EXHIBIT 10.103
EXECUTION COPY
================================================================================
FINANCIAL ASSET SECURITIES CORP.,
Depositor
PAN AMERICAN BANK, FSB,
Seller and Master Servicer
FAIRBANKS CAPITAL CORP.
Special Servicer
and
BANKERS TRUST COMPANY,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1999
---------------------------------
United PanAm Mortgage Loan Trust 1999-1
Asset-Backed Certificates, Series 1999-1
================================================================================
Table of Contents
Page
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.................................................2
Section 1.02. Accounting...................................................38
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.................................38
Section 2.02. Acceptance by Trustee........................................41
Section 2.03. Repurchase or Substitution of Mortgage Loans by the Seller...42
Section 2.04. Representations and Warranties of the Seller with Respect
to the Mortgage Loans........................................45
Section 2.05. Representations, Warranties and Covenants of the Master
Servicer.....................................................46
Section 2.06. Representations and Warranties of the Depositor..............48
Section 2.07. Issuance of Certificates.....................................49
Section 2.08. Representations and Warranties of the Seller.................49
Section 2.09. Covenants of the Seller......................................51
Section 2.10. Additional Transfers.........................................51
Section 2.11. Mandatory Prepayment.........................................53
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Servicer...........................54
Section 3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers................................................55
Section 3.03. Successor Sub-Servicers......................................57
Section 3.04. Liability of the Master Servicer.............................57
Section 3.05. No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders................................57
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee......................................................58
Section 3.07. Collection of Certain Mortgage Loan Payments.................58
Section 3.08. Sub-Servicing Accounts.......................................59
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts...........................................59
Section 3.10. Collection Account and Distribution Account..................60
Section 3.11. Withdrawals from the Collection Account and Distribution
Account......................................................62
Section 3.12. Investment of Funds in the Collection Account and the
Distribution Account.........................................64
Section 3.13. [Reserved]...................................................65
i
Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage........................................65
Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements....66
Section 3.16. Realization Upon Defaulted Mortgage Loans....................67
Section 3.17. Trustee to Cooperate; Release of Mortgage Files..............70
Section 3.18. Servicing Compensation.......................................71
Section 3.19. Reports to the Trustee; Collection Account Statements........71
Section 3.20. Statement as to Compliance...................................72
Section 3.21. Independent Public Accountants' Servicing Report.............72
Section 3.22. Access to Certain Documentation; Filing of Reports by
Trustee......................................................72
Section 3.23. Title, Management and Disposition of REO Property............73
Section 3.24. Obligations of the Master Servicer in Respect of Prepayment
Interest Shortfalls..........................................76
Section 3.25. Certain Rights Related to Foreclosure and the Special
Servicer.....................................................77
Section 3.26. Obligations of the Master Servicer in Respect of Mortgage
Rates and Monthly Payments...................................78
Section 3.27. Solicitations................................................78
Section 3.28. Special Servicer.............................................78
ARTICLE IV
FLOW OF FUNDS
Section 4.01. Distributions................................................80
Section 4.02. Reserved.....................................................83
Section 4.03. Statements...................................................83
Section 4.04. Remittance Reports; Advances.................................86
Section 4.05. Pre-Funding Accounts and Capitalized Interest Accounts.......88
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.............................................89
Section 5.02. Registration of Transfer and Exchange of Certificates........90
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates............94
Section 5.04. Persons Deemed Owners........................................95
Section 5.05. Appointment of Paying Agent..................................95
ARTICLE VI
THE SELLER, THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Seller, the Master Servicer and the
Depositor....................................................96
Section 6.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Master Servicer or the
Depositor....................................................96
Section 6.03. Limitation on Liability of the Master Servicer and Others....96
Section 6.04. Servicer Not to Resign.......................................97
Section 6.05. Delegation of Duties.........................................97
Section 6.06. Reserved.....................................................98
ii
Section 6.07. Inspection...................................................98
ARTICLE VII
DEFAULT
Section 7.01. Servicer Events of Termination...............................98
Section 7.02. Trustee to Act; Appointment of Successor....................101
Section 7.03. Waiver of Defaults..........................................102
Section 7.04. Notification to Certificateholders..........................102
Section 7.05. Survivability of Servicer Liabilities.......................102
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee...........................................102
Section 8.02. Certain Matters Affecting the Trustee.......................104
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.......105
Section 8.04. Trustee May Own Certificates................................106
Section 8.05. Seller to Pay Trustee Expenses..............................106
Section 8.06. Eligibility Requirements for Trustee........................106
Section 8.07. Resignation or Removal of Trustee...........................107
Section 8.08. Successor Trustee...........................................108
Section 8.09. Merger or Consolidation of Trustee..........................108
Section 8.10. Appointment of Co-Trustee or Separate Trustee...............108
Section 8.11. Limitation of Liability.....................................110
Section 8.12. Trustee May Enforce Claims Without Possession of
Certificates................................................110
Section 8.13. Suits for Enforcement.......................................111
Section 8.14. Waiver of Bond Requirement..................................111
Section 8.15. Waiver of Inventory, Accounting and Appraisal Requirement...111
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01. REMIC Administration........................................111
Section 9.02. Prohibited Transactions and Activities......................113
Section 9.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status................................................113
Section 9.04. REO Property................................................114
ARTICLE X
TERMINATION
Section 10.01. Termination.................................................115
Section 10.02. Additional Termination Requirements.........................116
iii
ARTICLE XI
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 11.01. Rights of the Certificate Insurer To Exercise Rights of
Class A Certificateholders..................................117
Section 11.02. Trustee To Act Solely with Consent of the Certificate
Insurer.....................................................118
Section 11.03. Trust Fund and Accounts Held for Benefit of the
Certificate Insurer.........................................118
Section 11.04. Claims Upon the Policy; Policy Payments Account.............118
Section 11.05. Effect of Payments by the Certificate Insurer; Subrogation..120
Section 11.06. Notices to the Certificate Insurer..........................120
Section 11.07. Third-Party Beneficiary.....................................120
Section 11.08. Trustee to Hold the Policy..................................121
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Amendment...................................................121
Section 12.02. Recordation of Agreement; Counterparts......................122
Section 12.03. Limitation on Rights of Certificateholders..................122
Section 12.04. Governing Law; Jurisdiction.................................123
Section 12.05. Notices.....................................................123
Section 12.06. Severability of Provisions..................................124
Section 12.07. Article and Section References..............................124
Section 12.08. Notice to the Rating Agencies...............................124
Section 12.09. Further Assurances..........................................125
Section 12.10. Benefits of Agreement.......................................125
Section 12.11. Acts of Certificateholders..................................125
iv
EXHIBITS:
---------
Exhibit A Form of Class A Certificates
Exhibit B Form of Class P Certificates
Exhibit C Form of Class X Certificate
Exhibit D Form of Class R Certificates
Exhibit E Mortgage Loan Schedule
Exhibit F Request for Release
Exhibit G-1 Form of Trustee's Initial Certification
Exhibit G-2 Form of Trustee's Final Certification
Exhibit G-3 Form of Receipt of Mortgage Note
Exhibit H [Reserved]
Exhibit I Form of Lost Note Affidavit
Exhibit J Form of ERISA Representation
Exhibit K Form of Investment Letter
Exhibit L Form of Class R Certificate Transfer Affidavit
Exhibit M Form of Transferor Certificate
Exhibit N Form of Liquidation Report
Exhibit O Form of Additional Transfer Agreement
v
This Pooling and Servicing Agreement is dated as of March 1, 1999 (the
"Agreement"), among FINANCIAL ASSET SECURITIES CORP., as depositor (the
"Depositor"), PAN AMERICAN BANK, FSB, as seller (in such capacity, the "Seller")
and master servicer (in such capacity, the "Master Servicer"), FAIRBANKS CAPITAL
CORP., as special servicer (in such capacity, the "Special Servicer"), and
BANKERS TRUST COMPANY, as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of four classes of
certificates, designated as (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class P Certificates, (iv) the Class X Certificate and
(v) the Class R Certificates.
As provided herein, the Trustee shall elect that the Trust Fund (exclusive
of the Accounts) be treated for federal income tax purposes as a real estate
mortgage investment conduit ("REMIC"). The Class A-1, Class A-2 and Class P
Certificates and the X-1 and X-2 Components represent ownership of all of the
"regular interests" in the REMIC, and the Class R Certificates represent the
sole class of "residual interest" in the REMIC for purposes of the REMIC
Provisions.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates comprising the interests in the Trust Fund created
hereunder:
============================= ============================ ======================= ====================================
Original Class Initial
Certificate Principal Pass-Through Assumed Final
Class Balance Rate Maturity Dates
----------------------------- ---------------------------- ----------------------- ------------------------------------
Class A-1................. $ 37,221,323.17 6.77% (1) April 25, 2029
----------------------------- ---------------------------- ----------------------- ------------------------------------
Class A-2................. $187,778,676.83 5.27% (1) April 25, 2029
----------------------------- ---------------------------- ----------------------- ------------------------------------
Class P................... $100 N/A April 25, 2029
----------------------------- ---------------------------- ----------------------- ------------------------------------
Class X................... N/A N/A April 25, 2029
----------------------------- ---------------------------- ----------------------- ------------------------------------
Class R................... N/A N/A N/A
============================= ============================ ======================= ====================================
(1) Calculated pursuant to the definition of Pass-Through Rate.
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations in respect of interest on the Group II Certificates shall be made
on the basis of the actual number of days elapsed on the basis of a 360-day year
and all other calculations of interest described herein shall be made on the
basis of a 360-day year consisting of twelve 30-day months.
Many of the defined terms listed below may apply to both Loan Groups /
Certificate Groups and are sometimes used in this Agreement to refer to a
particular Loan Group / Certificate Group by the adjectival use of the words
"Group I" and "Group II".
"1933 Act": The Securities Act of 1933, as amended.
"Account": Any of the Capitalized Interest Accounts, Collection Account,
Distribution Account, Policy Payments Account and Pre-Funding Accounts.
"Accrual Period": With respect to (i) the Group I Certificates and each
Distribution Date, the calendar month prior to the month of such Distribution
Date or (ii) the Group II Certificates and (A) the first Distribution Date, the
period commencing on the Closing Date and ending on April 25, 1999, or (B) any
subsequent Distribution Date, the period commencing on the preceding
Distribution Date and ending on the day preceding the current Distribution Date.
"Addition Notice": A notice (which may be verbal or written) provided to
the Certificate Insurer, Rating Agencies and the Trustee pursuant to Section
2.10 (b)(i) hereof.
"Additional Cut-off Date Deposit": With respect to any Additional Transfer
Date and any Additional Mortgage Loan transferred to the Trust that does not
have a Monthly Payment during the Due Period of such transfer, an amount equal
to the product of (a) the Loan Balance of such Additional Mortgage Loan on the
related Cut-off Date and (b) one-twelfth of the Net Mortgage Rate on such
Additional Mortgage Loan, and (c) the number of Due Periods from, but excluding,
the Due Period of such transfer to, and including, the Due Period in which such
Mortgage Loan has its first Monthly Payment due.
"Additional Mortgage Loans": The Mortgage Loans sold to the Trust for
inclusion in Group I or Group II pursuant to Section 2.10 of this Agreement and
the Additional Transfer Agreement, which shall be listed on the mortgage loan
schedule attached to the Additional Transfer Agreement.
"Additional 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 in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Additional Servicing
2
Fee Rate on the same principal amount on which interest on such Mortgage Loan
accrues for such calendar month.
"Additional Servicing Fee Rate": 0.06% per annum.
"Additional Transfer Date": The date specified in each Additional Transfer
Agreement, provided that in no event shall there be more than two such
Additional Transfer Dates.
"Additional Transfer Agreement": Each Additional Transfer Agreement
executed by the Trustee (solely in its capacity as Trustee and not in its
individual capacity) and the Seller substantially in the form of Exhibit O
hereto, by which Additional Mortgage Loans are sold and assigned to the Trust.
"Adjustment Date": With respect to each Group II Adjustable Rate Mortgage
Loan, each adjustment date, on which the related Mortgage Rate changes pursuant
to the related Mortgage Note. The first Adjustment Date following the Cut-off
Date as to each Group II Adjustable Rate Mortgage Loan is set forth in the
Mortgage Loan Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance made by
the Master Servicer in respect of any Distribution Date pursuant to Section
4.04.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Aggregate Servicing Fee": With respect to any Mortgage Loan and any
calendar month, the sum of the Servicing Fee and the Additional Servicing Fee.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Annual Loss Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
all Realized Losses for the twelve months ending on the last day of the
preceding month and the denominator of which is the aggregate Principal Balance
of the Mortgage Loans and REO Properties as of the first day of the twelfth
preceding calendar month.
"Applicable Regulations": As to any Mortgage Loan, all federal, state and
local laws, statutes, rules and regulations applicable thereto.
"Assignment": An assignment of Mortgage, notice of transfer or equivalent
instrument, in recordable form, which is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect or
record the sale of the Mortgage.
3
"Assumed Final Maturity Date": As to each Class of Certificates, the date
set forth as such in the Preliminary Statement.
"Available Funds": The sum of the Group I Available Funds and Group II
Available Funds.
"Available Funds Cap": For any Distribution Date, the difference between
(A) the average of the Mortgage Rates of the Group II Mortgage Loans as of the
first day of the month preceding the month of such Distribution Date (or, in the
case of the first Distribution Date, the Closing Date), weighted on the basis of
the related Principal Balances as of the immediately preceding Determination
Date, and (B) the sum of (i) the Servicing Fee Rate, (ii) the Trustee Fee Rate
and (iii) the rate at which the premium (including any premium supplement)
payable to the Certificate Insurer multiplied by a fraction, the numerator of
which is the Certificate Principal Balance of the Class A-2 Certificates and the
denominator of which is the aggregate Principal Balance of the Group II Mortgage
Loans, is calculated and (iv) 0.50%. For purposes of computing the Available
Funds Cap, calculations will be made on the basis of the actual number of days
in the related Due Period and a 360-day year.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the payment of
the unamortized principal balance of such Mortgage Loan in a single payment at
the maturity of such Mortgage Loan that is substantially greater than the
preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal balance of a
Mortgage Loan in a single payment at the maturity of such Mortgage Loan that is
substantially greater than the preceding Monthly Payment.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on which
the Certificate Insurer or banking or savings institutions in the State of
Delaware, the State of New York, the State of California or in the city in which
the Corporate Trust Office of the Trustee is located are authorized or obligated
by law or executive order to be closed.
"Capitalized Interest Account": Either of the accounts designated as such
and established and maintained by the Trustee pursuant to Section 4.05 hereof.
"Capitalized Interest Requirement": With respect to the Distribution Date
in April and May 1999 for a Loan Group, (A) the product of (a) a fraction, the
numerator of which is the related Pre-Funding Amount on the Closing Date less
the Principal Balance of any Additional Mortgage Loan transferred to the Trust
during the related Due Period or a prior Due Period that
4
has a Monthly Payment due during such Due Period and the denominator of which is
the sum of the related Pre-Funding Amount on the Closing Date and the Principal
Balance for the related Loan Group on the Closing Date and (b) the Monthly
Interest Distributable Amount for the related Class of Certificates for the
related Accrual Period plus the related Loan Group's allocable portion of the
Servicing Fee, the Additional Servicing Fee, the Trustee Fee and the premium due
to the Certificate Insurer, minus (B) any related Pre-Funding Earnings for such
Due Period, plus (C) with respect to Loan Group II only and the Distribution
Date in April 1999, an amount equal to $422,267.30.
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificate Group": Either the Group I Certificates or the Group II
Certificates.
"Certificateholder" or "Holder": The Person in whose name a Certificate is
registered in the Certificate Register and the Certificate Insurer to the extent
of Cumulative Insurance Payments, except that a Disqualified Organization or
non-U.S. Person shall not be a Holder of a Class R Certificate for any purpose
hereof.
"Certificate Insurer": Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Certificate Margin": On each Distribution Date (A) on or prior to the
Optional Termination Date, 0.32% per annum and (B) after the Optional
Termination Date, 0.64%.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of Certificates
and any Distribution Date, the Certificate Principal Balance thereof on the
Closing Date (the "Original Certificate Principal Balance") reduced by the sum
of all amounts actually distributed in respect of principal of such Class on all
prior Distribution Dates.
"Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.
"Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in the Percentage Interest evidenced thereby.
"Class A Certificate": Any one of the Class A-1 Certificates or Class A-2
Certificates as designated on the face thereof substantially in the form annexed
hereto as Exhibit A, executed by the Trustee and authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein and
therein.
"Class A Certificateholder": Any Holder of a Class A Certificate.
"Class P Certificate": The Class P Certificate as designated on the face
thereof substantially in the form annexed hereto as Exhibit B, executed by the
Trustee and authenticated
5
and delivered by the Trustee, representing the right to distributions as set
forth herein and therein.
"Class R Certificate": The Class R Certificate executed by the Trustee,
and authenticated and delivered by the Certificate Registrar, substantially in
the form annexed hereto as Exhibit D and evidencing the ownership of the
uncertificated Residual Interest in the REMIC.
"Class X Certificate": The Class X Certificate as designated on the face
thereof substantially in the form annexed hereto as Exhibit C , executed by the
Trustee and authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and therein. The Class X Certificate
consists of the X-1 Component and X-2 Component, which are not separately
transferable.
"Close of Business": As used herein, with respect to any Business Day,
5:00 p.m.
"Closing Date": March 11, 1999.
"Code": The Internal Revenue Code of 1986 as it may be amended from time
to time.
"Collection Account": The account or accounts created and maintained by
the Master Servicer pursuant to Section 3.10(a), which shall be entitled "Pan
American Bank, FSB, as Master Servicer for Bankers Trust Company, as Trustee, in
trust for registered Holders of United PanAm Mortgage Loan Trust 1999-1,
Asset-Backed Certificates, Series 1999-1", and which must be an Eligible
Account.
"Compensating Interest": As defined in Section 3.24 hereof.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at [ ], Attention: United PanAm
Series 1999-1, or at such other address as the Trustee may designate from time
to time by notice to the Certificateholders, the Depositor, the Certificate
Insurer, the Master Servicer and the Seller.
"Cumulative Loss Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the the aggregate
amount of Realized Losses incurred from the Closing Date through the end of the
related Due Period, and the denominator of which is the aggregate Cut-off Date
Principal Balance of the Mortgage Loans.
"Custodian": Bankers Trust Company, a New York banking corporation, as
custodian of the Mortgage Files, and any successor thereto.
"Cut-off Date": With respect to any Mortgage Loan other than a Qualified
Substitute Mortgage Loan, the later of (i) the date of origination of such
Mortgage Loan or (ii) the Close of Business on March 1, 1999. With respect to
any Qualified Substitute Mortgage Loan, the date designated as such on the
Mortgage Loan Schedule (as amended).
6
"Cut-off Date Aggregate Principal Balance": With respect to each Loan
Group, the aggregate of the Cut-off Date Principal Balances of the Mortgage
Loans in such Loan Group.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date (or as of the applicable
date of substitution with respect to a Qualified Substitute Mortgage Loan).
"Debt Service Reduction": With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
resulting from a Deficient Valuation.
"Deficiency Amount": With respect to any Distribution Date, (A) the
excess, if any, of (i) Interest Distributable Amount for the Class A
Certificates (net of any Relief Act Interest Shortfalls and Prepayment Interest
Shortfalls) over (ii) funds on deposit in the Distribution Account available to
be distributed therefor on such Distribution Date and (B) the Guaranteed
Principal Amount.
"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 the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c) hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by one
or more Qualified Substitute Mortgage Loans.
"Delinquency Percentage": With respect to any Distribution Date and the
related Due Period, the fraction, expressed as a percentage, the numerator of
which is the sum of the aggregate of the Principal Balances of all Mortgage
Loans that are (i) 60 or more days Delinquent, (ii) in bankruptcy and 60 or more
days Delinquent under the applicable Mortgage Note, (iii) in foreclosure and 60
or more days Delinquent, or (iv) REO Properties as of the close of business on
the last day of such Due Period, and the denominator of which is the aggregate
Principal Balance of the Mortgage Loans as of the Close of Business on the last
day of such Due Period.
"Delinquent": Any Mortgage Loan, the Monthly Payment due on a Due Date
with respect to which is not made by the Close of Business on the next scheduled
Due Date for such Mortgage Loan.
"Depositor": Financial Asset Securities Corp., a Delaware corporation, or
any successor in interest.
"Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a
7
"clearing corporation" as defined in Section 8-102(3) of the Uniform Commercial
Code of the State of New York.
"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.
"Determination Date": With respect to any Distribution Date, the 5th
Business Day preceding such Distribution Date.
