Bank, N.A., as Custodian n) ZC Sterling Insurance Agency, Inc. as Sub-Contractor for Wells Fargo Bank, N.A.
(35) Servicer compliance statement.
a) American Home Mortgage Servicing, Inc., as Servicer b) Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation c) EMC Mortgage Corporation, as Servicer d) First American Real Estate Solutions of Texas, L.P. as Sub-Contractor for HSBC Mortgage Corporation, USA e) Harborside Mortgage Corporation, as Servicer f) HSBC Mortgage Corporation, USA, as Servicer g) LandAmerica Tax and Flood Services as Sub-Contractor for EMC Mortgage Corporation h) Regulus Group LLC as Sub-Contractor for Wells Fargo Bank, N.A. i) Waterfield Mortgage Company, Incorporated, as Servicer j) Wells Fargo Bank, N.A., as Servicer k) Wells Fargo Bank, N.A., as Master Servicer l) Wells Fargo Bank, N.A., as Securities Administrator m) Wells Fargo Bank, N.A., as Custodian n) ZC Sterling Insurance Agency, Inc. as Sub-Contractor for Wells Fargo Bank, N.A.
(b) Not applicable. (c) Omitted. Filed with the Inital 10-K. Filed with this report. The Servicing Participant serviced less than 5% of the deal and is not required under Regulation AB to provide such documentation. The Servicing Participant serviced less than 10% of the deal and is not required under Regulation AB to provide such documentation. The Servicing Participant of the deal is not required under Regulation AB to provide such documentation. 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. Bear Stearns Asset Backed Securities I Trust 2006-AC2 (Issuing Entity) Wells Fargo Bank, N.A. (Master Servicer) /s/ Dawn Hammond Dawn Hammond, Vice President (senior officer in charge of the servicing function of the master servicer) Date: July 10, 2008 Exhibit Index Exhibit No. (31) Rule 13a-14(d)/15d-14(d) Certifications. (33) Reports on assessment of compliance with servicing criteria for asset-backed securities.
b) Restated report on assessment of compliance with servicing criteria for Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation
(34) Attestation reports on assessment of compliance with servicing criteria for asset-backed securities.
b) Restated report on assessment of compliance with servicing criteria for Assurant Inc. as Sub-Contractor for EMC Mortgage Corporation