"Directing Holder": The initial Holder of the Class X Certificate and any
subsequent Holder of a Class X Certificate to whom the rights of the Directing
Holder have been transferred pursuant to Section 3.25.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the REMIC other than through an
Independent Contractor; provided, however, that the Trustee (or the Master
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Master Servicer on behalf of
the Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under Section
860E of the Code, which as of the Closing Date is any of: (i) the United States,
any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
unless such organization is subject to the tax imposed by Section 511 of the
Code, (iii) any organization described in Section 1381(a)(2)(C) of the Code,
(iv) an "electing large partnership" within the meaning of Section 775 of the
Code or (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel provided by nationally recognized counsel to the Trustee that the
holding of an ownership interest in a Class R Certificate by such Person may
cause the Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in the Class R Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof, if all of its activities are subject
to tax and, a majority of its board of directors is not selected by a
governmental unit. The term "United States", "state" and "international
organizations" shall have the meanings set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Bankers Trust Company, as Trustee, in trust for the
registered Certificateholders of United PanAm Mortgage Loan Trust 1999-1,
Asset-Backed Certificates, Series 1999-1" and which must be an Eligible Account.
8
"Distribution Date": The 25th day of any calendar month, or if such 25th
day is not a Business Day, the Business Day immediately following such 25th day,
commencing in April 1999.
"Due Date": With respect to each Mortgage Loan and any Distribution Date,
the first day of the calendar month in which such Distribution Date occurs on
which the Monthly Payment for such Mortgage Loan was due, exclusive of any days
of grace.
"Due Period": With respect to any Distribution Date, the period commencing
on the second day of the month preceding the month in which such Distribution
Date occurs and ending on the first day of the month in which such Distribution
Date occurs.
"Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated P-1 by Moody's and A-1 by S&P (or comparable ratings if Moody's and S&P
are not the Rating Agencies) at the time any amounts are held on deposit
therein, (ii) an account or accounts the deposits in which are fully insured by
the FDIC (to the limits established by such corporation), the uninsured deposits
in which account are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders will have a claim with respect to the funds in such account
or a perfected first priority security interest against such collateral (which
shall be limited to Permitted Investments) securing such funds that is superior
to claims of any other depositors or creditors of the depository institution
with which such account is maintained, (iii) a trust account or accounts
maintained with the trust department of a federal or state chartered depository
institution, national banking association or trust company acting in its
fiduciary capacity or (iv) an account otherwise (A) acceptable to each Rating
Agency without reduction or withdrawal of their then current ratings of the
Certificates as evidenced by a letter from each Rating Agency to the Trustee and
the Certificate Insurer and (B) acceptable to the Certificate Insurer. Eligible
Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, fire and hazard insurance premiums and other payments
required to be escrowed by the Mortgagor with the mortgagee pursuant to any
Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of real
property.
"FDIC": Federal Deposit Insurance Corporation or any successor thereto.
"▇▇▇▇▇▇ ▇▇▇": Federal National Mortgage Association 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 Seller, the Master Servicer or the Special Servicer pursuant to or as
contemplated by Section 2.03 or 10.01), a determination made by the Master
Servicer (and with respect to which written confirmation by a
9
Servicing Officer shall have been received by the Trustee) that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the Master
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Master Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
"Fiscal Agent": As defined in the Policy.
"Foreclosure Price": The amount reasonably expected to be received from
the sale of the related Mortgaged Property net of any expenses associated with
foreclosure proceedings.
"▇▇▇▇▇▇▇ Mac": The Federal Home Loan Mortgage Corporation or any successor
thereto.
"General Excess Available Amount": With respect to a Certificate Group and
each Distribution Date, the amount, if any, by which the related Available Funds
for such Distribution Date exceeds the aggregate amount distributed on such
Distribution Date pursuant to paragraphs (i) through (vi) of clauses (A) or (B),
as applicable, under Section 4.01.
"Gross Margin": With respect to each Group II Adjustable-Rate Mortgage
Loan, the fixed percentage set forth in the related Mortgage Note that is added
to the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Group I Available Funds": With respect to any Distribution Date and Loan
Group I, an amount equal to the excess of (i) the sum of (a) the aggregate of
the related Monthly Payments received on or prior to the Determination Date, (b)
Liquidation Proceeds, Insurance Proceeds, Principal Prepayments and other
unscheduled recoveries of principal and interest in respect of the Group I
Mortgage Loans during the related Prepayment Period, excluding prepayment
penalties, (c) the aggregate of any amounts received in respect of a related REO
Property withdrawn from any REO Account and deposited in the Collection Account
for such Distribution Date, (d) the aggregate of any amounts deposited in the
Collection Account by the Master Servicer in respect of related Prepayment
Interest Shortfalls for such Distribution Date, (e) the aggregate of any related
Advances made by the Master Servicer for such Distribution Date and (f) the
aggregate of any related advances made by the Trustee for such Distribution Date
pursuant to Section 7.02, over (ii) the sum of (a) related amounts reimbursable
or payable to the Master Servicer pursuant to Section 3.11(a), and (b) the
amount payable to the Trustee pursuant to Section 8.05 and (c) related amounts
deposited in the Collection Account or the Distribution Account, as the case may
be, in error.
"Group I Basic Principal Distribution Amount": With respect to the Group I
Certificates and any Distribution Date, the excess of (i) the related Principal
Remittance Amount for such Distribution Date over (ii) the related
Overcollateralization Release Amount, if any, for such Distribution Date.
"Group I Capitalized Interest Account": The Capitalized Interest Account
designated as such and established pursuant to Section 4.05 hereof.
"Group I Certificates": The Class A-1 Certificates.
10
"Group I Extra Principal Distribution Amount": With respect to the Group I
Certificates and any Distribution Date, the lesser of (x) the related General
Excess Available Amount for such Distribution Date and (y) the related
Overcollateralization Deficiency Amount for such Distribution Date.
"Group I Loan Balance": As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group I as of such date.
"Group I Mortgage Loan": A Mortgage Loan that is identified as such on the
Mortgage Loan Schedule. "Group I Pre-Funding Account": The Pre-Funding Account
designated as such and established pursuant to Section 4.05.
"Group I Principal Distribution Amount": With respect to Group I
Certificates, and any Distribution Date (other than the Final Scheduled
Distribution Date), the sum of (i) the related Group I Basic Principal
Distribution Amount and (ii) the related Group I Extra Principal Distribution
Amount for such Distribution Date.
"Group II Adjustable-Rate Mortgage Loan": A Group II Mortgage Loan that
provides at any period during the life of such loan for the adjustment of the
Mortgage Rate payable in respect thereto.
"Group II Available Funds": With respect to any Distribution Date and Loan
Group II, an amount equal to the excess of (i) the sum of (a) the aggregate of
the related Monthly Payments received on or prior to the Determination Date, (b)
Liquidation Proceeds, Insurance Proceeds, Principal Prepayments and other
unscheduled recoveries of principal and interest in respect of the Group II
Mortgage Loans during the related Prepayment Period, excluding prepayment
penalties, (c) the aggregate of any amounts received in respect of a related REO
Property withdrawn from any REO Account and deposited in the Collection Account
for such Distribution Date, (d) the aggregate of any amounts deposited in the
Collection Account by the Master Servicer in respect of related Prepayment
Interest Shortfalls for such Distribution Date, (e) the aggregate of any related
Advances made by the Master Servicer for such Distribution Date and (f) the
aggregate of any related advances made by the Trustee for such Distribution Date
pursuant to Section 7.02, over (ii) the sum of (a) related amounts reimbursable
or payable to the Master Servicer pursuant to Section 3.11(a), (b) the amount
payable to the Trustee pursuant to Section 8.05, and (c) related amounts
deposited in the Collection Account or the Distribution Account, as the case may
be, in error.
"Group II Available Funds Cap Carryover Amount": With respect to the Class
A-2 Certificates and any Distribution Date on which the Pass-Through Rate for
such Certificates is based upon the related Available Funds Cap, the sum of (A)
the excess of (i) the amount of interest such Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated at
the Pass-Through Rate without giving effect to the related Available Funds Cap,
up to the Maximum Cap, over (ii) the amount of interest payable on such
Certificates at the Available Funds Cap for such Distribution Date and (B) the
Group II Available Funds Cap Carryover Amount for all previous Distribution
Dates not previously paid, together with interest
11
thereon at a rate equal to the related Pass-Through Rate, up to the Maximum Cap
for such Certificates for such Distribution Date (it being understood that such
amount is not covered by the Policy).
"Group II Basic Principal Distribution Amount": With respect the Group II
Certificates and any Distribution Date, the excess of (i) the related Principal
Remittance Amount for such Distribution Date over (ii) the related
Overcollateralization Release Amount, if any, for such Distribution Date.
"Group II Capitalized Interest Account": The Capitalized Interest Account
designated as such and established pursuant to Section 4.05 hereof.
"Group II Certificates": The Class A-2 Certificates.
"Group II Extra Principal Distribution Amount": With respect to the Group
II Certificates and any Distribution Date, the lesser of (x) the related General
Excess Available Amount for such Distribution Date and (y) the related
Overcollateralization Deficiency Amount for such Distribution Date.
"Group II Formula Rate": For any Distribution Date, LIBOR plus the
Certificate Margin.
"Group II Loan Balance": As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group II as of such date.
"Group II Mortgage Loan": A Mortgage Loan that is identified as such on
the Mortgage Loan Schedule.
"Group II Pre-Funding Account": The Pre-Funding Account designated as such
and established pursuant to Section 4.05.
"Group II Principal Distribution Amount": With respect to Group II
Certificates, and any Distribution Date (other than the Final Scheduled
Distribution Date), the sum of (i) the related Basic Principal Distribution
Amount and (ii) the related Extra Principal Distribution Amount for such
Distribution Date.
"Guaranteed Principal Amount": means (a) for any Distribution Date (other
than a Distribution Date specified in (b)), the amount, if any, by which the
Certificate Principal Balances of the Class A-1 and the Class A-2 Certificates
exceed the Pool Balance at the end of the related Prepayment Period (after
giving effect to all distributions of principal on the related Class A
Certificates on such Distribution Date) and (b) on the Distribution Date in
April, 2029 (after giving effect to all other distributions of principal on the
Class A Certificates), an amount equal to the aggregate Certificate Principal
Balance of the Class A Certificates.
"Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Master Servicer and
their respective Affiliates, (b) does not have any direct financial interest in
or any material indirect financial interest in the Depositor or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter,
12
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor or the Master Servicer or any Affiliate thereof merely because such
Person is the beneficial owner of 1% or less of any class of securities issued
by the Depositor or the Master Servicer or any Affiliate thereof, as the case
may be.
"Independent Contractor": Either (i) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to the REMIC
within the meaning of Section 856(d)(3) of the Code if the REMIC were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Certificates), so long as the REMIC does
not receive or derive any income from such Person and provided that the
relationship between such Person and the REMIC is at arm's length, all within
the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other
Person (including the Master Servicer) if the Trustee has received an Opinion of
Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor will not
cause such REO Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Index": With respect to each Group II Adjustable-Rate Mortgage Loan and
each related Adjustment Date, the index as specified in the related Mortgage
Note.
"Initial Certificate Principal Balance": With respect to any Regular
Certificate, the amount designated "Initial Certificate Principal Balance" on
the face thereof.
"Initial Mortgage Loans": The Mortgage Loans transferred and assigned to
the Trustee on the Closing Date pursuant to Section 2.01.
"Insurance Agreement": The insurance and indemnity agreement, dated as of
March 1, 1999, among the Certificate Insurer, the Seller, the Depositor and the
Trustee.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or other
insurance policy (other than the Policy) covering a Mortgage Loan, to the extent
such proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing mortgage loans held for its own
account, subject to the terms and conditions of the related Mortgage Note and
Mortgage.
"Insurer Default": The existence and continuance of any of the following:
(a) the Certificate Insurer fails to make a payment required under
the Policy in accordance with its terms;
(b) the Certificate Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the Bankruptcy Code
or any other similar
13
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (B) makes a general assignment for the
benefit of its creditors, or (C) has an order for relief entered against
it under the Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority enters a final and
nonappealable order, judgment or decree (A) appointing a custodian,
trustee, agent or receiver for the Certificate Insurer or for all or any
material portion of its property or (B) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Certificate
Insurer (or the taking of possession of all or any material portion of the
property of the Certificate Insurer). "Interest Determination Date": With
respect to the Class A Certificates and for each Accrual Period, the
second LIBOR Business Day preceding the commencement of such Accrual
Period.
"Interest Distributable Amount": With respect to any Distribution Date and
each Class of Class A Certificates, the sum of (i) the related Monthly Interest
Distributable Amount for such Class for such Distribution Date and (ii) the
related Unpaid Interest Shortfall Amount for such Class for such Distribution
Date.
"Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any related
Due Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds 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 on a
contractual basis for such Due Period and not previously recovered.
"LIBOR": With respect to each Accrual Period other than the initial
Accrual Period, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rates of the Reference Banks for
one-month United States dollar deposits, as such rates appear on the Telerate
Screen 3750, as of 11:00 a.m. (London time) on such Interest Determination Date.
On each Interest Determination Date, LIBOR for the related Accrual Period will
be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the related Accrual
Period shall be the arithmetic mean of such offered quotations (rounded
upwards if necessary to the nearest whole multiple of 1/16 of 1%); and
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Accrual
Period shall be the higher of (i) LIBOR as determined on the previous
Interest Determination Date and (ii) the Reserve Interest Rate.
14
"LIBOR Business Day": Any day on which banks in London, England and The
City of New York are open and conducting transactions in foreign currency and
exchange.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage Loan
in respect of which the Master Servicer has determined, in accordance with the
servicing procedures specified herein, as of the end of the related Prepayment
Period, that all Liquidation Proceeds which it expects to recover with respect
to the liquidation of the Mortgage Loan or disposition of the related REO
Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 10.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property; or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.23 or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received in respect
of the rental of any REO Property prior to REO Disposition) received by the
Master Servicer in connection with (i) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise, or (iii) the repurchase, substitution or sale of
a Mortgage Loan or an REO Property pursuant to or as contemplated by Section
2.03, Section 3.23 or Section 10.01.
"Liquidation Report": A report to be provided by the Master Servicer
substantially in the form attached hereto in Exhibit N.
"Loan-to-Value Ratio": As of any date and Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the Principal Balance of
the Mortgage Loan, and the denominator of which is the Value of the related
Mortgaged Property.
"Loan Group": Either Loan Group I or Loan Group II, as the context
requires.
"Loan Group Balance": Either the Group I Loan Balance or the Group II Loan
Balance, as applicable.
"Loan Group I": At any time, the Group I Mortgage Loans in the aggregate.
"Loan Group II": At any time, the Group II Mortgage Loans in the
aggregate.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not been
replaced, an affidavit from the Seller certifying that the original Mortgage
Note has been lost, misplaced or destroyed (together with a copy of the related
Mortgage Note and indemnifying the Trust against any loss,
15
cost or liability resulting from the failure to deliver the original Mortgage
Note) in the form of Exhibit I hereto.
"Majority Certificateholders": The Holders of Certificates evidencing at
least 51% of the Voting Rights.
"Majority Class R Certificateholders": The Holders of Class R Certificates
evidencing at least a 51% Percentage Interest in the Class R Certificates.
"Master Servicer": Pan American Bank, FSB, a federal savings bank, or any
successor master servicer appointed as herein provided.
"Master Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Master Servicer or which is 50% or more owned by
the Master Servicer and (ii) which is qualified to service residential mortgage
loans.
"Master Servicer Event of Termination": One or more of the events
described in Section 7.01.
"Master Servicer Remittance Date": With respect to any Distribution Date,
the third Business Day preceding such Distribution Date.
"Maximum Cap": For any Distribution Date and with respect to the Group II
Adjustable Rate Mortgage Loans, the weighted average of the Maximum Mortgage
Rates less the sum of (A) the Servicing Fee Rate and (B) the rate at which the
premium (including any premium supplement) payable to the Certificate Insurer
multiplied by a fraction, the numerator of which is the Certificate Principal
Balance of the related Group of Certificates and the denominator of which is the
current outstanding Principal Balance of the related Mortgage Loan Group, is
calculated.
"Maximum Mortgage Rate": With respect to each Group II Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.
"Minimum Mortgage Rate": With respect to each Group II Adjustable-Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.
"Monthly Interest Distributable Amount": With respect to each Class of
Class A Certificates and for any Distribution Date, the amount of interest
accrued during the related Accrual Period at the related Pass-Through Rate on
the Certificate Principal Balance of such Class immediately prior to such
Distribution Date (or, in the case of the first Distribution Date, from the
Closing Date).
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage
16
Loan and (ii) any reduction in the amount of interest collectible from the
related Mortgagor pursuant to the Relief Act; (b) without giving effect to any
extension granted or agreed to by the Master Servicer pursuant to Section 3.01;
and (c) on the assumption that all other amounts, if any, due under such
Mortgage Loan are paid when due.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01, Section 2.03(d) or Section 2.10 as from time
to time held as a part of the Trust Fund, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the Seller and
the Depositor, dated as of March 1, 1999, regarding the transfer of the Mortgage
Loans by the Seller to or at the direction of the Depositor.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, separately identifying the Group II
Mortgage Loans and the Group I Mortgage Loans, attached hereto as Schedule 1.
The Mortgage Loan Schedule shall be prepared by the Seller and shall set forth
the following information with respect to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property
including the state and zip code;
(iv) a code indicating whether the Mortgaged Property
was represented by the borrower, at the time of origination,
as being owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property; (vi) the original months to maturity;
(vii) the stated remaining months to maturity from the
Cut-off Date based on the original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
17
(ix) the Mortgage Rate in effect immediately following
the Cut-off Date;
(x) the date on which the first Monthly Payment is or
was due on the Mortgage Loan;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the amount of the Monthly Payment due on the
first Due Date after the Cut-off Date;
(xiv) the last Due Date on which a Monthly Payment was
actually applied to the unpaid Stated Principal Balance;
(xv) the original principal amount of the Mortgage Loan;
(xvi) the Stated Principal Balance of the Mortgage Loan
as of the Close of Business on the Cut-off Date;
(xvii) a code indicating the purpose of the Mortgage
Loan in accordance with Seller's standards (i.e., purchase
financing, rate/term refinancing, cash-out refinancing);
(xviii) the Mortgage Rate at origination;
(xix) a code indicating the documentation program (i.e.,
full documentation, limited documentation, stated income
documentation);
(xx) the risk grade;
(xxi) the Value of the Mortgaged Property;
(xxii) the sale price of the Mortgaged Property, if
applicable;
(xxiii) the actual unpaid principal balance of the
Mortgage Loan as of the Cut-off Date;
(xxiv) the type and term of the related Prepayment
Premium;
(xxv) the rounding code; and
(xxvi) the program code.
The Mortgage Loan Schedule, as in effect from time to time, shall set
forth the following information, as of the Cut-off Date with respect to the
Mortgage Loans in the aggregate and for each Loan Group: (1) the number of
Mortgage Loans; (2) the current Principal Balance of the Mortgage Loans; (3) the
weighted average Mortgage Rate of the Mortgage Loans; and (4) the
18
weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule
shall be amended from time to time by the Seller in accordance with the
provisions of this Agreement.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Schedule 1 from
time to time, and any REO Properties acquired in respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate (i) in the case of
(x) each Group I Mortgage Loan and (y) each Group II Mortgage Loan that is not a
Group II Adjustable-Rate Mortgage Loan, shall remain constant at the rate set
forth in the Mortgage Loan Schedule as the Mortgage Rate in effect immediately
following the Cut-off Date and (ii) in the case of each Group II Adjustable-Rate
Mortgage Loan (A) as of any date of determination until the first Adjustment
Date following the Cut-off Date shall be the rate set forth in the Mortgage Loan
Schedule as the Mortgage Rate in effect immediately following the Cut-off Date
and (B) as of any date of determination thereafter shall be the rate as adjusted
on the most recent Adjustment Date, to equal the sum, rounded to the next
highest or nearest 0.125% (as provided in the Mortgage Note), of the Index,
determined as set forth in the related Mortgage Note, plus the related Gross
Margin subject to the limitations set forth in the related Mortgage Note. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of an Estate in Real Property improved by
a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage Loan
or any other disposition of related Mortgaged Property (including REO Property)
the related Liquidation Proceeds net of Advances, Servicing Advances, Servicing
Fees and any other accrued and unpaid servicing fees received and retained in
connection with the liquidation of such Mortgage Loan or Mortgaged Property.
"Net Loan Rate": With respect to any Mortgage Loan (or the related REO
Property), as of any date of determination, a per annum rate of interest equal
to the then applicable Mortgage Rate for such Mortgage Loan minus the Servicing
Fee Rate.
"Net Prepayment Interest Shortfall": With respect to each Loan Group and
any Distribution Date, the excess, if any, of any Prepayment Interest Shortfalls
in such Loan Group for such date over the related Compensating Interest.
"Net WAC Cap": For any Distribution Date, the difference between (A) the
average of the Mortgage Rates of the Group I Mortgage Loans as of the first day
of the month preceding the month of such Distribution Date (or, in the case of
the first Distribution Date, the Closing Date),
19
weighted on the basis of the related Principal Balances as of the related
Determination Date, and (B) the sum of (i) the Servicing Fee Rate, (ii) the
Trustee Fee Rate and (iii) the rate at which the premium (including any premium
supplement) payable to the Certificate Insurer multiplied by a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-1
Certificates and the denominator of which is the aggregate Principal Balance of
the Group I Mortgage Loans is calculated and (iv) 0.50%. For purposes of
computing the Net WAC Cap, calculations will be made on the basis of an assumed
360-day year consisting of twelve 30-day months.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously made
in respect of a Mortgage Loan or REO Property that, in the good faith business
judgment of the Master Servicer, will not be ultimately recoverable from Late
Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Seller
or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Master Servicer,
acceptable to the Trustee, except that any opinion of counsel relating to (a)
the qualification of any REMIC as a REMIC or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.
"Optional Termination Date": The first Distribution Date on which the
Master Servicer or the Certificate Insurer may opt to terminate the Trust Fund
pursuant to Section 10.01.
"Original Class Certificate Principal Balance": With respect to the Class
A-1, Class A-2 and Class P Certificates, the corresponding amounts set forth
opposite such Classes above in the Preliminary Statement and, with respect to
the Class X and Class R Certificates, zero.
"Original Pre-Funding Amount": With respect to Group I, $7,690,328.68; and
with respect to Group II, $37,546,898.85.
"Other Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account.
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date and each Certificate Group, the amount, if any, by which the
related Overcollateralization Target Amount exceeds the related
Overcollateralized Amount on such Distribution Date (after giving effect to
distributions in respect of the related Basic Principal Distribution Amount on
such Distribution Date).
20
"Overcollateralization Release Amount": With respect to each Certificate
Group and any Distribution Date (A) prior to the occurrence of a Step Down
Trigger, zero, and (B) on or after the occurrence of a Step Down Trigger, the
lesser of (x) the related Principal Remittance Amount for such Distribution Date
and (y) the excess, if any, of (i) the related Overcollateralized Amount for
such Distribution Date, assuming that 100% of the related Principal Remittance
Amount is applied as a principal payment on the related Certificate Group on
such Distribution Date over (ii) the related Overcollateralization Target Amount
for such Distribution Date.
"Overcollateralization Target Amount": With respect to each Certificate
Group and any Distribution Date, an amount equal to 3.25% of the Cut-off Date
Aggregate Principal Balance of the Group I Mortgage Loans plus the Original
Pre-Funding Amount for the Related Loan Group or 4.00% of the Cut-off Date
Aggregate Principal Balance of the Group II Mortgage Loans plus the Original
Pre-Funding Amount for the Related Loan Group, respectively, subject to the
following: (i) if the Step Up Trigger has occurred, the Overcollateralization
Target Amount with respect to each Certificate Group for such Distribution Date
will be an amount equal to the aggregate Principal Balance of the Mortgage Loans
in the Related Loan Group as of the end of the related Prepayment Period plus
the Pre-Funding Amount for the Related Loan Group on such Distribution Date;
(ii) if the Step Up Trigger has not occurred but the Step Up Spread Squeeze Test
is met, the Overcollateralization Target Amount with respect to Group II for
such Distribution Date will be an amount equal to the sum of (A) the
Overcollateralization Target Amount for such Distribution Date determined as
though the Step Up Spread Squeeze Test were not met plus (B) the Spread Squeeze
Overcollateralization Increase Amount; or (iii) if neither the Step Up Trigger
has occurred nor the Step Up Spread Squeeze Test is met but the Step Down
Trigger has occurred, the Overcollateralization Target Amount with respect to
each Certificate Group for such Distribution Date will be an amount equal to the
greater of (A) the greater of (1) 0.50% of the Cut-off Date Aggregate Principal
Balance of the Mortgage Loans in the related Loan Group plus the Original
Pre-Funding Amount for the Related Loan Group and (2) the aggregate Stated
Principal Balance, as of such Distribution Date, of the three largest
outstanding Mortgage Loans in the related Loan Group and (B) the lesser of (x)
3.25 % of the Cut-off Date Aggregate Principal Balance of the Group I Mortgage
Loans plus the Original Pre-Funding Amount for the Related Loan Group or 4.00%
of the Cut-off Date Aggregate Principal Balance of the Group II Mortgage Loans
plus the Original Pre-Funding Amount for the Related Loan Group, as applicable,
and (y) the Stepped Down Required Overcollateralized Percentage of the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties in respect of
the related Loan Group as of such Distribution Date.
"Overcollateralized Amount": For any Distribution Date and each
Certificate Group, the amount, if any, by which (i) the related Loan Group
Balance on the last day of the related Prepayment Period exceeds (ii) the
Certificate Principal Balance of such Class of Class A Certificates as of such
Distribution Date after giving effect to distributions to be made on such Class
A Certificates on such Distribution Date.
"Ownership Interest": As to any Certificate, any ownership or security
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, as owner or as pledgee.
21
"Pass-Through Rate": As to any Distribution Date and (i) with respect to
the Class A-1 Certificates, the lesser of (a) (1) 6.77% per annum on or prior to
the Optional Termination Date or (2) 7.27% after the Optional Termination Date
and (b) the Net WAC Cap for such Distribution Date, and (ii) with respect to the
Class A-2 Certificates, the lesser of (a) the Group II Formula Rate and (b) the
Available Funds Cap for such Distribution Date.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05.
"Percentage Interest": With respect to any Certificate (other than a Class
R Certificate), a fraction, expressed as a percentage, the numerator of which is
the Initial Certificate Principal Balance represented by such Certificate and
the denominator of which is the Original Class Certificate Principal Balance of
the related Class. With respect to a Class R Certificate, the portion of the
Class evidenced thereby, expressed as a percentage, as stated on the face of
such Certificate; provided, however, that the sum of all such percentages for
each such Class totals 100%.
"Periodic Rate Cap": With respect to each Group II Adjustable-Rate
Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth
in the related Mortgage Note, which is the maximum amount by which the Mortgage
Rate for such Mortgage Loan may increase or decrease (without regard to the
Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from
the Mortgage Rate in effect immediately prior to such Adjustment Date.
"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 or managed by the Depositor, the Master Servicer, the Trustee or
any of their respective Affiliates or for which an Affiliate of the Trustee
serves as an advisor:
(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) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agent acting in
their respective commercial capacities) incorporated under the laws of the
United States of America or any state thereof and subject to supervision
and examination by federal and/or state authorities, so long as, at the
time of such investment or contractual commitment providing for such
investment, such depository institution or trust company or its ultimate
parent has a short-term uninsured debt rating in one of the two highest
available rating categories of S&P and the highest available rating
category of ▇▇▇▇▇'▇ and provided that each such investment has an original
maturity of no more than 365 days and (B) any other demand or time deposit
or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into
with a depository institution or trust company (acting as principal) rated
A or higher by S&P and rated A2 or higher by
22
▇▇▇▇▇'▇, provided, however, that collateral transferred pursuant to such
repurchase obligation must be of the type described in clause (i) above
and must (A) be valued daily at current market prices plus accrued
interest or (B) pursuant to such valuation, be equal, at all times, to
105% of the cash transferred by the Trustee in exchange for such
collateral and (C), be delivered to the Trustee or, if the Trustee is
supplying the collateral, an agent for the Trustee, in such a manner as to
accomplish perfection of a security interest in the collateral by
possession of certificated securities;
(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 a Rating Agency in
its highest long-term unsecured rating categories at the time of such
investment or contractual commitment providing for such investment;
(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 a Rating Agency in its highest short-term
unsecured debt rating available at the time of such investment;
(vi) units of money market funds registered under the Investment
Company Act of 1940 including funds managed or advised by the Trustee or
an affiliate thereof having a rating by S&P of AAA-G, AAA-m, or AA-m, and
if rated by ▇▇▇▇▇'▇, rated Aaa, Aa1 or Aa2; and
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies and the
Certificate Insurer in writing as a permitted investment of funds backing
securities having ratings equivalent to its highest initial rating of the
Class A Certificates;
provided, 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% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual Certificate other
than a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Policy": The Certificate Guaranty Insurance Policy (No. 50785-N) with
respect to the Class A Certificates and all endorsements thereto dated the
Closing Date, issued by the Certificate Insurer for the benefit of the Holders
of each Class of Class A Certificates.
"Policy Payments Account": The account established pursuant to Section
11.04 hereof.
23
"Pool Balance": As of any date of determination, the aggregate principal
balance of the Mortgage Loans.
"Preference Claim": As defined in Section 11.04(d).
"Pre-Funding Accounts": The accounts designated as such and created and
maintained by the Trustee pursuant to Section 4.05 hereof.
"Pre-Funding Amount": With respect to any date, the amount on deposit in
the respective Pre-Funding Accounts as of such date (net of any reinvestment
earnings thereon).
"Pre-Funding Earnings": With respect to the April 1999 Distribution Date
and either Loan Group, the actual investment earnings earned on amounts on
deposit in the related Pre-Funding Account during the period from March 11, 1999
through and including April 11, 1999.
"Pre-Funding Period": With respect to each Loan Group, the period
commencing on the Closing Date and ending on the earliest to occur of (i) the
date on which the amount on deposit in the related Pre-Funding Account
(exclusive of any investment earnings) is less than $100,000, (ii) the date on
which any Servicer Default occurs and (iii) April 11, 1999.
"Prepayment Assumption": As defined in the Prospectus Supplement.
"Prepayment Interest Excess": With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a Principal Prepayment in full during
the portion of the related Prepayment Period occurring between the first day and
the 15th day of the calendar month in which such Distribution Date occurs, an
amount equal to interest at the applicable Net Loan Rate on the amount of such
Principal Prepayment for the number of days commencing on the first day of the
calendar month in which such Distribution Date occurs and ending on the date on
which such prepayment is so applied.
"Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment in full
during the portion of the related Prepayment Period occurring between the 16th
day and the last day of the calendar month preceding the month in which such
Distribution Date occurs, an amount equal to interest at the applicable Net Loan
Rate on the amount of such Principal Prepayment for the number of days
commencing on the date on which the prepayment is applied and ending on the last
day of the calendar month preceding the month in which such Distribution Date
occurs. The obligations of the Master Servicer in respect of any Prepayment
Interest Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, 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 March 1, 1999) and ending on the 15th day of the month in which
such Distribution Date occurs.
"Prepayment Premium": With respect to any Mortgage Loan, the penalties or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof.
24
"Principal Balance": As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-off Date Principal Balance, minus all
collections credited against the Principal Balance of any such Mortgage Loan.
For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related Mortgage
Loan as of the final recovery of related Liquidation Proceeds and a Principal
Balance of zero thereafter. As to any REO Property and any day, the Principal
Balance of the related Mortgage Loan immediately prior to such Mortgage Loan
becoming REO Property minus and REO Principal Amortization received with respect
thereto on or prior to such day.
"Principal Prepayment": Any payment of principal made by the Mortgagor on
a Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment.
"Principal Remittance Amount": With respect to each Loan Group and any
Distribution Date, the sum of (i) each scheduled payment of principal collected
or advanced on the related Mortgage Loans by the Master Servicer in respect of
the related Due Period, (ii) the principal portion of all partial and full
principal prepayments of such Mortgage Loans applied by the Master Servicer
during the related Prepayment Period, (iii) the principal portion of all related
Net Liquidation Proceeds and Insurance Proceeds received during such Prepayment
Period, (iv) that portion of the Purchase Price, representing principal of any
repurchased Mortgage Loan in such Loan Group, deposited to the Collection
Account during such Prepayment Period, (v) the principal portion of any related
Substitution Adjustments deposited in the Collection Account during such
Prepayment Period, and (vi) on the Distribution Date on which the Trust Fund is
to be terminated pursuant to Section 10.01, that portion of the Termination
Price, in respect of principal for such Loan Group.
"Property Insurance Proceeds": Proceeds of any title policy, hazard policy
or other insurance policy covering a Mortgage Loan, to the extent such proceeds
are received by the Master Servicer and are not to be applied to the restoration
of the related Mortgaged Property or released to the Mortgagor in accordance
with Accepted Servicing Procedures, subject to the terms and conditions of the
related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement dated March 9,
1999 relating to the public offering of the Class A Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
confirmed by an Officers' Certificate from the Master Servicer to the Trustee,
an amount equal to the sum of (i) 100% of the Principal Balance thereof as of
the date of purchase (or such other price as provided in Section 10.01), (ii) in
the case of (x) a Mortgage Loan, accrued interest on such Principal Balance at
the applicable Mortgage Rate in effect from time to time from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an advance by
the Master Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, the sum of (1)
accrued interest on such Principal Balance at the applicable Mortgage Rate in
effect from time to time from the Due Date as to which interest was last
25
covered by a payment by the Mortgagor or an advance by the Master Servicer
through the end of the calendar month immediately preceding the calendar month
in which such REO Property was acquired, plus (2) REO Imputed Interest for such
REO Property for each calendar month commencing with the calendar month in which
such REO Property was acquired and ending with the calendar month in which such
purchase is to be effected, net of the total of all net rental income, Insurance
Proceeds, Liquidation Proceeds and Advances that as of the date of purchase had
been distributed as or to cover REO Imputed Interest pursuant to Section 4.04,
(iii) any unreimbursed Servicing Advances and Advances and any unpaid Servicing
Fees allocable to such Mortgage Loan or REO Property, (iv) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan or REO Property pursuant to Section 3.23, and (v) in the case of a Mortgage
Loan required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the Master Servicer or the Trustee in respect of
the breach or defect giving rise to the purchase obligation.
"Qualified Insurer": Any insurance company acceptable to ▇▇▇▇▇▇ Mae.
"Qualified Additional Mortgage Loan": An Additional Mortgage Loan that, in
the sole judgment of the Certificate Insurer, meets the same credit quality
standards as the Initial Mortgage Loans.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of, and not more than 5% less
than, the outstanding principal balance of the Deleted Mortgage Loan as of the
Due Date in the calendar month during which the substitution occurs, (ii) if a
Group I Mortgage Loan or a Group II Mortgage Loan that is not a Group II
Adjustable Rate Mortgage Loan, have a Mortgage Rate not less than (and not more
than one percentage point in excess of) the Mortgage Rate of the Deleted
Mortgage Loan, (iii) if a Group II Adjustable Rate Mortgage Loan, have a Maximum
Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted Mortgage
Loan, (iv) if a Group II Adjustable Rate Mortgage Loan, have a Minimum Mortgage
Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage Loan, (v)
if a Group II Adjustable Rate Mortgage Loan, have a Gross Margin equal to or
greater than the Gross Margin of the Deleted Mortgage Loan, (vi) if a Group II
Adjustable Rate Mortgage Loan, have a next Adjustment Date not more than two
months later than the next Adjustment Date on the Deleted Mortgage Loan, (vii)
have a remaining term to maturity not greater than (and not more than one year
less than) that of the Deleted Mortgage Loan, (viii) are current as of the date
of substitution, (ix) have a Loan-to-Value Ratio as of the date of substitution
equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (x) have a risk grading determined by the Seller at least equal to
the risk grading assigned on the Deleted Mortgage Loan, (xi) have been
underwritten or re-underwritten by the Seller in accordance with the same
underwriting criteria and guidelines as the Deleted Mortgage Loan, (xii) conform
to each representation and warranty set forth in Section 2.04 hereof applicable
to the Deleted Mortgage Loan, and (xiii) be acceptable to the Certificate
Insurer. In the event that one or more mortgage loans are substituted for one or
more Deleted Mortgage Loans, the amounts described in clause (i) hereof shall be
determined on the basis of aggregate principal balances, the Mortgage Rates
described in clause (ii) hereof shall be determined on the basis of weighted
26
average Mortgage Rates, the risk gradings described in clause (x) hereof shall
be satisfied as to each such mortgage loan, the terms described in clause (vii)
hereof shall be determined on the basis of weighted average remaining term to
maturity, the Loan-to-Value Ratios described in clause (ix) hereof shall be
satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (xii) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the aggregate, as the case may be.
"Rating Agency or Rating Agencies": S&P and ▇▇▇▇▇'▇ or their successors.
If such agencies or their successors are no longer in existence, "Rating
Agencies" shall be such nationally recognized statistical rating agencies, or
other comparable Persons, designated by the Depositor and acceptable to the
Certificate Insurer, notice of which designation shall be given to the Trustee
and Servicer.
"Realized Loss": With respect to any Liquidated Mortgage Loan, the amount
of loss realized equal to the portion of the Principal Balance remaining unpaid
after application of all Net Liquidation Proceeds in respect of such Mortgage
Loan.
"Receipt": As defined in the Policy.
"Record Date": With respect to (i) Certificate Group I, the last day of
the calendar month preceding the month in which the related Distribution Date
occurs and (ii) Certificate Group II, the Close of Business on the Business Day
immediately preceding the related Distribution Date; provided, however, that
following the date on which Definitive Certificates for a Class are available
pursuant to Section 5.02, the Record Date shall be the last day of the calendar
month preceding the month in which the related Distribution Date occurs.
"Reference Banks": Those banks (i) with an established place of business
in London, England, (ii) not controlling, under the control of or under common
control with the Depositor or the Master Servicer or any affiliate thereof,
(iii) whose quotations appear on the Telerate Screen 3750 on the relevant
Interest Determination Date and (iv) which have been designated as such by the
Depositor; provided, however, that if fewer than two of such banks provide a
LIBOR rate, then any leading banks selected by the Depositor which are engaged
in transactions in United States dollar deposits in the international
Eurocurrency market.
"Regular Certificate": Any of the Class A Certificates, the Class P
Certificates or the Class X Certificate.
"Related Loan Group": With respect to the Group I Certificates, Loan Group
I and with respect to the Group II Certificates, Loan Group II.
"Relief Act": The Soldiers' and Sailors Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution Date and
Loan Group, for any Mortgage Loan in such Loan Group to which there has been a
reduction in the amount of interest collectible thereon for the most recently
ended Due Period as a result of the application of the Relief Act, the amount by
which (i) interest collectible on such Mortgage Loan during such Due Period is
less than (ii) one month's interest on the Principal Balance of such Mortgage
27
Loan at the Loan Rate for such Mortgage Loan before giving effect to the
application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"Remittance Report": A report prepared by the Master Servicer and
delivered to the Trustee pursuant to Section 4.04.
"Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.
"REO Account": The account or accounts maintained by the Master Servicer
in respect of an REO Property pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Loan Rate on the Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the Close of Business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 10.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i) payable pursuant
to Section 3.23 in respect of the proper operation, management and maintenance
of such REO Property or (ii) payable or reimbursable to the Master Servicer
pursuant to Section 3.23 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and Advances in respect of
such REO Property or the related Mortgage Loan, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Master Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit F attached hereto.
28
"Reserve Interest Rate": With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be either (i) the arithmetic
mean (rounded upwards if necessary to the nearest whole multiple of 1/16 of 1%)
of the one-month United States dollar lending rates which banks in The City of
New York selected by the Depositor are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, in the case of any Interest Determination Date after the
initial Interest Determination Date, the lowest one-month United States dollar
lending rate which such New York banks selected by the Depositor are quoting on
such Interest Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a ▇▇▇▇▇▇ ▇▇▇ eligible condominium project, (iv) a
manufactured home, or (v) a detached one-family dwelling in a planned unit
development, none of which is a co-operative or mobile home.
"Responsible Officer": When used with respect to the Trustee, the Chairman
or Vice Chairman of the Board of Directors or Trustees, the Chairman or Vice
Chairman of the Executive or Standing Committee of the Board of Directors or
Trustees, the President, any vice president, any assistant vice president, the
Secretary, any assistant secretary, the Treasurer, any assistant treasurer, the
Cashier, any assistant cashier, any trust officer or assistant trust officer,
the Controller and any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and, with respect to a particular matter, to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Rolling Delinquency Percentage": With respect to any Distribution Date,
the average of the Delinquency Percentages as of the last day of each of the
three (or one or two, in the case of the first and second Distribution Dates,
respectively) preceding Due Periods.
"S&P": Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
and its successors, and, if such division shall for any reason no longer perform
the functions of a securities rating agency, "S&P" shall be deemed to refer to
any other "nationally recognized rating organization," as set forth on the most
current list of such organizations released by the Securities and Exchange
Commission.
"Seller": Pan American Bank, FSB, or its successor in interest, in its
capacity as seller under the Mortgage Loan Purchase Agreement.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the Master Servicer in the performance of its servicing obligations,
including, but not limited to, the cost of (i) the preservation, restoration,
inspection and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation
29
of the REO Property and (iv) compliance with the obligations under Sections
3.01, 3.09, 3.16, and 3.23.
"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 in full 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 same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. The
Servicing Fee may be retained by any Sub-Servicer as its servicing compensation.
"Servicing Fee Rate": 0.44% per annum.
"Servicing Officer": Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers furnished by the
Master Servicer to the Trustee and the Depositor on the Closing Date, as such
list may from time to time be amended.
"Servicing Standard": The standards set forth in Section 3.01.
"Severely Delinquent Loan": Any Specially Serviced Mortgage Loan that does
not become a Resolved Loan prior to the 150th day of delinquency (without giving
effect to any grace period permitted by the related Mortgage Note) in the
payment of a Monthly Payment.
"Specially Serviced Mortgage Loan": Any Mortgage Loan which is or has been
90 or more days delinquent, the servicing of which has been transferred to the
Special Servicer.
"Special Servicer": Fairbanks Capital Corp., in its capacity as special
servicer hereunder.
"Spread Squeeze Condition": The Spread Squeeze Condition will be met with
respect to a Distribution Date if the Spread Squeeze Percentage for such
Distribution Date is less than 3.00% for any Distribution Date after April 2000.
"Spread Squeeze Overcollateralization Increase Amount": For any
Distribution Date on which the Step Up Spread Squeeze Test is met, an amount
equal to the product obtained by multiplying (i) three, (ii) the excess, if any,
of 3.00% over the Spread Squeeze Percentage for such Distribution Date and (iii)
the Aggregate Cut-off Date Principal Balance of the Group II Mortgage Loans plus
the Original Pre-Funding Amount for the Related Loan Group.
"Spread Squeeze Percentage": With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the product of 12
and the sum of the General Excess Available Amount for Group II for such
Distribution Date, and the denominator of which is the aggregate Stated
Principal Balance of the Group II Mortgage Loans and REO Properties as of such
Distribution Date.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as of
any date of determination up to but not including the Distribution Date on which
the proceeds, if any, of a
30
Liquidation Event with respect to such Mortgage Loan would be distributed, the
outstanding principal balance of such Mortgage Loan as of the Cut-off Date, as
shown in the Mortgage Loan Schedule, minus the sum of (i) the principal portion
of each Monthly Payment due on a Due Date subsequent to the Cut-off Date, to the
extent received from the Mortgagor or advanced by the Master Servicer and
distributed pursuant to Section 4.01 on or before such date of determination,
(ii) all Principal Prepayments received after the Cut-off Date, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
(iii) all Liquidation Proceeds and Insurance Proceeds applied by the Master
Servicer as recoveries of principal in accordance with the provisions of Section
4.03, to the extent distributed pursuant to Section 4.01 on or before such date
of determination, and (iv) any Realized Loss incurred with respect thereto as a
result of a Deficient Valuation made during or prior to the Due Period for the
most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of the Trust Fund, minus the aggregate amount of REO Principal Amortization in
respect of such REO Property for all previously ended calendar months, to the
extent distributed pursuant to Section 4.01 on or before such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Step Down Cumulative Loss Test": The Step Down Cumulative Loss Test will
be met with respect to a Distribution Date as follows: (i) for the 31st through
the 41st Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is 1.25% or less; (ii) for the 42nd through the 53rd
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is 1.75% or less; (iii) for the 54th through the 65th Distribution Dates, if the
Cumulative Loss Percentage for such Distribution Date is 2.50% or less; and (iv)
for any Distribution Date after the 65th Distribution Date, if the Cumulative
Loss Percentage for such Distribution Date is 3.15% or less.
"Step Down Rolling Delinquency Test": The Step Down Rolling Delinquency
Test will be met with respect to a Distribution Date if the Rolling Delinquency
Percentage for such Distribution Date is 10.00% or less.
"Step Down Rolling Loss Test": The Step Down Rolling Loss Test will be met
with respect to a Distribution Date if the Annual Loss Percentage is less than
1.00%.
"Step Down Trigger": For any Distribution Date after the 30th Distribution
Date, the Step Down Trigger will have occurred if each of the Step Down
Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step Down
Rolling Loss Test is met. In no event will the Step Down Trigger be deemed to
have occurred for the 30th Distribution Date or any preceding Distribution Date.
31
"Stepped Down Required Overcollateralized Percentage": For any
Distribution Date for which the Step Down Trigger has occurred, a percentage
equal to (i) the percentage equivalent of a fraction, the numerator of which is
3.25% of the Cut-off Date Aggregate Principal Balance of the Group I Mortgage
Loans plus the Pre-Funding Amount for the Related Loan Group or 4.00% of the
Cut-off Date Aggregate Principal Balance of the Group II Mortgage Loans plus the
Pre-Funding Amount for the Related Loan Group, as applicable, and the
denominator of which is the aggregate Stated Principal Balance of the related
Group of Mortgage Loans and REO Properties as of such Distribution Date, minus
(ii) the percentage equivalent of a fraction, the numerator of which is the
product of (A) the percentage calculated under clause (i) above minus 6.50% with
respect to the Group I Mortgage Loans and 8.00% with respect to the Group II
Mortgage Loans, multiplied by (B) the number of consecutive Distribution Dates
through and including the Distribution Date for which the Stepped Down Required
Overcollateralized Percentage is being calculated, up to a maximum of six, for
which the Step Down Trigger has occurred, and the denominator of which is six.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss Test will be
met with respect to a Distribution Date as follows: (i) for the 1st through the
12th Distribution Dates, if the Cumulative Loss Percentage for such Distribution
Date is more than 0.75%; (ii) for the 13th through the 24th Distribution Dates,
if the Cumulative Loss Percentage for such Distribution Date is more than 1.25%;
(iii) for the 25th through the 36th Distribution Dates, if the Cumulative Loss
Percentage for such Distribution Date is more than 3.00%; (iv) for the 37th
through the 48th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is more than 3.75%; and (v) for the 49th Distribution Date and
any Distribution Date thereafter, if the Cumulative Loss Percentage for such
Distribution Date is more than 4.25%.
"Step Up Rolling Delinquency Test": The Step Up Rolling Delinquency Test
will be met with respect to a Distribution Date if the Rolling Delinquency
Percentage for such Distribution Date is more than 11.50%.
"Step Up Rolling Loss Test": The Step Up Rolling Loss Test will be met
with respect to a Distribution Date, if the Annual Loss Percentage is equal to
or more than 1.65%.
"Step Up Spread Squeeze Test": The Step Up Spread Squeeze Test will be met
with respect to a Distribution Date if the Spread Squeeze Condition is met for
such Distribution Date.
"Step Up Trigger": For any Distribution Date, the Step Up Trigger will
have occurred if any one of the Step Up Cumulative Loss Test, the Step Up
Rolling Delinquency Test or the Step Up Rolling Loss Test is met.
"Sub-Servicer": Any Person with which either Servicer has entered into a
Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer which
meets the requirements set forth in Section 3.08 and is otherwise acceptable to
the applicable Servicer.
"Sub-Servicing Agreement": The written contract between either Servicer
and a Sub-Servicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.02.
32
"Substitution Adjustment": As defined in Section 2.03(d) hereof.
"Tax Matters Person": The tax matters person appointed pursuant to Section
9.01(e) hereof.
"Tax Returns": The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of the REMIC Trust in its capacity as a REMIC under the REMIC
Provisions, together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders of the related Group
or filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01(a) hereof.
"Trust": United PanAm Mortgage Loan Trust 1999-1, the trust created
hereunder.
"Trust Fund": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to a portion of which REMIC election is to be made, such entire Trust Fund
consisting of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together with
all collections thereon and proceeds thereof, (ii) any REO Property, together
with all collections thereon and proceeds thereof, (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby); (v) the Policy and (vi) the Collection
Account, the Distribution Account (subject to the last sentence of this
definition) and any REO Account and such assets that are deposited therein from
time to time and any investments thereof, together with any and all income,
proceeds and payments with respect thereto. Notwithstanding the foregoing,
however, (a) a REMIC election will not be made with respect to the Collection
Account, the Distribution Account, the Pre-Funding Accounts or the Capitalized
Interest Accounts and (b) the Trust Fund specifically excludes (1) all
Prepayment Premiums and all payments and other collections of principal and
interest due on the Mortgage Loans on or before the Cut-off Date and (2) all
income and gain realized from Permitted Investments of funds on deposit in the
Distribution Account.
"Trustee": Bankers Trust Company, a New York banking corporation, or any
successor trustee appointed as herein provided.
"Trustee's Fee": The amount payable to the Trustee on each Distribution
Date pursuant to Section 8.05 as compensation for all services rendered by it in
the execution of the trust hereby created and in the exercise and performance of
any of the powers and duties of the Trustee hereunder, which amount shall equal
one twelfth of the product of (i) the Trustee Fee Rate, multiplied by (ii) the
aggregate Stated Principal Balance of the Mortgage Loans and any REO Properties
as of the preceding Distribution Date (or, in the case of the initial
Distribution Date, as of the Cut-off Date).
33
"Trustee Fee Rate": .0125% per annum.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such that
the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.
"United States Person or U.S. Person": A citizen or resident of the United
States, a corporation, partnership or other entity treated as a corporation or
partnership for federal income tax purposes (other than a partnership that is
not treated as a U.S. Person pursuant to any applicable Treasury regulations)
created or organized in, or under the laws of, the United States, any state
thereof or the District of Columbia, or an estate the income of which from
sources without the United States is includible in gross income for United
States federal income tax purposes regardless of its connection with the conduct
of a trade or business within the United States, or 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 United States persons have authority
to control all substantial decisions of the trust. The term "United States"
shall have the meaning set forth in Section 7701 of the Code or successor
provisions.
"Unpaid Interest Shortfall Amount": With respect to each Class of Class A
Certificates and (i) the first Distribution Date, zero, and (ii) any
Distribution Date after the first Distribution Date, the amount, if any, by
which (a) the sum of (1) the Monthly Interest Distributable Amount for such
Class for the immediately preceding Distribution Date and (2) the outstanding
Unpaid Interest Shortfall Amount, if any, for such Class for such preceding
Distribution Date exceeds (b) the aggregate amount distributed on such Class in
respect of interest pursuant to clause (a) of this definition on such preceding
Distribution Date, plus interest on the amount of interest due but not paid on
the Certificates of such Class on such preceding Distribution Date, to the
extent permitted by law, at the Pass-Through Rate for such Class for the related
Accrual Period.
"Unutilized Funding Amount": The Pre-Funding Amount immediately after the
end of the Pre-Funding Period.
"Value": With respect to any Mortgage Loan, and the related Mortgaged
Property, the lesser of:
(i) the lesser of (a) the value thereof as determined by an
appraisal made for the originator of the Mortgage Loan at the time or
origination of the Mortgage Loan by an appraiser who met the minimum
requirements of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac, and (b) the value thereof as
determined by a review appraisal conducted by the Seller in the event any
such review appraisal determines an appraised value more than 10% lower
than the value thereof, in the case of a Mortgaged Loan with a
Loan-to-Value Ratio less than or equal to 80%, or more than 5% lower than
the value thereof, in the case of a Mortgage Loan with a Loan-to-Value
Ratio greater than 80%, as determined by the appraisal referred to in
clause (i)(a) above; and
(ii) the purchase price paid for the related Mortgaged Property by
the Mortgagor with the proceeds of the Mortgage Loan;
34
provided, however, that (A) in the case of a refinanced Mortgage Loan
(which is a Mortgage Loan the proceeds of which were not used to purchase the
related Mortgaged Property), such value of the Mortgaged Property is based
solely upon the lesser of (i) the value determined by an appraisal made for the
originator of such refinanced Mortgaged Loan at the time of origination of such
refinanced Mortgage Loan by an appraiser who met the minimum requirements of
▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and (ii) the value thereof as determined by a review
appraisal conducted by the Seller in the event any such review appraisal
determines an appraised value more than 10% lower than the value thereof, in the
case of a Mortgage Loan with a Loan-to-Value Ratio less than or equal to 80%, or
more than 5% lower than the value thereof, in the case of a Mortgage Loan with a
Loan-to-Value Ratio greater than 80%, as determined by the appraisal referred to
in clause (ii)(A)(i) above, and (B) in the case of a Mortgage Loan originated in
connection with a "lease option purchase," such value of the Mortgaged Property
is based on the lower of the value determined by an appraisal made for the
originator of such Mortgage Loan at the time of origination or the sale price of
such Mortgaged Property if the "lease option purchase price" was set less than
12 months prior to origination, and is based on the value determined by an
appraisal made for the originator of such Mortgage Loan at the time of the
origination if the "lease option purchase price" was set 12 months or more prior
to origination.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. Except as otherwise
expressly provided for herein, on any date on which no Insurer Default exists
and is continuing and the Class A Certificates are outstanding or any amounts
are owed the Certificate Insurer under the Insurance Agreement, all of the
Voting Rights allocated to the Certificateholders shall be vested in the
Certificate Insurer. However, if an Insurer Default exists and is continuing and
no amounts are owed to the Certificate Insurer under the Insurance Agreement,
the Voting Rights allocated among Holders of such Certificates outstanding shall
be the fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Balance of all the Certificates of such Class then
outstanding and the denominator of which is the aggregate Certificate Balance of
all the Certificates then outstanding. The Voting Rights allocated to a Class of
Certificates shall be allocated among all holders of each such Class in
proportion to the outstanding Certificate Balance of such Certificates;
provided, however, that any Certificate registered in the name of the Master
Servicer, the Depositor or the Trustee or any of their respective affiliates
shall not be included in the calculation of Voting Rights; provided further that
when none of the Regular Certificates are outstanding, 100% of the Voting Rights
shall be allocated among Holders of the Class R Certificates in accordance with
such Holders' respective Percentage Interests in the Certificates of such Class.
"X-1 Component": The payment component constituting a part of the Class X
Certificate and with respect to which the "X-1 Component Distributable Amount"
is payable.
"X-2 Component": The payment component constituting a part of the Class X
Certificate and with respect to which the "X-2 Component Distributable Amount"
is payable.
"X-1 Component Distributable Amount": With respect to any Distribution
Date, the product of (A) the excess of (x) the weighted average of the Net Loan
Rates of the Group I Mortgage Loans at the beginning of the related Due Period
less the sum of the Additional
35
Servicing Fee Rate, the Trustee Fee Rate and the rate at which the premium on
the Policy is calculated (converted to a per annum rate calculated on the basis
of an assumed 360-day year consisting of twelve 30-day months), weighted on the
basis of their Principal Balances as of the beginning of such Due Period, over
(y) the Pass-Through Rate for the Class A-1 Certificates for such Distribution
Date, and (B) one-twelfth of the Group I Loan Balance at the beginning of the
related Due Period.
"X-2 Component Distributable Amount": With respect to any Distribution
Date, the product of (A) the excess of (x) the weighted average of the Net Loan
Rates of the Group II Mortgage Loans at the beginning of the related Due Period
less the sum of the Additional Servicing Fee Rate, the Trustee Fee Rate and the
rate at which the premium on the Policy is calculated (converted to a per annum
rate calculated on the basis of the actual number of days elapsed in the related
Accrual Period and an assumed 360-day year), weighted on the basis of their
Principal Balances as of the beginning of such Due Period, over (y) the
Pass-Through Rate for the Class A-2 Certificates for such Distribution Date, and
(B) one-twelfth of the Group II Loan Balance at the beginning of the related Due
Period.
Section 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey to the Trustee without
recourse for the benefit of the Certificateholders and the Certificate Insurer
all the right, title and interest of the Depositor, including any security
interest therein for the benefit of the Depositor, in and to (i) each Initial
Mortgage Loan identified on the Mortgage Loan Schedule, including the related
Cut-off Date Principal Balance, all interest due thereon after the Cut-off Date
and all collections in respect of interest and principal due after the Cut-off
Date (excluding, however, the right to receive any Prepayment Premiums); (ii)
any real property that secured each such Mortgage Loan and that has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in
any insurance policies in respect of the Mortgage Loans; (iv) all proceeds of
any of the foregoing; (vi) the rights of the Depositor under the Mortgage Loan
Purchase Agreement, and (vii) all other assets included or to be included in the
Trust Fund. Such assignment includes all interest and principal due to the
Depositor or the Master Servicer after the Cut-off Date with respect to the
Initial Mortgage Loans.
36
In connection with such transfer and assignment, the Seller, on behalf of
the Depositor, does hereby deliver to, and deposit with the Trustee, or its
designated agent (the "Custodian"), the following documents or instruments with
respect to each Mortgage Loan (a "Mortgage File") so transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank, in which
case the Trustee shall cause the endorsement to be completed upon
the request of and at the expense of the Seller or (B) in the
following form: "Pay to the order of Bankers Trust Company, as
Trustee under the Pooling and Servicing Agreement, dated as of March
1, 1999, United PanAm Mortgage Loan Trust 1999-1, Asset-Backed
Certificates, Series 1999-1, without recourse", or with respect to
any lost Mortgage Note, an original Lost Note Affidavit stating that
the original mortgage note was lost, misplaced or destroyed,
together with a copy of the related mortgage note; provided,
however, that such substitutions of Lost Note Affidavits for
original Mortgage Notes may occur only with respect to Mortgage
Loans, the aggregate Cut-off Date Principal Balance of which is less
than or equal to 1.00% of the Pool Balance as of the Cut-off Date;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed
pursuant to a power of attorney, with evidence of recording thereon
or, if such Mortgage or power of attorney has been submitted for
recording but has not been returned from the applicable public
recording office, has been lost or is not otherwise available, a
copy of such Mortgage or power of attorney, as the case may be,
certified to be a true and complete copy of the original submitted
for recording;
(iii) an original Assignment of Mortgage, in form and substance acceptable
for recording. The Mortgage shall be assigned either (A) in blank or
(B) to "Bankers Trust Company, as Trustee under the Pooling and
Servicing Agreement, dated as of March 1, 1999, United PanAm
Mortgage Loan Trust 1999-1, Asset-Backed Certificates, Series
1999-1, without recourse";
(iv) an original copy of any intervening assignment of Mortgage showing a
complete chain of assignments;
(v) the original or a certified copy of lender's title insurance policy;
and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
The Trustee agrees to execute and deliver (or cause the Custodian to
execute and deliver) to the Depositor on or prior to the Closing Date an
acknowledgment of receipt of the original Mortgage Note (with any exceptions
noted), substantially in the form attached as Exhibit G-3 hereto.
The Seller shall promptly (and in no event later than 30 days following
the Closing Date) submit or cause to be submitted for recording, at the Seller's
expense and at no expense to the Trust Fund, the Trustee or the Certificate
Insurer, in the appropriate public office for real
37
property records, each Assignment referred to in Sections 2.01(iii) and (iv)
above. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Seller shall promptly prepare or cause to be
prepared a substitute Assignment or cure or cause to be cured such defect, as
the case may be, and thereafter submit each such Assignment for recordation.
If any of the documents referred to in Section 2.01(ii), (iii) or (iv)
above has as of the Closing Date been submitted for recording but either (x) has
not been returned from the applicable public recording office or (y) has been
lost or such public recording office has retained the original of such document,
the obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trustee or the Custodian no later than the
Closing Date, of a copy of each such document certified by the Seller in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Seller, delivery to the
Trustee or the Custodian, promptly upon receipt thereof of either the original
or a copy of such document certified by the applicable public recording office
to be a true and complete copy of the original. If the original lender's title
insurance policy, or a certified copy thereof, was not delivered pursuant to
Section 2.01(v) above, the Seller shall deliver or cause to be delivered to the
Trustee or the Custodian, the original or a copy of a written commitment or
interim binder or preliminary report of title issued by the title insurance or
escrow company, with the original or a certified copy thereof to be delivered to
the Trustee or the Custodian, promptly upon receipt thereof. The Seller shall
deliver or cause to be delivered to the Trustee or the Custodian promptly upon
receipt thereof any other documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.
Upon discovery or receipt of notice of any materially defective document
in, or that a document is missing from, a Mortgage File, the Seller shall have
90 days to cure such defect or deliver such missing document to the Trustee or
the Custodian. If the Seller does not cure such defect or deliver such missing
document within such time period, the Seller shall either repurchase or
substitute for such Mortgage Loan in accordance with Section 2.03. The Seller
shall cause the Assignments of Mortgage which were delivered in blank and cause
to be completed and shall cause all Assignments referred to in Section 2.01(iii)
hereof and, to the extent necessary, in Section 2.01(iv) hereof to be recorded;
provided, however, the Seller need not cause to be recorded any Assignment which
relates to a Mortgage Loan in any jurisdiction under the laws of which, as
evidenced by an Opinion of Counsel delivered by the Seller to the Trustee, the
Certificate Insurer and the Rating Agencies, the recordation of such assignment
is not necessary to protect the Trustee's interest in the related Mortgage Loan.
The Seller shall be required to deliver such assignments for recording within 30
days of the Closing Date. The Seller shall furnish the Trustee, or its
designated agent, with a copy of each assignment of Mortgage submitted for
recording. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Seller shall promptly have a substitute
Assignment prepared or have such defect cured, as the case may be, and
thereafter cause each such Assignment to be duly recorded. In the event that any
Mortgage Note is endorsed in blank as of the Closing Date, promptly following
the Closing Date the Seller shall cause to be completed such endorsements "Pay
to the order of Bankers Trust Company, as Trustee under the Pooling
38
and Servicing Agreement, dated as of March 1, 1999, United PanAm Mortgage Loan
Trust 1999-1, Series 1999-1, without recourse."
The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement.
In addition, on or prior to the Closing Date, the Seller shall cause the
Certificate Insurer to deliver the Policy to the Trustee.
The Master Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution; provided, however, that the Master Servicer shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within two weeks of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within 270 days of its submission for recordation. In the event that
the Master Servicer cannot provide a copy of such document certified by the
public recording office within such 270 day period, the Master Servicer shall
deliver to the Custodian, within such 270 day period, an Officer's Certificate
of the Master Servicer which shall (A) identify the recorded document, (B) state
that the recorded document has not been delivered to the Custodian due solely to
a delay caused by the public recording office, (C) state the amount of time
generally required by the applicable recording office to record and return a
document submitted for recordation, if known, and (D) specify the date the
applicable recorded document is expected to be delivered to the Custodian, if
known, and, upon receipt of a copy of such document certified by the public
recording office, the Master Servicer shall immediately deliver such document to
the Custodian. In the event the appropriate public recording office will not
certify as to the accuracy of such document, the Master Servicer shall deliver a
copy of such document certified by an officer of the Master Servicer to be a
true and complete copy of the original to the Custodian.
Section 2.02. Acceptance by Trustee.
The Trustee acknowledges the receipt of the Policy and, subject to the
provisions of Section 2.01 and subject to the review described below and any
exceptions noted on the exception report described in the next paragraph below,
the documents referred to in Section 2.01 above and all other assets included in
the definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "Trust Fund" in trust for the exclusive use and benefit of all
present and future Certificateholders and the Certificate Insurer.
The Trustee agrees, for the benefit of the Certificateholders and the
Certificate Insurer, to review, or that it has reviewed (or to cause the
Custodian to review or that it has caused the Custodian to have reviewed) each
Mortgage File on or prior to the Closing Date (or, with respect to any document
delivered after the Startup Day, within 45 days of receipt and with respect to
any Qualified Substitute Mortgage Loan, within 45 days after the assignment
thereof). The Trustee further agrees, for the benefit of the Certificateholders
and the Certificate Insurer, to
39
certify in substantially the form attached hereto as Exhibit G-1, within 45 days
after the Closing Date (or, with respect to any document delivered after the
Startup Day, within 45 days of receipt and with respect to any Qualified
Substitute Mortgage, within 45 days after the assignment thereof) 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 the exception
report annexed thereto as not being covered by such certification), (i) all
documents required to be delivered to it pursuant Section 2.01 of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based
on its examination and only as to the foregoing, the information set forth in
the Mortgage Loan Schedule that corresponds to items (i) and (ii) of the
Mortgage Loan Schedule accurately reflects information set forth in the Mortgage
File. It is herein acknowledged that, in conducting such review, the Trustee (or
the Custodian, as applicable) is under no duty or obligation to inspect, review
or examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they have actually been recorded or that they are other than
what they purport to be on their face.
Prior to the first anniversary date of this Agreement the Trustee shall
deliver (or cause the Custodian to deliver) to the Depositor, the Master
Servicer and the Certificate Insurer a final certification in the form annexed
hereto as Exhibit G-2 evidencing the completeness of the Mortgage Files, with
any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or preparing,
as the case may be, the certifications referred to above, the Trustee (or the
Custodian, as applicable) finds any document or documents constituting a part of
a Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trustee shall so notify the Seller, the Depositor,
the Master Servicer and the Certificate Insurer. In addition, upon the discovery
by the Seller, Depositor or the Master Servicer (or upon receipt by the Trustee
of written notification of such breach) of a breach of any of the
representations and warranties made by the Seller in the related Mortgage Loan
Purchase Agreement in respect of any Mortgage Loan which materially adversely
affects such Mortgage Loan or the interests of the related Certificateholders in
such Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties to this Agreement and the Certificate Insurer.
The Depositor and the Trustee intend that the assignment and transfer
herein contemplated constitute a sale of the Mortgage Loans, the related
Mortgage Notes and the related documents, conveying good title thereto free and
clear of any liens and encumbrances, from the Depositor to the Trustee and that
such property not be part of the Depositor's estate or property of the Depositor
in the event of any insolvency by the Depositor. In the event that such
conveyance is deemed to be, or to be made as security for, a loan, the parties
intend that the Depositor shall be deemed to have granted and does hereby grant
to the Trustee a first priority perfected security interest in all of the
Depositor's right, title and interest in and to the Mortgage Loans, the related
Mortgage Notes and the related documents, and that this Agreement shall
constitute a security agreement under applicable law.
40
Section 2.03. Repurchase or Substitution of Mortgage Loans by the Seller.
(a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement or in Section 2.04 in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders or the Certificate Insurer, the
Trustee shall promptly notify the Seller, the Certificate Insurer and the Master
Servicer of such defect, missing document or breach and request that the Seller
deliver such missing document or cure such defect or breach within 90 days from
the date the Seller was notified of such missing document, defect or breach, and
if the Seller does not deliver such missing document or cure such defect or
breach in all material respects during such period, the Trustee shall enforce
the Seller's obligation under the Mortgage Loan Purchase Agreement and cause the
Seller to repurchase such Mortgage Loan from the Trust Fund at the Purchase
Price on or prior to the Determination Date following the expiration of such 90
day period (subject to Section 2.03(e)); provided that, in connection with any
such breach that could not reasonably have been cured within such 90 day period,
if the Seller shall have commenced to cure such breach within such 90 day
period, the Seller shall be permitted to proceed thereafter diligently and
expeditiously to cure the same within the additional period provided under the
Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account, and the Trustee,
upon receipt of written certification from the Master Servicer of such deposit,
shall release to the Seller the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as the Seller shall furnish to it and as shall be necessary to vest in
the Seller any Mortgage Loan released pursuant hereto and the Trustee shall have
no further responsibility with regard to such Mortgage File (it being understood
that the Trustee shall have no responsibility for determining the sufficiency of
such assignment for its intended purpose). In lieu of repurchasing any such
Mortgage Loan as provided above, the Seller may cause such Mortgage Loan to be
removed from the Trust Fund (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.03(d). It is
understood and agreed that the obligation of the Seller to cure or to repurchase
(or to substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy against the
Seller respecting such omission, defect or breach available to the Trustee on
behalf of the Certificateholders and the Certificate Insurer.
(b) [Reserved]
(c) Within 90 days of the earlier of discovery by the Master Servicer or
receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.05 which
materially and adversely affects the interests of the Certificateholders or the
Certificate Insurer in any Mortgage Loan, the Master Servicer shall cure such
breach in all material respects.
(d) Any substitution of Qualified Substitute Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 2.03(a) must be effected prior to the
last Business Day that is within two years after the Closing Date. As to any
Deleted Mortgage Loan for which the Seller
41
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Seller delivering to the Trustee, for such Qualified
Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the
Assignment to the Trustee, and such other documents and agreements, with all
necessary endorsements thereon, as are required by Section 2.01, together with
an Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Adjustment
(as described below), if any, in connection with such substitution. The Trustee
shall acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans
and, within ten Business Days thereafter, shall review such documents as
specified in Section 2.02 and deliver to the Master Servicer and the Certificate
Insurer, with respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit G-1, with any
applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Master Servicer and the
Certificate Insurer a certification substantially in the form of Exhibit G-2
hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
the Trust Fund and will be retained by the Seller. For the month of
substitution, distributions to Certificateholders will reflect the collections
and recoveries in respect of such Deleted Mortgage Loan in the Due Period
preceding the month of substitution and the Depositor or the Seller, as the case
may be, shall thereafter be entitled to retain all amounts subsequently received
in respect of such Deleted Mortgage Loan. The Seller shall give or cause to be
given written notice to the Certificateholders and the Certificate Insurer that
such substitution has taken place, shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the
Trustee and the Certificate Insurer. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool and
shall be subject in all respects to the terms of this Agreement and, in the case
of a substitution effected by the Seller, the Mortgage Loan Purchase Agreement,
including, in the case of a substitution effected by the Seller all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement and all applicable representations and warranties thereof set forth in
Section 2.04, in each case as of the date of substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (the "Substitution Adjustment"), if any, by
which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds
the aggregate, as to each such Qualified Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Loan Rate. On
the date of such substitution, the Seller will deliver or cause to be delivered
to the Master Servicer for deposit in the Collection Account an amount equal to
the Substitution Adjustment, if any, and the Trustee, upon receipt of the
related Qualified Substitute Mortgage Loan or Loans and certification by the
Master Servicer of such deposit, shall release to the Seller the related
Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall
deliver to it and as shall be necessary to vest therein any Deleted Mortgage
Loan released pursuant hereto.
42
In addition, the Seller shall obtain at its own expense and deliver to the
Trustee and the Certificate Insurer an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed on the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of the Code or on "contributions after
the startup date" under Section 860G(d)(l) of the Code, or (b) the REMIC to fail
to qualify as a REMIC at any time that any Certificate is outstanding. If such
Opinion of Counsel can not be delivered, then such substitution may only be
effected at such time as the required Opinion of Counsel can be given.
(e) Upon discovery by the Seller, the Master Servicer, the Certificate
Insurer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties and the Certificate Insurer. In connection therewith, the
Seller shall repurchase or, subject to the limitations set forth in Section
2.03(d), substitute one or more Qualified Substitute Mortgage Loans for the
affected Mortgage Loan within 90 days of the earlier of discovery or receipt of
such notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a),
if made by the Seller. The Trustee shall reconvey to the Seller the Mortgage
Loan to be released pursuant hereto in the same manner, and on the same terms
and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.
Section 2.04. Representations and Warranties of the Seller with Respect to
the Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for the benefit
of the Certificateholders and the Certificate Insurer that, as of the Closing
Date or as of such other date specifically provided herein, the representations
and warranties made by the Seller pursuant to Section 3.01 of the Mortgage Loan
Purchase Agreement are hereby being made to the Trustee and are true and correct
as of the Closing Date.
With respect to the representations and warranties incorporated in this
Section 2.04 that are made to the best of the Seller's knowledge or as to which
the Seller has no knowledge, if it is discovered by the Depositor, the Seller,
the Master Servicer, the Certificate Insurer or the Trustee that the substance
of such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan or the interest
therein of the Certificateholders or the Certificate Insurer then,
notwithstanding the Seller's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
Within ninety days of its discovery or its receipt of notice of any such
missing or materially defective documentation or any such breach of a
representation or warranty, the Seller shall promptly deliver such missing
document or cure such defect or breach in all material respects, or in the event
such defect or breach cannot be cured, the Seller shall repurchase the affected
Mortgage Loan or cause the removal of such Mortgage Loan from the Trust Fund and
substitute for it one or more Qualified Substitute Mortgage Loans, in either
case, in accordance with Section 2.03.
43
It is understood and agreed that the representations and warranties
incorporated in this Section 2.04 shall survive delivery of the Mortgage Files
to the Trustee and shall inure to the benefit of the Certificateholders and the
Certificate Insurer notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Depositor, the Master Servicer, the
Special Servicer, the Seller or the Trustee of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of any Mortgage Loan or the interests therein of the Certificateholders or the
Certificate Insurer, the party discovering such breach shall give prompt written
notice to the other parties and the Certificate Insurer, and in no event later
than two Business Days from the date of such discovery. It is understood and
agreed that the obligations of the Seller set forth in Section 2.03(a) to cure,
substitute for or repurchase a Mortgage Loan pursuant to the Mortgage Loan
Purchase Agreement constitute the sole remedies available to the
Certificateholders, the Certificate Insurer or to the Trustee on their behalf
respecting a breach of the representations and warranties incorporated in this
Section 2.04.
Section 2.05. Representations, Warranties and Covenants of the Master
Servicer.
The Master Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee, the Certificate Insurer and the
Certificateholders and to the Depositor that as of the Closing Date or as of
such date specifically provided herein:
(i) The Master Servicer is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its formation and has
all licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing or is exempt from such
licensure, qualification or requirement of good standing in the states
where the Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Master Servicer or is a condition to the enforceability
or validity of each Mortgage Loan; the Master Servicer has the power and
authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Master Servicer and the consummation of the
transactions contemplated hereby have been duly and validly authorized;
this Agreement constitutes the valid, binding and enforceable obligation
of the Master Servicer, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally or the rights of federally insured
financial institutions; and all requisite corporate action has been taken
by the Master Servicer to make this Agreement valid and binding upon the
Master Servicer in accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master Servicer
and will not result in the breach of any term or provision of the charter
or by-laws of the Master Servicer or result in the breach of any term or
provision of, or conflict with or constitute a default under or result in
the acceleration of any obligation under, any agreement, indenture or loan
or credit agreement or other instrument to which the Master Servicer or
its property is subject, or
44
result in the violation of any law, rule, regulation, order, judgment or
decree to which the Master Servicer or its property is subject;
(iii) The execution and delivery of this Agreement by the Master
Servicer and the performance and compliance with its obligations and
covenants hereunder do not require the consent or approval of any
governmental authority or, if such consent or approval is required, it has
been obtained;
(iv) This Agreement, and all documents and instruments contemplated
hereby which are executed and delivered by the Master Servicer, constitute
and will constitute valid, legal and binding obligations of the Master
Servicer, enforceable in accordance with their respective terms, except as
the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, or the rights of creditors of
federally insured financial institutions, and general principles of
equity;
(v) [Reserved];
(vi) The Master Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vii) There is no action, suit, proceeding or investigation pending
or, to its knowledge, threatened against the Master Servicer that, either
individually or in the aggregate, (A) could reasonably be expected to
prohibit or materially and adversely affect the performance by such
Servicer of its obligations under, or validity or enforceability of, this
Agreement, or (B) could reasonably be expected to result in any material
impairment of the right or ability of the Master Servicer to carry on its
business substantially as now conducted, or (C) could reasonably be
expected to result in any material liability on the part of the Master
Servicer, or (D) would draw into question the validity or enforceability
of this Agreement or of any action taken or to be taken in connection with
the obligations of the Master Servicer contemplated herein, or (E) would
otherwise be likely to impair materially the ability of the Master
Servicer to perform under the terms of this Agreement;
(viii) Neither this Agreement nor any information, certificate of an
officer, statement furnished in writing or report delivered to the Trustee
by the Master Servicer in connection with the transactions contemplated
hereby contains any untrue statement of a material fact; and
(ix) The Master Servicer (a) acknowledges that its performance under
this Agreement will be adversely affected if it is unable to become "Year
2000 Compliant" prior to January 1, 2000, (b) has made an assessment of
the microchip and computer-based systems, hardware, software and other
equipment used by the Master Servicer in connection with such performance
(collectively, "Systems") and (c) confirms that it has developed and is
implementing a program to help assure that its Systems will be Year 2000
Compliant by January 1, 2000; provided that the foregoing clauses (a), (b)
and (c) shall not affect the Master Servicer's obligations in respect of
its performance and
45
liabilities (and the limitations thereon) set forth elsewhere in this
Agreement. As used herein, "Year 2000 Compliant" means (1) the Systems
process, provide and/or receive (provided data received from third party
providers is Year 2000 Compliant), so as to avoid the occurrence of a
material adverse effect thereon, date data (including without limitation
calculating, comparing, and sequencing), within, from, into, and between
centuries (including without limitation the twentieth and twenty-first
centuries), including leap year calculations, and (2) none of the
performance or the functionality or the Master Servicer's performance
under this Agreement will be materially adversely affected by dates prior
to, on or after January 1, 2000.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor, the Certificate Insurer and the Certificateholders. Upon discovery by
any of the Depositor, the Master Servicer, the Special Servicer, the Seller or
the Trustee of a breach of any of the foregoing representations, warranties and
covenants which materially and adversely affects the value of any Mortgage Loan
or the interests therein of the Certificateholders or the Certificate Insurer,
the party discovering such breach shall give prompt written notice (but in no
event later than two Business Days following such discovery) to the Master
Servicer, the Seller, the Certificate Insurer and the Trustee.
Section 2.06. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders and the Certificate Insurer as follows:
(i) This agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general an except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the Depositor
to the Trustee on behalf of the Trust of each Mortgage Loan, the Depositor
had good and marketable title to each Mortgage Loan (insofar as such title
was conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title interest in the Mortgage Loans to the Trustee on behalf of
the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or defraud
any of its creditors;
(v) The Depositor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of Delaware, with full
corporate power and authority to own its assets and conduct its business
as presently being conducted;
46
(vi) The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Depositor is a party or by which it or its
properties may be bound, which default might result in any material
adverse changes in the financial condition, earnings, affairs or business
of the Depositor or which might materially and adversely affect the
properties or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement by
the Depositor, and the consummation of the transactions contemplated
thereby, do not and will not result in a material breach or violation of
any of the terms or provisions of, or, to the knowledge of the Depositor,
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a
party or by which the Depositor is bound or to which any of the property
or assets of the Depositor is subject, nor will such actions result in any
violation of the provisions of the articles of incorporation or by-laws of
the Depositor or, to the best of the Depositor's knowledge without
independent investigation, any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Depositor or any of its properties or assets (except for such conflicts,
breaches, violations and defaults as would not have a material adverse
effect on the ability of the Depositor to perform its obligations under
this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body of the United States or any other jurisdiction is required for the
issuance of the Certificates, or the consummation by the Depositor of the
other transactions contemplated by this Agreement, except such consents,
approvals, authorizations, registrations or qualifications as (a) may be
required under State securities or Blue Sky laws, (b) have been previously
obtained or (c) the failure of which to obtain would not have a material
adverse effect on the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement; and
(ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a party
or of which any of its properties is the subject: (a) which if determined
adversely to the Depositor would have a material adverse effect on the
business, results of operations or financial condition of the Depositor;
(b) asserting the invalidity of this Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the consummation by
the Depositor of any of the transactions contemplated by this Agreement,
as the case may be; or (d) which might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement.
47
Section 2.07. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery to it of the Mortgage Files, subject to the provisions of Sections
2.01 and 2.02, together with the assignment to it of all other assets included
in the Trust Fund, receipt of which is hereby acknowledged. Concurrently with
such assignment and delivery and in exchange therefor, the Trustee, pursuant to
the written request of the Depositor executed by an officer of the Depositor,
has executed, authenticated and delivered to or upon the order of the Depositor,
the Certificates in authorized denominations. The interests evidenced by the
Certificates, constitute the entire beneficial ownership interest in the Trust
Fund.
Section 2.08. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders and the Certificate Insurer that as of the
Closing Date or as of such date specifically provided herein:
(i) The Seller is duly organized, validly existing and in good
standing as a federal savings bank and has the power and authority to own
its assets and to transact the business in which it is currently engaged.
The Seller is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the business transacted by it
or properties owned or leased by it requires such qualification and in
which the failure to so qualify would have a material adverse effect on
(a) its business, properties, assets or condition (financial or other),
(b) the performance of its obligations under this Agreement, (c) the value
or marketability of the Mortgage Loans, or (d) its ability to foreclose on
the related Mortgaged Properties to the extent such foreclosure is
conducted by the Master Servicer.
(ii) The Seller has the power and authority to make, execute,
deliver and perform this Agreement and to consummate all of the
transactions contemplated hereunder and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute the Seller's legal,
valid and binding obligations enforceable in accordance with its terms,
except as enforcement of such terms may be limited by (1) bankruptcy,
insolvency, reorganization, receivership, moratorium or similar laws
affecting the enforcement of creditors' rights generally and the rights of
creditors of federally insured financial institutions and by the
availability of equitable remedies, (2) general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law) or (3) public policy considerations underlying the
securities laws, to the extent that such policy considerations limit the
enforceability of the provisions of this Agreement which purport to
provide indemnification from securities laws liabilities.
(iii) The Seller holds all necessary licenses, certificates and
permits from all governmental authorities necessary for conducting its
business as it is presently conducted. It is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
48
performance, validity or enforceability of this Agreement, except for such
consents, licenses, approvals or authorizations, or registrations or
declarations as shall have been obtained or filed, as the case may be,
prior to the Closing Date.
(iv) The execution, delivery and performance of this Agreement by
the Seller will not conflict with or result in a breach of, or constitute
a default under, any provision of any existing law or regulation or any
order or decree of any court applicable to the Seller or any of its
properties or any provision of its articles of incorporation or by-laws,
or constitute a material breach of, or result in the creation or
imposition of any lien, charge or encumbrance upon any of its properties
pursuant to any mortgage, indenture, contract or other agreement to which
it is a party or by which it may be bound.
(v) No certificate of an officer, written statement or written
report delivered pursuant to the terms hereof by the Seller contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(vi) The transactions contemplated by this Agreement are in the
ordinary course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be made
insolvent by the transfer of the Mortgage Loans to the Depositor, nor is
the Seller aware of any pending insolvency of the Seller.
(viii) The Seller is not in violation of, and the execution and
delivery of this Agreement by it and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court, or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction,
which violation would materially and adversely affect the Seller's
financial condition (financial or otherwise) or operations, or materially
and adversely affect the performance of any of its duties hereunder.
(ix) There are no actions or proceedings against the Seller, or
pending or, to its knowledge, threatened, before any court, administrative
agency or other tribunal; nor, to its knowledge, are there any
investigations (i) that, if determined adversely, would prohibit the
Seller from entering into this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
(iii) that, if determined adversely, would prohibit or materially and
adversely affect the Seller's ability to perform any of its respective
obligations under, or the validity or enforceability of, this Agreement.
(x) The Seller did not transfer the Mortgage Loans to the Depositor
with any intent to hinder, delay or defraud any of its creditors.
(xi) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claims.
49
(xii) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller to the Depositor are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
Section 2.09. Covenants of the Seller. The Seller hereby covenants that
except for the transfer hereunder, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any lien on any Mortgage Loan, or any interest therein; the Seller will notify
the Trustee, as assignee of the Depositor, of the existence of any lien on any
Mortgage Loan immediately upon discovery thereof, and the Seller will defend the
right, title and interest of the Trust, as assignee of the Depositor, in, to and
under the Mortgage Loans, against all claims of third parties claiming through
or under the Seller; provided, however, that nothing in this Section 2.09 shall
prevent or be deemed to prohibit the Seller from suffering to exist upon any of
the Mortgage Loans any liens for municipal or other local taxes and other
governmental charges if such taxes or governmental charges shall not at the time
be due and payable or if the Seller shall currently be contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves with respect thereto.
Section 2.10. Additional Transfers.
(a) Subject to the satisfaction of the conditions set forth in Article II
hereof and paragraph (b) below and pursuant to the terms of the related
Additional Transfer Agreement, in consideration of the Trustee's delivery on
each Additional Transfer Date to or upon the order of the Seller of all or a
portion of the balance of funds in the related Pre-Funding Account, the Seller
shall on such Additional Transfer Date sell, transfer, assign, set over and
otherwise convey without recourse to the Trustee, all of the Seller's right,
title and interest in and to each related Additional Mortgage Loan listed in the
Mortgage Loan Schedule delivered by the Seller on such Additional Transfer Date
for inclusion in the related Loan Group, including (i) the related Loan Balance,
all interest payments due after the related Cut-off Date and all collections in
respect of principal received after such Cut-off Date; (ii) any real property
that secured such Additional Mortgage Loan and that has been acquired by
foreclosure or deed in lieu of foreclosure; (iii) its interest in any insurance
policies in respect of such Additional Mortgage Loan; and (iv) all proceeds of
the foregoing to the Trustee. The transfer by the Seller to the Trustee of the
Additional Mortgage Loans set forth in the Mortgage Loan Schedule shall be
absolute and shall be intended by all parties hereto to be treated as a sale by
the Seller to the Trust. If the assignment and transfer of the Additional
Mortgage Loans and the other property specified in this Section 2.10 from the
Seller to the Trust pursuant to this Agreement is held or deemed not to be a
sale or is held or deemed to be a pledge of security for a loan, the Seller
intends that the rights and obligations of the parties shall be established
pursuant to the terms of this Agreement and that, in such event, (i) the Seller
shall be deemed to have granted and does hereby grant to the Trustee as of each
Additional Transfer Date a perfected, first priority security interest in the
entire right, title and interest of the Seller in and to the related Additional
Mortgage Loans and all other property conveyed to the Trustee pursuant to this
Section 2.10 and all proceeds thereof, and (ii) this Agreement shall constitute
a security agreement under applicable law. The amount released from the
Pre-Funding Account shall be one hundred percent (100%) of the aggregate of the
applicable Cut-off Date Principal Balances of the Additional Mortgage Loans so
transferred.
50
(b) The Trustee shall contribute from the Pre-Funding Account funds in an
amount equal to one hundred percent (100%) of the aggregate of the applicable
Cut-off Date Principal Balances of the Additional Mortgage Loans so transferred
to the Trust and use such cash to purchase the Additional Mortgage Loans on
behalf of the Trust, along with the other property and rights related thereto
described in paragraph (a) above only upon the satisfaction of each of the
following conditions on or prior to each Additional Transfer Date:
(i) the Seller shall have provided the Trustee, the Certificate
Insurer and the Rating Agencies with an Addition Notice, which notice
shall be given not less than two Business Days prior to such Additional
Transfer Date and shall designate the Additional Mortgage Loans to be sold
to the Trust and the aggregate Cut-off Date Principal Balance of such
Mortgage Loans;
(ii) the Seller shall have deposited in the Collection Account (A)
all principal collected after such Cut-off Date and interest payments due
after such Cut-off Date but collected on or before such Cut-off Date in
respect of each Additional Mortgage Loan and (B) the related Additional
Cut-off Date Deposit;
(iii) the Seller shall have delivered an Officer's Certificate to
the Trustee confirming that, as of each Additional Transfer Date, the
Seller was not insolvent, nor would it be made insolvent by such transfer,
nor was it aware of any pending insolvency of the Seller;
(iv) the Pre-Funding Period shall not have ended;
(v) the Seller shall have delivered to the Trustee an Officer's
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b) and in the related Additional Transfer
Agreement;
(vi) the Seller shall have delivered an Officer's Certificate to the
Trustee confirming that the representations and warranties of the Seller
pursuant to Section 2.04 hereof and Section 2.08 hereof are true and
correct with respect to the Seller and the Additional Mortgage Loans, as
applicable, as of the Additional Transfer Date;
(vii) the Seller shall have provided the Rating Agencies, the
Certificate Insurer and the Trustee with an Opinion of Counsel relating to
the sale of the Additional Mortgage Loans to the Trustee;
(viii) the Trust shall not purchase an Additional Mortgage Loan
unless the Seller obtains the prior written consent of the Certificate
Insurer and each Rating Agency, which consent, in the case of the
Certificate Insurer shall be subject to the provisions of subsection (e)
below;
(ix) [reserved]; and
(x) in connection with the transfer and assignment of the Additional
Mortgage Loans, the Seller shall satisfy the document delivery
requirements set forth in Section 2.01 hereof.
51
(c) In connection with each Additional Transfer Date and on the related
Distribution Date, the Trustee shall determine (i) the amount and correct
dispositions of the Capitalized Interest Requirement and Pre-Funding Earnings
for such Distribution Date in accordance with the provisions of this Agreement
and (ii) any other necessary matters in connection with the administration of
the related Pre-Funding Account and Capitalized Interest Account. In the event
that any amounts are released by the Trustee from a Pre-Funding Account or from
a Capitalized Interest Account as a result of calculation error, the Trustee
shall not be liable therefor, and the Seller shall immediately repay such
amounts to the Trustee.
(d) The Trustee shall acknowledge receipt on each Additional Transfer Date
of the Additional Mortgage Loans delivered to it on such date and within five
Business Days after such receipt shall, as specified in Section 2.01 hereof,
review the documents required to be delivered pursuant to Section 2.01 hereof
(or shall cause such documents to be reviewed) and shall deliver to the Seller,
the Depositor and the Master Servicer, with respect to such Additional Mortgage
Loans, a certification substantially similar to the one prepared by the Trustee
pursuant to the second paragraph of Section 2.02 hereof. After the delivery of
each such certification, the Trustee shall provide to the Master Servicer, the
Seller and the Depositor, no less frequently than quarterly, updated
certifications in the form attached hereto as Exhibit [F-3], indicating the then
current status of exceptions to the Mortgage Files of the related Additional
Mortgage Loans until all such exceptions have been eliminated.
(e) With respect to any Additional Transfer Date which is at least three
weeks prior to the end of the Pre-Funding Period, the Certificate Insurer may
condition its consent to the purchase of any Additional Mortgage Loans on
retaining the option to review, for a period of two weeks from the applicable
Additional Transfer Date, the applicable Additional Mortgage Loans to determine
whether such Additional Mortgage Loans are Qualified Additional Mortgage Loans.
Upon notification by the Certificate Insurer to the Trustee and the Seller that
any such Additional Mortgage Loan delivered by the Seller does not constitute a
"Qualified Additional Mortgage Loan" within the meaning of this Agreement, the
Seller shall, subject to the limitations specified in the last sentence of this
Section 2.10(e), repurchase such Additional Mortgage Loan at the Purchase Price
or substitute one or more Mortgage Loans which are acceptable to the Certificate
Insurer for the affected Additional Mortgage Loan, in each case on or before the
last day of the Pre-Funding Period. Any such repurchase or substitution shall be
made in the same manner as set forth in Section 2.03(a). The Trustee shall
reconvey to the Seller the Additional Mortgage Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would a
Mortgage Loan repurchased for breach of a representation or warranty. In no
event shall the Certificate Insurer require the Seller to repurchase, or
substitute for, Additional Mortgage Loans pursuant to this Section 2.10(e) in an
aggregate amount greater than 10% of the aggregate Cut-off Date Principal
Balance of the Additional Mortgage Loans delivered on the applicable Additional
Transfer Date.
Section 2.11. Mandatory Prepayment.
Any Unutilized Pre-Funding Amount shall be distributed to Holders of the
related Group of Certificates in accordance with Section 4.05 hereof on the
Distribution Date immediately following the Due Period in which the end of the
Pre-Funding Period occurs.
52
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Servicer.
The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Trustee and in the best interests of and for the benefit of the
Certificateholders and the Certificate Insurer (as determined by the Master
Servicer in its reasonable judgment) in accordance with the terms of this
Agreement and the Mortgage Loans and, to the extent consistent with such terms,
in the same manner in which it services and administers similar mortgage loans
for its own portfolio, giving due consideration to customary and usual standards
of practice of mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:
(i) any relationship that the Master Servicer, any Sub-Servicer or
any Affiliate of the Master Servicer or any Sub-Servicer may have with the
related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the Master
Servicer or any Affiliate of the Master Servicer;
(iii) the Master Servicer's obligation to make Advances or Servicing
Advances; or
(iv) the Master Servicer's, the Special Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or
with respect to any particular transaction.
To the extent consistent with the foregoing, the Master 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 Mortgage Loans, the Master Servicer shall
have full power and authority, acting alone or through Sub-Servicers 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 Master Servicer in its own
name or in the name of a Sub-Servicer is hereby authorized and empowered by the
Trustee when the Master Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver,
on behalf of the Certificateholders and the Trustee, and upon notice to the
Trustee, 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 and Certificateholders. The Master 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 Master 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. Subject to Section
53
3.17, the Trustee shall execute, at the written request of the Master Servicer,
and furnish to the Master Servicer and any Sub-Servicer any special or limited
powers of attorney and other documents necessary or appropriate to enable the
Master Servicer or any Sub-Servicer to carry out their servicing and
administrative duties hereunder; provided, such limited powers of attorney or
other documents shall be prepared by the Master Servicer and submitted to the
Trustee for execution. The Trustee shall not be liable for the actions of the
Master Servicer or any Sub-Servicers under such powers of attorney.
Subject to Section 3.09 hereof, in accordance with the standards of the
preceding paragraph, the Master 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 related collections from the
Mortgagors pursuant to Section 3.09, and further as provided in Section 3.11.
Any cost incurred by the Master Servicer or by Sub-Servicers in effecting the
timely payment of taxes and assessments on a Mortgaged Property shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
unpaid Principal Balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.03) and the Master 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 (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) 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 Treasury regulations promulgated thereunder) and (B) cause the 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 date" under the REMIC
Provisions.
The Master Servicer may, with the consent of the Certificate Insurer,
delegate its responsibilities under this Agreement; provided, however, that no
such delegation shall release the Master Servicer from the responsibilities or
liabilities arising under this Agreement.
Section 3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that any Sub-Servicer shall be acceptable to the Certificate
Insurer and provided such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the rating or any shadow rating on any Class
of Certificates. The Trustee is hereby authorized to acknowledge, at the request
of the Master Servicer, any Sub-Servicing Agreement that meets the requirements
applicable to Sub-Servicing Agreements set forth in this Agreement and that is
otherwise permitted under this Agreement. The Master Servicer hereby designates
Fairbanks Capital Corp. as the initial Sub-Servicer.
54
Each Sub-Servicer shall be (i) authorized to transact business in the
state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement and (ii) a ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08 and provide for servicing of the
Mortgage Loans consistent with the terms of this Agreement. The Master Servicer
will examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub-Servicing 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 Certificateholders without the
consent of the Certificate Insurer and the Holders of Certificates entitled to
at least 66% of the Voting Rights; provided, further, that the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights shall not
be required (i) to cure any ambiguity or defect in a Sub-Servicing Agreement,
(ii) to correct, modify or supplement any provisions of a Sub-Servicing
Agreement, or (iii) to make any other provisions with respect to matters or
questions arising under a Sub-Servicing Agreement, which, in each case, shall
not be inconsistent with the provisions of this Agreement. Any variation without
the consent of the Certificate Insurer and the Holders of Certificates entitled
to at least 66% of the Voting Rights from the provisions set forth in Section
3.08 relating to insurance or priority requirements of Sub-Servicing Accounts,
or credits and charges to the Sub-Servicing Accounts or the timing and amount of
remittances by the Sub-Servicers to the Master Servicer, are conclusively deemed
to be inconsistent with this Agreement and therefore prohibited. The Master
Servicer shall deliver to the Trustee and the Certificate Insurer copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof, promptly
upon the Master Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Trustee, the Certificateholders and the Certificate
Insurer, shall enforce the obligations of each Sub-Servicer under the related
Sub-Servicing Agreement and of the Seller under the Mortgage Loan Purchase
Agreement, including, without limitation, any obligation to make advances in
respect of delinquent payments as required by a Sub-Servicing Agreement, or to
purchase a Mortgage Loan on account of missing or defective documentation or on
account of a breach of a representation, warranty or covenant, as described in
Section 2.03(a). Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing 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 Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master 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. Enforcement of the Mortgage Loan Purchase Agreement
against the Seller shall be
55
effected by the Master Servicer to the extent it is not the Seller, and
otherwise by the Trustee in accordance with the foregoing provisions of this
paragraph.
Section 3.03. Successor Sub-Servicers.
The Master Servicer (with the consent of the Certificate Insurer) or the
Certificate Insurer shall be entitled to terminate any Sub-Servicing Agreement
and the rights and obligations of any Sub-Servicer pursuant to any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement. In the event of termination of any Sub-Servicer, all servicing
obligations of such Sub-Servicer shall be assumed simultaneously by the Master
Servicer without any act or deed on the part of such Sub-Servicer or the Master
Servicer, and the Master Servicer either shall service directly the related
Mortgage Loans or shall enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Master Servicer, the Trustee (if
the Trustee is acting as Servicer) or the Certificate Insurer without fee, in
accordance with the terms of this Agreement, in the event that the Master
Servicer (or the Trustee, if such party is then acting as Servicer) shall, for
any reason, no longer be the Master Servicer (including termination due to a
Servicer Event of Termination).
Section 3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement or the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee, the Certificateholders and the Certificate Insurer for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the Sub-Servicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans. The Master Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Master
Servicer by such Sub-Servicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
Section 3.05. No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any transactions
or services relating to the Mortgage Loans involving a Sub-Servicer in its
capacity as such shall be deemed to be between the Sub-Servicer and the Master
Servicer alone, and the Trustee, Certificateholders or the Certificate Insurer
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Sub-Servicer except as
set forth in Section 3.06. The Master Servicer shall be solely liable for all
fees owed by it to any Sub-Servicer, irrespective of whether the Master
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.
56
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the Master Servicer shall for any reason no longer be the
Master Servicer (including by reason of the occurrence of a Servicer Event of
Termination), the Trustee shall thereupon assume all of the rights and
obligations of the Master Servicer under each Sub-Servicing Agreement that the
Master Servicer may have entered into, unless the Trustee (with the consent of
the Certificate Insurer) or the Certificate Insurer elects to terminate any
Sub-Servicing Agreement in accordance with its terms as provided in Section
3.03. Upon such assumption, the Trustee (or the successor servicer appointed
pursuant to Section 7.02) shall be deemed, subject to Section 3.03, to have
assumed all of the departing Servicer's interest therein and to have replaced
the departing Servicer as a party to each Sub-Servicing Agreement to the same
extent as if each Sub-Servicing Agreement had been assigned to the assuming
party, except that (i) the departing Servicer shall not thereby be relieved of
any liability or obligations under any Sub-Servicing Agreement that arose before
it ceased to be the Master Servicer and (ii) neither the Trustee nor any
successor Servicer shall be deemed to have assumed any liability or obligation
of the Master Servicer that arose before it ceased to be the Master Servicer.
The Master Servicer at its expense shall, upon request of Trustee, deliver
to the assuming party all documents and records relating to each Sub-Servicing
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 Sub-Servicing
Agreements to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments.
The Master 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, the
Master Servicer may in its discretion (i) waive any late payment charge or, if
applicable, any penalty interest, or (ii) extend the due dates for the Monthly
Payments due on a Mortgage Note for a period of not greater than 180 days;
provided, however, 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 Master Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.04
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangement. Notwithstanding the
foregoing, in the event that any Mortgage Loan is in default or, in the judgment
of the Master Servicer, such default is reasonably foreseeable, the Master
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 or extend the final maturity date of such Mortgage Loan), 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
57
collectively referred to herein as "forbearance"), provided, however, that in no
event shall the Master Servicer grant any such forbearance (other than as
permitted by the second sentence of this Section) with respect to any one
Mortgage Loan more than once in any 12 month period or more than three times
over the life of such Mortgage Loan. The Master Servicer's analysis supporting
any forbearance and the conclusion that any forbearance meets the standards of
Section 3.01 (including the standard that such forbearance will maximize the
timely and complete recovery of principal and interest on the Mortgage Notes)
shall be reflected in writing in the Mortgage File and shall be provided to the
Certificate Insurer upon request. Notwithstanding the foregoing, the Master
Servicer shall not modify the terms of Mortgage Loans having an aggregate
Principal Balance in excess of 3.00% of the Cut-off Date Aggregate Principal
Balance of the Related Loan Group without the consent of the Certificate
Insurer.
Section 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant
to a Sub-Servicing Agreement, the Sub-Servicer will be required to establish and
maintain one or more accounts (collectively, the "Sub-Servicing Account"). The
Sub-Servicing Account shall be an Eligible Account and shall comply with all
requirements of this Agreement relating to the Collection Account. The
Sub-Servicer shall deposit in the clearing 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 Sub-Servicer's receipt thereof, all proceeds of
Mortgage Loans received by the Sub-Servicer less its servicing compensation to
the extent permitted by the Sub-Servicing Agreement, and shall thereafter
deposit such amounts in the Sub-Servicing Account, in no event more than two
Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Master Servicer for deposit in the Collection Account not later
than two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Master Servicer shall be deemed to
have received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
The Master Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts"),
into which all Escrow Payments shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Master Servicer shall deposit in the
clearing 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 Master
Servicer's receipt thereof, all Escrow Payments collected on account of the
Mortgage Loans and shall thereafter deposit such Escrow Payments in the
Servicing Accounts, in no event more than two Business Days after the receipt of
such Escrow Payments, all Escrow Payments collected on account of the Mortgage
Loans for the purpose of effecting the timely payment of any such items as
required under the terms of this Agreement. Withdrawals of amounts from a
Servicing Account may be made only to (i) effect payment of taxes, assessments,
hazard insurance premiums, and comparable items in a manner and at a time that
assures that the lien priority of the Mortgage is not jeopardized (or, with
respect to the payment of taxes, in a manner and at a time that avoids the loss
of the
58
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien); (ii) reimburse the Master Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) out of related collections for
any Servicing Advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.14 (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 Servicing
Account; or (v) clear and terminate the Servicing Account at the termination of
the Master Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement in accordance with Article X. The Master
Servicer will be responsible for the administration of the Servicing Accounts
and will be obligated to make Servicing Advances to such accounts when and as
necessary to avoid the lapse of insurance coverage on the Mortgaged Property, or
which the Master Servicer knows, or in the exercise of the required standard of
care of the Master Servicer hereunder should know, is necessary to avoid the
loss of the Mortgaged Property due to a tax sale or the foreclosure as a result
of a tax lien. If any such payment has not been made and the Master Servicer
receives notice of a tax lien with respect to the Mortgage being imposed, the
Master Servicer will, within 10 business days of such notice, advance or cause
to be advanced funds necessary to discharge such lien on the Mortgaged Property.
As part of its servicing duties, the Master Servicer or Sub-Servicers shall pay
to the Mortgagors interest on funds in the Servicing Accounts, to the extent
required by law and, to the extent that interest earned on funds in the
Servicing Accounts is insufficient, to pay such interest from its or their own
funds, without any reimbursement therefor.
Section 3.10. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Master Servicer shall establish and
maintain, or cause to be established and maintained, one or more accounts (such
account or accounts, the "Collection Account"), held in trust for the benefit of
the Trustee, the Certificateholders and the Certificate Insurer. On behalf of
the Trust Fund, the Master Servicer shall deposit or cause to be deposited in
the clearing 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 Master
Servicer's receipt thereof, and shall thereafter deposit in the Collection
Account, in no event more than two Business Days after the Master Servicer's
receipt thereof, as and when received or as otherwise required hereunder, the
following payments and collections received or made by it Additional to the
Cut-off Date (other than in respect of principal or interest on the 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 Additional 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 Liquidation Proceeds (other than
proceeds collected in respect of any particular REO Property and amounts
paid in connection with a purchase of Mortgage Loans and REO Properties
pursuant to Section 10.01);
59
(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 Master Servicer
pursuant to the second paragraph of Section 3.14(a) in respect of any
blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03 or Section 10.01; and
(vii) all amounts required to be deposited in connection with
Substitution Adjustments pursuant to Section 2.03.
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, ancillary
income and assumption fees, or insufficient funds charges need not be deposited
by the Master Servicer in the Collection Account and may be retained by the
Master Servicer as additional compensation. In the event the Master 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.
(b) On behalf of the Trust Fund, the Trustee shall establish and maintain
one or more accounts (such account or accounts, the "Distribution Account"),
held in trust for the benefit of the Trustee, the Certificateholders and the
Certificate Insurer. On behalf of the Trust Fund, the Master Servicer shall
deliver to the Trustee in immediately available funds for deposit in the
Distribution Account on or before the Close of Business New York time (i) on the
Master Servicer Remittance Date, that portion of the Available Funds (calculated
without regard to the references in the definition thereof to amounts that may
be withdrawn from the Distribution Account) for the related Distribution Date
then on deposit in the Collection Account, and (ii) on each Business Day as of
the commencement of which the balance on deposit in the Collection Account
exceeds $75,000 following any withdrawals pursuant to the next succeeding
sentence, the amount of such excess, but only if the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account." If the balance on deposit in the Collection Account
exceeds $75,000 as of the commencement of business on any Business Day and the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account," the Master Servicer shall, on or
before the Close of Business New York time on such Business Day, withdraw from
the Collection Account any and all amounts payable or reimbursable to the Master
Servicer, the Trustee, the Seller or any Sub-Servicer pursuant to Section 3.11
and shall pay such amounts to the Persons entitled thereto.
(c) Funds in the Collection Account and the Distribution Account may be
invested in Permitted Investments in accordance with the provisions set forth in
Section 3.12. The Master Servicer shall give notice to the Trustee and the
Certificate Insurer of the location of the Collection Account maintained by it
when established and prior to any change thereof. The Trustee shall give notice
to the Master Servicer, the Depositor and the Certificate Insurer of the
location of the Distribution Account when established and prior to any change
thereof.
60
(d) Funds held in the Collection Account at any time may be delivered by
the Master Servicer to the Trustee for deposit in an account (which may be the
Distribution Account and must satisfy the standards for the Distribution Account
as set forth in the definition thereof) and for all purposes of this Agreement
shall be deemed to be a part of the Collection Account; provided, however, that
the Trustee shall have the sole authority to withdraw any funds held pursuant to
this subsection (d). In the event the Master Servicer shall deliver to the
Trustee for deposit in the Distribution Account any amount not required to be
deposited therein, it may at any time request that the Trustee withdraw such
amount from the Distribution Account and remit to it any such amount, any
provision herein to the contrary notwithstanding. In addition, the Master
Servicer, with respect to items (i) through (iv) below, shall deliver to the
Trustee from time to time for deposit, and the Trustee, with respect to items
(i) through (iv) below, shall so deposit, in the Distribution Account:
(i) any Advances, as required pursuant to Section 4.04;
(ii) any amounts required to be deposited pursuant to Section
3.23(d) or (f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 10.01; and
(iv) any Compensating Interest to be deposited pursuant to Section
3.24 in connection with any Prepayment Interest Shortfall.
(e) [Reserved].
(f) The Master Servicer shall deposit in the Collection Account any
amounts required to be deposited pursuant to Section 3.12(b) in connection with
losses realized on Permitted Investments with respect to funds held in the
Collection Account.
Section 3.11. Withdrawals from the Collection Account and Distribution
Account.
(a) The Master Servicer shall, from time to time, make withdrawals from
the Collection Account for any of the following purposes or as described in
Section 4.04:
(i) to remit to the Trustee for deposit in the Distribution Account
the amounts required to be so remitted pursuant to Section 3.10(b) or
permitted to be so remitted pursuant to the first sentence of Section
3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Master Servicer
for Advances, but only to the extent of amounts received which represent
Late Collections (net of the related Servicing Fees) of Monthly Payments,
Liquidation Proceeds and Insurance Proceeds on Mortgage Loans with respect
to which such Advances were made in accordance with the provisions of
Section 4.03;
(iii) subject to Section 3.16(d), to pay the Master Servicer or any
Sub-Servicer (a) any unpaid Servicing Fees, (b) any unreimbursed Servicing
Advances with respect to each Mortgage Loan, but only to the extent of any
Late Collections, Liquidation Proceeds
61
and Insurance Proceeds received with respect to such Mortgage Loan, and
(c) any Servicing Advances with respect to the final liquidation of a
Mortgage Loan that are Nonrecoverable Advances, but only to the extent
that Late Collections, Liquidation Proceeds and Insurance Proceeds
received with respect to such Mortgage Loan are insufficient to reimburse
the Master Servicer or any Sub-Servicer for Servicing Advances;
(iv) to pay to the Master Servicer as servicing compensation (in
addition to the Servicing Fee) on the Master Servicer Remittance Date any
interest or investment income earned on funds deposited in the Collection
Account;
(v) to pay to the Master Servicer or the Seller, with respect to
each Mortgage Loan that has previously been purchased or replaced pursuant
to Section 2.03 or Section 3.16(c) all amounts received thereon subsequent
to the date of purchase or substitution, as the case may be;
(vi) to reimburse the Master Servicer for any Advance previously
made which the Master Servicer has determined to be a Nonrecoverable
Advance in accordance with the provisions of Section 4.04;
(vii) to pay, or to reimburse the Master Servicer for Servicing
Advances in respect of, expenses incurred in connection with any Mortgage
Loan pursuant to Section 3.16(b);
(viii) to pay to the Master Servicer on a Servicer Remittance Date
the excess of aggregate Prepayment Interest Excesses for the related
Distribution Date over aggregate Prepayment Interest Shortfalls for such
Distribution Date; and
(ix) to clear and terminate the Collection Account pursuant to
Section 10.01.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (iv), (v), (vi) and (vii) above. The
Master Servicer shall provide written notification to the Trustee, on or prior
to the next succeeding Servicer Remittance Date, upon making any withdrawals
from the Collection Account pursuant to subclause (vi) above; provided that an
Officer's Certificate in the form described under Section 4.04(d) shall suffice
for such written notification to the Trustee in respect hereof.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions in accordance with Sections 4.01 and 8.05;
(ii) to pay any amounts in respect of taxes pursuant to Section
9.01(g); and
(iii) to clear and terminate the Distribution Account pursuant to
Section 10.01.
62
Section 3.12. Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Master Servicer may direct any depository institution maintaining
the Collection Account, and the Trustee may direct any depository institution
maintaining the Distribution Account (each such account, for purposes of this
Section 3.12, an "Investment Account"), to invest the funds in such Investment
Account in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement. All such Permitted Investments
shall be held to maturity, unless payable on demand. Any investment of funds in
an Investment Account shall be made in the name of the Trustee (in its capacity
as such), or in the name of a nominee of the Trustee. The Trustee shall be
entitled to sole possession (except with respect to investment direction of
funds held in the Collection Account and any income and gain realized thereon)
over each such investment, and any certificate or other instrument evidencing
any such investment shall be delivered directly to the Trustee or its agent,
together with any document of transfer necessary to transfer title to such
investment to the Trustee or its nominee. In the event amounts on deposit in an
Investment Account are at any time invested in a Permitted Investment payable on
demand, the Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such
date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that
such Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in the
Investment Account.
(b) All income and gain realized from the investment of funds deposited in
the Collection Account and any REO Account held by or on behalf of the Master
Servicer shall be for the benefit of the Master Servicer and shall be subject to
its withdrawal in accordance with Section 3.11 or Section 3.23, as applicable.
The Master Servicer shall deposit in the Collection Account or any REO Account,
as applicable, the amount of any loss of principal incurred in respect of any
such Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
(c) All income and gain realized from the investment of funds deposited in
the Distribution Account shall be for the benefit of the Trustee. The Trustee
shall deposit in the Distribution Account the amount of any loss of principal
incurred in respect of any such Permitted Investment made with funds in such
accounts immediately upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other
63
performance required under any Permitted Investment, the Trustee may and,
subject to Section 8.01 and Section 8.02(a)(v), upon the request of the
Certificate Insurer or the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
Section 3.13. [Reserved]
Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each Mortgage
Loan fire insurance with extended coverage on the Mortgaged Property in an
amount which is at least equal to the lesser of the current Principal Balance of
such Mortgage Loan and the amount necessary to fully compensate for any damage
or loss to the improvements that are a part of such property on a replacement
cost basis, in each case in an amount not less than such amount as is necessary
to avoid the application of any coinsurance clause contained in the related
hazard insurance policy. The Master Servicer shall also cause to be maintained
fire insurance with extended coverage on each REO Property in an amount which is
at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) the outstanding
Principal Balance of the related Mortgage Loan at the time it became an REO
Property. The Master Servicer will comply in the performance of this Agreement
with all reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by the Master Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11, if received
in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal
pursuant to Section 3.23, if received in respect of an REO Property. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating distributions to Certificateholders and the
Certificate Insurer, be added to the unpaid Principal Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Master Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid Principal Balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
In the event that the Master Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of A:X or better in Best's
Key Rating Guide (or such
64
other rating that is comparable to such rating) insuring against hazard losses
on all of the Mortgage Loans, it shall conclusively be deemed to have satisfied
its obligations as set forth in the first two sentences of this Section 3.14, it
being understood and agreed that such policy may contain a deductible clause, in
which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Mortgaged Property or REO Property a policy
complying with the first two sentences of this Section 3.14, and there shall
have been one or more losses which would have been covered by such policy,
deposit to the Collection Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Master Servicer agrees to prepare and present, on behalf of itself,
the Trustee, Certificateholders and the Certificate Insurer, claims under any
such blanket policy in a timely fashion in accordance with the terms of such
policy.
(b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, unless the Master Servicer has obtained a waiver
of such requirements from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Master Servicer shall
be deemed to have complied with this provision if an Affiliate of the Master
Servicer has such errors and omissions and fidelity bond coverage and, by the
terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Master Servicer. Any such errors and omissions policy
and fidelity bond shall by its terms not be cancelable without thirty days'
prior written notice to the Trustee. The Master Servicer shall also cause each
Sub-Servicer to maintain a policy of insurance covering errors and omissions and
a fidelity bond which would meet such requirements.
Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
The Master Servicer will, to the extent it has knowledge of any conveyance
or prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Master Servicer shall not be required to take such action if in its sole
business judgment the Master Servicer believes it is not in the best interests
of the Trust Fund and shall not exercise any such rights if prohibited by law
from doing so. If the Master Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, or if any of the other
conditions set forth in the proviso to the preceding sentence apply, the Master
Servicer will enter into an assumption and modification agreement from or with
the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Master Servicer is also authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
the Mortgagor and becomes liable under
65
the Mortgage Note, provided that no such substitution shall be effective unless
such person satisfies the underwriting criteria of the Master Servicer and has a
credit risk rating at least equal to that of the original Mortgagor. In
connection with any assumption or substitution, the Master Servicer shall apply
such underwriting standards and follow such practices and procedures as shall be
normal and usual in its general mortgage servicing activities and as it applies
to other mortgage loans owned solely by it. The Master Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy. Any fee collected by the Master Servicer in respect of an assumption,
modification or substitution of liability agreement shall be retained by the
Master Servicer as additional servicing compensation. In connection with any
such assumption, no material term of the Mortgage Note (including but not
limited to the related Mortgage Rate and the amount of the Monthly Payment) may
be amended or modified, except as otherwise required pursuant to the terms
thereof. The Master Servicer shall notify the Trustee that any such
substitution, modification or assumption agreement has been completed by
forwarding to the Trustee the executed original of such substitution,
modification or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Master Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.
Section 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall use its best efforts, consistent with
Servicing Standard, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans (including selling
any such Mortgage Loans other than converting the ownership of the related
properties) as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07. The Master Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will be recoverable as Servicing Advances by the Master
Servicer as contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the provision that, in any case in which Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Master Servicer shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or any
other provision of this Agreement, with respect to any Mortgage Loan as to which
the Master Servicer has received actual notice of, or has actual knowledge of,
the presence of any toxic or hazardous
66
substance on the related Mortgaged Property, the Master Servicer shall not, on
behalf of the Trustee, either (i) obtain title to such Mortgaged Property as a
result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, or take any other action with respect to, such Mortgaged
Property, if, as a result of any such action, the Trustee, the Trust Fund, the
Certificateholders or the Certificate Insurer would be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or "operator" of
such Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Master Servicer has also previously
determined, based on its reasonable judgment and a report prepared by a Person
who regularly conducts environmental audits using customary industry standards,
that:
(i) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
(ii) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any
hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required
under any federal, state or local law or regulation, or that if any
such materials are present for which such action could be required,
that it would be in the best economic interest of the Trust Fund to
take such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section
3.16 shall be advanced by the Master Servicer, subject to the Master Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(vii), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
If the Master Servicer determines, as described above, that it is in the
best economic interest of the Trust Fund to take such actions as are necessary
to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund; provided that any amounts disbursed by the
Master Servicer pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to Section 4.04(d). The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(iii) and (a)(vii), such right
of reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.
67
(c) The Master Servicer or the Special Servicer, if the Master Servicer
elects not to exercise such option, may at its option purchase from each Loan
Group, any Mortgage Loan or related REO Property that is 90 days or more
delinquent, which the Master Servicer or the Special Servicer, as applicable,
determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee and the Certificate Insurer prior to purchase), at a price equal to the
Purchase Price; provided, however, that (i) the Master Servicer or the Special
Servicer, as applicable, shall purchase any such Mortgage Loans or related REO
Properties on the basis of delinquency, purchasing the most delinquent Mortgage
Loans or related REO Properties first and (ii) after such parties (or the
entities contemplated in Section 3.25 below) in the aggregate shall have
purchased 3.00% of the Mortgage Loans or related REO Properties in each Loan
Group, by Cut-off Date Aggregate Principal Balance, pursuant to clause (i) above
or Section 3.25 below, the Master Servicer or the Special Servicer, as
applicable, must also obtain the consent of the Certificate Insurer prior to any
further purchases, provided that failure of the Certificate Insurer to respond
within five Business Days following actual receipt of any such request for
consent by the Master Servicer or the Special Servicer, as applicable, shall be
deemed to constitute consent to the additional purchases identified in such
request for consent. The Purchase Price for any Mortgage Loan or related REO
Property purchased hereunder shall be deposited in the Distribution Account, and
the Trustee, upon receipt of such deposit, shall release or cause to be released
to the Master Servicer or the Special Servicer, as applicable, the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Master Servicer or the Special
Servicer, as applicable, shall furnish and as shall be necessary to vest in it
title to any Mortgage Loan or related REO Property released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery Determination,
as well as any recovery resulting from a partial collection of Insurance
Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan, will be
applied in the following order of priority: first, to reimburse the Master
Servicer or any Sub-Servicer for any related unreimbursed Servicing Advances and
Advances, pursuant to Section 3.11(a)(ii) or (a)(iii); second, to accrued and
unpaid interest on the Mortgage Loan, to the date of the Final Recovery
Determination, or to the Due Date prior to the Distribution Date on which such
amounts are to be distributed if not in connection with a Final Recovery
Determination; and third, as a recovery of principal of the Mortgage Loan. If
the amount of the recovery so allocated to interest is less than the full amount
of accrued and unpaid interest due on such Mortgage Loan, the amount of such
recovery will be allocated by the Master Servicer as follows: first, to unpaid
Servicing Fees; and second, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Master Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).
Section 3.17. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Master Servicer shall deliver to the
Trustee two executed copies of a completed certification (which certification
shall include a statement to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Collection Account pursuant to Section 3.10 have been or will be so
deposited) of a Servicing Officer and
68
shall request delivery to it of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall, within five Business Days, release
and send by overnight mail, at the expense of the Master Servicer, the related
Mortgage File to the Master Servicer. The Trustee agrees to indemnify the Master
Servicer, out of its own funds, for any loss, liability or expense (other than
special, indirect, punitive or consequential damages which will not be paid by
the Trustee) incurred by the Master Servicer as a proximate result of the
Trustee's breach of its obligations pursuant to this Section 3.17. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account. The Trustee will provide to the Certificate Insurer an updated listing
of any Mortgage Files released pursuant to this Section 3.17(a) on March 30,
June 30, September 30 and December 30 of each year, beginning in March 1999 and
as otherwise requested by the Certificate Insurer or the Trustee.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any
insurance policy relating to the Mortgage Loans, the Trustee shall, upon any
request made by or on behalf of the Master Servicer and delivery to the Trustee
of a Request for Release in the form of Exhibit F, release the related Mortgage
File to the Master Servicer, and the Trustee shall, at the direction of the
Master Servicer, execute such documents as shall be necessary to the prosecution
of any such proceedings. Such Request for Release shall obligate the Master
Servicer to return each and every document previously requested from the
Mortgage File to the Trustee when the need therefor by the Master Servicer no
longer exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Master
Servicer has delivered, or caused to be delivered, to the Trustee an additional
Request for Release certifying as to such liquidation or action or proceedings.
Upon the request of the Trustee or the Certificate Insurer, the Master Servicer
shall provide notice to the Trustee and the Certificate Insurer of the name and
address of the Person to which such Mortgage File or such document was delivered
and the purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation that are
required to be deposited into the Collection Account have been so deposited, or
that such Mortgage Loan has become an REO Property, any outstanding Requests for
Release with respect to such Mortgage Loan shall be released by the Trustee to
the Master Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Master Servicer or the Sub-Servicer, as the case may
be, and upon the request of the Certificate Insurer the Master Servicer shall
deliver or cause to be delivered to the Certificate Insurer copies of, any court
pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Each such certification shall include a request that such
pleadings or documents be executed by the Trustee and a statement as to the
69
reason such documents or pleadings are required and that the execution and
delivery thereof by the Trustee will not invalidate or otherwise affect the lien
of the Mortgage, except for the termination of such a lien upon completion of
the foreclosure or trustee's sale.
Section 3.18. Servicing Compensation.
As compensation for the activities of the Master Servicer hereunder, the
Master Servicer shall be entitled to (i) the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan and (ii) the Additional Servicing Fee with respect to each
Mortgage Loan payable solely as provided in Section 4.01(a)(C) hereof, in each
case subject to Section 3.24. In addition, the Master Servicer shall be entitled
to recover unpaid Servicing Fees and unpaid Additional Servicing Fees out of
Insurance Proceeds or Liquidation Proceeds to the extent permitted by Section
3.11(a)(iii) and out of amounts derived from the operation and sale of an REO
Property to the extent permitted by Section 3.23. The right to receive the
Aggregate Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of the Master Servicer's responsibilities
and obligations under this Agreement; provided, however, that the Master
Servicer may pay from the Aggregate Servicing Fee any amounts due to a
Sub-Servicer pursuant to a Sub-Servicing Agreement entered into under Section
3.02.
Additional servicing compensation in the form of assumption fees,
ancillary income and late payment charges, insufficient funds charges or
otherwise (subject to Section 3.24 and other than Prepayment Premiums) shall be
retained by the Master Servicer only to the extent such fees or charges are
received by the Master Servicer. The Master Servicer shall also be entitled
pursuant to Section 3.11(a)(iv) to withdraw from the Collection Account and
pursuant to Section 3.23(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.12 and Section 3.24. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its servicing activities
hereunder (including premiums for the insurance required by Section 3.14, to the
extent such premiums are not paid by the related Mortgagors or by a Sub-Servicer
and servicing compensation of each Sub-Servicer) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 3.19. Reports to the Trustee; Collection Account Statements.
Not later than twenty days after each Distribution Date, the Master
Servicer shall forward, upon request, to the Trustee, the Certificate Insurer
and the Depositor the most current available bank statement for the Collection
Account. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Master Servicer to the
Trustee.
Section 3.20. Statement as to Compliance.
The Master Servicer and the Special Servicer each shall deliver to the
Trustee, the Certificate Insurer and the Depositor not later than 90 days
following the end of the fiscal year of the Master Servicer and of the Special
Servicer, commencing with the fiscal year that begins in
70
1999, an Officers' Certificate stating, as to each signatory thereof, that (i) a
review of the activities of the Master Servicer or Special Servicer, as
applicable, during the preceding year and of performance under this Agreement
has been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Master Servicer or the Special
Servicer, as applicable, has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Copies of any such statement shall be
provided by the Trustee to any Certificateholder and to any Person identified to
the Trustee as a prospective transferee of a Certificate, upon request at the
expense of the requesting party, provided such statement is delivered by the
Master Servicer or the Special Servicer, as applicable, to the Trustee.
Section 3.21. Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of each fiscal year of the Master
Servicer and the Special Servicer, commencing with the fiscal year that begins
in 1999, the Master Servicer and the Special Servicer, each at its own expense,
shall cause a nationally recognized firm of independent certified public
accountants to furnish to the Master Servicer or the Special Servicer, as
applicable, a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Master Servicer or the
Special Servicer, as applicable, which includes an assertion that the Master
Servicer or the Special Servicer, as applicable, has complied with certain
minimum residential mortgage loan servicing standards, identified in the Uniform
Single Attestation Program for Mortgage Bankers established by the Mortgage
Bankers Association of America, with respect to the servicing of residential
mortgage loans during the most recently completed fiscal year and (ii) on the
basis of an examination conducted by such firm in accordance with standards
established by the American Institute of Certified Public Accountants, such
representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. In rendering its
report such firm may rely, as to matters relating to the direct servicing of
residential mortgage loans by Sub-Servicers, upon comparable reports of firms of
independent certified public accountants rendered on the basis of examinations
conducted in accordance with the same standards (rendered within one year of
such report) with respect to those Sub-Servicers. Immediately upon receipt of
such report, the Master Servicer or the Special Servicer, as applicable, shall
furnish a copy of such report to the Trustee, the Certificate Insurer and each
Rating Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the expense of the Master Servicer or the
Special Servicer, as applicable, provided that such statement is delivered by
the Master Servicer or the Special Servicer, as applicable, to the Trustee.
Section 3.22. Access to Certain Documentation; Filing of Reports by
Trustee.
(a) The Master Servicer shall provide to the Office of Thrift Supervision,
the FDIC, and any other federal or state banking or insurance regulatory
authority that may exercise authority over any Certificateholder, access to the
documentation regarding the Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer designated by it. In addition, access to the documentation regarding
the Mortgage Loans will be provided to any Certificateholder, the Certificate
Insurer, the Trustee and to any Person
71
identified to the Master Servicer as a prospective transferee of a Certificate,
upon reasonable request during normal business hours at the offices of the
Master Servicer designated by it at the expense of the Person requesting such
access.
(b) The Trustee shall, on behalf of the Trust Fund, prepare, sign and file
with the Securities and Exchange Commission any and all reports, statements and
information respecting the Trust which the Depositor determines are required to
be filed with the Securities and Exchange Commission pursuant to Sections 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, each such report,
statement and information to be filed on or prior to the required filing date
for such report, statement or information. Upon the request of the Trustee, each
of the Seller, the Master Servicer and the Depositor shall cooperate with the
Trustee in the preparation of any such report and shall provide to the Trustee
in a timely manner all such information or documentation as the Trustee may
reasonably request in connection with the performance of its duties and
obligations under this Section.
Section 3.23. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be taken in
the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Master Servicer, on behalf
of the REMIC, shall either sell any REO Property by the end of the third full
taxable year after the taxable year in which the REMIC acquires ownership of
such REO Property for purposes of Section 860G(a)(8) of the Code or request from
the Internal Revenue Service, no later than 60 days before the day on which the
three-year grace period would otherwise expire, an extension of such three-year
period, unless the Master Servicer shall have delivered to the Trustee an
Opinion of Counsel, addressed to the Trustee, the Certificate Insurer and the
Depositor, to the effect that the holding by the REMIC of such REO Property
subsequent to three years after its acquisition will not result in the
imposition on the REMIC of taxes on "prohibited transactions" thereof, as
defined in Section 860F of the Code, or cause the REMIC to fail to qualify as a
REMIC under Federal law at any time that any Certificates are outstanding. The
Master Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the REMIC of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code, or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
(b) The Master Servicer shall separately account for all funds collected
and received in connection with the operation of any REO Property and shall
establish and maintain, or cause to be established and maintained, with respect
to REO Properties an account held in trust for the Trustee for the benefit of
the Certificateholders and the Certificate Insurer (the "REO Account"), which
shall be an Eligible Account. The Master Servicer shall be permitted to allow
the Collection Account to serve as the REO Account, subject to separate ledgers
for each REO Property. The Master Servicer shall be entitled to retain or
withdraw any interest income paid on funds deposited in the REO Account.
72
(c) The Master Servicer shall have full power and authority, subject only
to the specific requirements and prohibitions of this Agreement, to do any and
all things in connection with any REO Property as are consistent with the manner
in which the Master Servicer manages and operates similar property owned by the
Master Servicer or any of its Affiliates, all on such terms and for such period
as the Master Servicer deems to be in the best interests of Certificateholders.
In connection therewith, the Master Servicer shall deposit, or cause to be
deposited in the clearing 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 Master Servicer's receipt thereof, and shall thereafter deposit in the REO
Account, in no event more than two Business Days after the Master Servicer's
receipt thereof, all revenues received by it with respect to an REO Property and
shall withdraw therefrom funds necessary for the proper operation, management
and maintenance of such REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.
Notwithstanding the foregoing, neither the Master Servicer nor the Trustee
shall:
(i) authorize the Trust Fund to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its terms will
give rise to any income that does not constitute Rents from Real Property;
(ii) authorize any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize any construction on any REO Property, other than the
completion of a building or other improvement thereon, and then only if
more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of the
Code; or
(iv) authorize any Person to Directly Operate any REO Property on
any date more than 90 days after its date of acquisition by the Trust
Fund;
unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trustee and the Certificate Insurer, to the effect that
such action will not cause such REO
73
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by the REMIC, in
which case the Master Servicer may take such actions as are specified in such
Opinion of Counsel.
The Master Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above and remit all related revenues (net
of such costs and expenses) to the Master Servicer as soon as practicable,
but in no event later than thirty days following the receipt thereof by
such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to any
such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Master Servicer of any of its duties and
obligations to the Trustee on behalf of the Certificateholders and the
Certificate Insurer with respect to the operation and management of any
such REO Property; and
(iv) the Master Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and obligations
in connection with the operation and management of such REO Property.
The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c), the
Master Servicer may from time to time make withdrawals from the REO Account for
any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in
respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and Advances made in respect of
such REO Property or the related Mortgage Loan. On the Master Servicer
Remittance Date, the Master Servicer shall withdraw from each REO Account
maintained by it and deposit into the Distribution Account in accordance with
Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
74
(e) Subject to the time constraints set forth in Section 3.23(a), each REO
Disposition shall be carried out by the Master Servicer at such price and upon
such terms and conditions as the Master Servicer shall deem necessary or
advisable, as shall be normal and usual in its Servicing Standard.
(f) The proceeds from the REO Disposition, net of any amount required by
law to be remitted to the Mortgagor under the related Mortgage Loan and net of
any payment or reimbursement to the Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution Date
in accordance with Section 4.01. Any REO Disposition shall be for cash only
(unless changes in the REMIC Provisions made subsequent to the Startup Day allow
a sale for other consideration).
(g) The Master Servicer shall file information returns with respect to the
receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Section 3.24. Obligations of the Master Servicer in Respect of Prepayment
Interest Shortfalls.
Not later than the Close of Business on each Servicer Remittance Date, the
Master Servicer shall remit to the Collection Account an amount ("Compensating
Interest") equal to the lesser of (A) (1) the aggregate of the Prepayment
Interest Shortfalls for the related Distribution Date minus (2) the aggregate of
the Prepayment Interest Excesses for the related Distribution Date and (B) its
Aggregate Servicing Fee received in the related Due Period. The Master Servicer
shall not have the right to reimbursement for any amounts remitted to the
Trustee in respect of Compensating Interest. Such amounts so remitted shall be
included in the Available Funds relating to the Loan Group experiencing the
Principal Prepayments and distributed therewith on the next Distribution Date.
If on any Servicer Remittance Date the amount deposited into the Collection
Account is the amount calculated in (B), such amount shall be allocated between
the Available Funds of each Loan Group pro rata based on the aggregate
Prepayment Interest Shortfall experienced by both Loan Groups during the related
Due Period. The Master Servicer shall not be obligated to pay Compensating
Interest with respect to Relief Act Interest Shortfalls.
Section 3.25. Certain Rights Related to Foreclosure and the Special
Servicer.
(a) The Directing Holder shall have the right to purchase defaulted
Mortgage Loans from the Trust Fund as and to the extent provided herein. At any
time, the Directing Holder may request that the Special Servicer take a
particular action permitted under this Agreement with respect to a particular
Specially Serviced Mortgage Loan, including without limitation foreclosure,
waivers or modifications. Any such request shall be in writing, a copy of which
shall be delivered to the Master Servicer. Within two Business Days of receipt
of such a request,
75
the Special Servicer shall notify the Directing Holder whether the Special
Servicer intends to comply with such request. If the Special Servicer does not
comply with such request (or fails to notify the Directing Holder of its
decision within the two Business Day period), then the Directing Holder may, at
its sole option and upon written notice to the Special Servicer and the Master
Servicer, purchase the related Mortgage Loan from the Trust Fund at the Purchase
Price. In addition, the Directing Holder may purchase any Severely Delinquent
Loan upon written notice to the Master Servicer and the Special Servicer within
three days of the day on which such Mortgage Loan becomes a Severely Delinquent
Loan. After Mortgage Loans or related REO Properties in a Loan Group have been
purchased, together with Mortgage Loans and related REO Properties purchased
pursuant (i) to the two immediately preceding sentences, (ii) to subsection (b)
below and (iii) to Section 3.16(c), in an amount equal to 3.00% by Cut-off Date
Aggregate Principal Balance, the Directing Holder must obtain the consent of the
Certificate Insurer prior to any further purchases of Mortgage Loans in such
Loan Group, provided that failure of the Certificate Insurer to respond within
five Business Days following actual receipt of any such request for consent by
the Directing Holder shall be deemed to constitute consent to the additional
purchases identified in such request for consent.
(b) In addition to the purchase option provided under subsection (a)
above, the Special Servicer and the Directing Holder shall have the right to
purchase Severely Delinquent Loans from the Trust Fund as set forth herein. The
Special Servicer shall have the right to purchase any Severely Delinquent Loan
at the Purchase Price (as defined in this Agreement). The Special Servicer shall
send a written notice (the "Initial Notice") to the Directing Holder advising
the Directing Holder that the Special Servicer intends to purchase a Severely
Delinquent Loan. The Directing Holder shall have the option to (i) direct the
Special Servicer not to purchase any such Severely Delinquent Loan but to
proceed with a particular default resolution strategy or other strategy
consistent with the servicing standards set forth in this Agreement, (ii) direct
the Special Servicer to proceed with the purchase of such loan on the terms
proposed by the Special Servicer, or (iii) indicate that the Directing Holder
intends to purchase such Severely Delinquent Loan, in which case the Directing
Holder shall have the sole right and option to purchase the Severely Delinquent
Loan at the Purchase Price; provided, however, that if the Directing Holder
fails or refuses to deliver a written notice of its election to the Special
Servicer within two Business Days after the Special Servicer has sent to the
Directing Holder the Initial Notice, then the Directing Holder shall have deemed
to have consented to the Special Servicer purchasing the Severely Delinquent
Loan for its own account. Such right of such Directing Holder shall be
transferable to and exercisable by subsequent Holders of the Class X Certificate
only upon satisfaction of the conditions set forth in this Section 3.25. The
aggregate of any such purchases by the Directing Holder of a Mortgage Loan
pursuant to this Section 3.25(b) shall be subject to the restriction described
in subsection (a) above.
(c) All rights of the Directing Holder under this Agreement shall
terminate immediately upon any transfer of the Class X Certificate to any other
Person, unless (i) the Special Servicer consents in writing to the transfer of
such rights and (ii) the Trustee is provided with a letter from each Rating
Agency to the effect that the transfer of the rights of the Directing Holder to
such transferee will not result in the qualification, withdrawal or downgrade of
the ratings then assigned to any Class of Certificates.
76
(d) The Directing Holder may, with the consent of the Certificate Insurer,
by written notice to the Special Servicer, terminate the rights and obligations
of the Special Servicer under this Agreement, without cause, as and with the
effect set forth in the first paragraph following clause (iv) of Section 8.01
and appoint a successor Special Servicer, provided that (i) such successor is
reasonably acceptable to the Master Servicer and the Certificate Insurer and
(ii) a letter is provided to the Trustee from each Rating Agency to the effect
that such termination and appointment will not result in the qualification,
reduction or withdrawal of the ratings then applicable to the Certificates.
Section 3.26. Obligations of the Master Servicer in Respect of Mortgage
Rates and Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to the Mortgage Loans in the aggregate results from or is attributable
to adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Master Servicer in a manner not consistent with the terms
of the related Mortgage Note and this Agreement, the Master Servicer, upon
discovery or receipt of notice thereof, immediately shall deliver to the Trustee
for deposit in the Distribution Account from its own funds the amount of any
such shortfall and shall indemnify and hold harmless the Trust Fund, the
Trustee, the Certificate Insurer, the Depositor and any successor servicer in
respect of any such liability. Such indemnities shall survive the termination or
discharge of this Agreement. Notwithstanding the foregoing, this Section 3.26
shall not limit the ability of the Master Servicer to seek recovery of any such
amounts from the related Mortgagor under the terms of the related Mortgage Note,
as permitted by law.
Section 3.27. Solicitations.
From and after the Closing Date, the Master Servicer agrees that it will
not take any action or permit or cause any action to be taken by any of its
agents and Affiliates, or by any independent contractors or independent mortgage
brokerage companies on the Master Servicer's behalf, to personally, by telephone
or mail, solicit the Mortgagor under any Mortgage Loan for the purpose of
refinancing such Mortgage Loan; provided, that the Master Servicer may solicit
any Mortgagor for whom the Master Servicer has received a request for
verification of mortgage, a request for demand for payoff, a mortgagor initiated
written or verbal communication indicating a desire to prepay the related
Mortgage Loan, or the mortgagor initiates a title search; provided further, it
is understood and agreed that promotions undertaken by the Master Servicer or
any of its Affiliates which (i) concern optional insurance products or other
additional products or (ii) are directed to the general public at large,
including, without limitation, mass mailings based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this Section, nor is the Master Servicer
prohibited from responding to unsolicited requests or inquiries made by a
Mortgagor or an agent of a Mortgagor.
Section 3.28. Special Servicer.
With respect to any Mortgage Loan that becomes a Specially Serviced
Mortgage Loan, all servicing responsibilities shall be transferred from the
Master Servicer or any Sub-Servicer to the Special Servicer. The Special
Servicer shall, consistent with the servicing standard set forth herein, perform
the day-to-day servicing functions with respect to such Mortgage Loan. In
77
connection therewith, the Special Servicer shall be entitled as compensation to
retain the Servicing Fee with respect to each Mortgage Loan that is a Specially
Serviced Mortgage Loan for any calendar month or part thereof that such Mortgage
Loan was a Specially Serviced Mortgage Loan. The Special Servicer shall perform
the duties and obligations set forth in Section 3.16 with respect to the
realization of proceeds on any such Mortgage Loans.
The Special Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder and shall not be entitled
to reimbursement thereof except as specifically provided for herein.
In the event that Fairbanks Capital Corp. is terminated in its capacity as
Sub-Servicer, such termination shall have the effect under this Agreement of
simultaneously terminating Fairbanks Capital Corp. in its capacity as Special
Servicer hereunder. In the event of any such termination of the Special
Servicer, the Master Servicer shall, with the consent of the Certificate Insurer
and the Rating Agencies, appoint a successor Special Servicer.
ARTICLE IV
FLOW OF FUNDS
Section 4.01. Distributions.
(a) On each Distribution Date the Trustee shall withdraw funds on deposit
in the Distribution Account and make the following disbursements and transfers
as described below and to the extent of such funds.
(A) The Group I Available Funds shall be distributed in the following
order of priority:
(i) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for the premium (including any premium
supplement) payable in respect of the Class A-1 Certificates;
(ii) to the Holders of the Class A-1 Certificates, the related Interest
Distributable Amount;
(iii) from the Group I Principal Distribution Amount for such Distribution
Date to the Holders of the Class A-1 Certificates, an amount equal to the Group
I Basic Principal Distribution Amount;
(iv) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for reimbursement for prior draws made on
the Policy in respect of the Class A Certificates and any other amounts owing to
the Certificate Insurer under the Insurance Agreement with respect to the Class
A Certificates;
(v) to the Holders of the Class A-2 Certificates, an amount equal to the
excess, if any, of (x) the related Interest Distributable Amount for such
Distribution Date over (y) the amount
78
actually distributed to the Holders of the Class A-2 Certificates on such
Distribution Date pursuant to subclause (B)(ii) below;
(vi) to the Holders of the Class A-2 Certificates, an amount equal to the
excess, if any, of (x) the Certificate Principal Balance of the Class A-2
Certificates (after giving effect to all distributions thereon on such
Distribution Date from the Group II Available Funds) over (y) the related Loan
Group Balance on the last day of the related Prepayment Period;
(vii) from the Group I Principal Distribution Amount for such Distribution
Date to holders of the Class A-1 Certificates, an amount equal to the Group I
Extra Principal Distribution Amount;
(viii) to the Holders of the Class A-2 Certificates, an amount equal to
the excess, if any, of (x) the Group II Principal Distribution Amount for such
Distribution Date over (y) the amount actually distributed to Holders of the
Class A-2 Certificates on such Distribution Date pursuant to subclause (B)(vii)
from the Group II Available Funds, plus, any remaining Overcollateralization
Deficiency Amount for such Distribution Date for the Class A-2 Certificates;
(ix) to the Master Servicer, certain amounts in respect of indemnification
that may be required to be paid by the Trust pursuant to the terms of this
Agreement;
(x) to the Holders of the Class A-2 Certificates, an amount equal to the
Group II Available Funds Cap Carryover Amount, if any, after giving effect to
the amount distributable on such Distribution Date pursuant to clause (B)(x)
below; and
(xi) to the Holder of the Class X Certificate, the X-1 Component
Distributable Amount for such Distribution Date and the X-1 Component
Distributable Amount for any prior Distribution Date to the extent not
previously paid.
(B) The Group II Available Funds shall be distributed in the following
order of priority:
(i) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for the premium (including any premium
supplement) payable in respect of the Class A-2 Certificates;
(ii) to the Holders of the Class A-2 Certificates, the related Interest
Distributable Amount;
(iii) from the Group II Principal Distribution Amount for such
Distribution Date to the Holders of the Class A-2 Certificates, an amount equal
to the Group II Basic Principal Distribution Amount;
(iv) to the Certificate Insurer, the amount owing to the Certificate
Insurer under the Insurance Agreement for reimbursement for prior draws made on
the Policy in respect of the Class A Certificates and any other amounts owing to
the Certificate Insurer under the Insurance Agreement with respect to the Class
A Certificates;
79
(v) to the Holders of the Class A-1 Certificates, an amount equal to the
excess, if any, of (x) the related Interest Distributable Amount for such
Distribution Date over (y) the amount actually distributed to the Holders of the
Class A-1 Certificates on such Distribution Date pursuant to subclause (A)(ii)
above;
(vi) to the Holders of the Class A-1 Certificates, an amount equal to the
excess, if any, of (x) the Certificate Principal Balance of the Class A-1
Certificates (after giving effect to all distributions thereon on such
Distribution Date from the Group I Available Funds) over (y) the related Loan
Group Balance on the last day of the related Prepayment Period;
(vii) from the Group II Principal Distribution Amount for such
Distribution Date to the Holders of the Class A-2 Certificates, an amount equal
to the Group II Extra Principal Distribution Amount;
(viii) to the Holders of the Class A-1 Certificates, an amount equal to
the excess, if any, of (x) the Group I Principal Distribution Amount for such
Distribution Date over (y) the amount actually distributed to Holders of the
Class A-1 Certificates on such Distribution Date pursuant to subclause (A)(vii)
from the Group I Available Funds, plus, any remaining Overcollateralization
Deficiency Amount for the Class A-1 Certificates for such Distribution Date;
(ix) to the Master Servicer, certain amounts in respect of indemnification
that may be required to be paid by the Trust pursuant to this Agreement;
(x) to the Holders of the Class A-2 Certificates, an amount equal to the
Group II Available Funds Cap Carryover Amount, if any; and
(xi) to the Holder of the Class X Certificate, the X-2 Component
Distributable Amount for such Distribution Date and the X-2 Component
Distributable Amount for any prior Distribution Date to the extent not
previously paid.
(C) On each Distribution Date, any remaining amounts after giving effect
to the distributions specified in clauses (A) and (B) above will be distributed,
first, to the Master Servicer on account of all accrued and unpaid Additional
Servicing Fees, second, as principal to the Holders of the Class P Certificates,
until the Certificate Principal Balance thereof is reduced to zero, and,
thereafter, to the Holders of the Class R Certificates.
On each Distribution Date, all amounts representing Prepayment Premiums
from the Mortgage Loans in each Loan Group received during the related
Prepayment Period will be distributed to the holders of the Class P
Certificates.
(b) Method of Distribution. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution), in the case of Certificateholders of the Regular
Certificates, by check or money order mailed to such Certificateholder at the
address appearing in the Certificate Register, or by wire transfer.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.
80
(c) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Depositor, the Master Servicer, the
Special Servicer or the Seller shall have any responsibility therefor except as
otherwise provided by applicable law.
(d) Distribution of Insured Payments. With respect to any Distribution
Date, in the event of an Insured Payment, the Trustee shall make such payments
from the amount drawn under the Policy for the purposes specified in the Policy.
The Certificate Insurer shall be deemed to be the assignee of the Holders of the
Class A-1 Certificates and the Holders of the Class A-2 Certificates to the
extent of any amount of Insured Payments disbursed by the Trustee from proceeds
of the Policy and to such extent, shall be the subrogee of each such Holder of
the Class A-1 Certificates and each such Holder of the Class A-2 Certificates;
provided, however, that any such right of subrogation inuring to the Certificate
Insurer hereunder or otherwise shall be and is subordinated to the rights under
this Agreement of the Holders of the Class A-1 Certificates and the Holders of
the Class A-2 Certificates and in accordance with Section 11.04.
Section 4.02. Reserved.
Section 4.03. Statements.
(a) On each Distribution Date, based, as applicable, on information
provided to it by the Master Servicer, the Trustee shall prepare and forward by
mail to each Holder of the Regular Certificates, the Master Servicer, the
Certificate Insurer and the Rating Agencies, a statement as to the distributions
made on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Class A Certificates, separately identified,
allocable to principal;
(ii) the amount of the distribution made on such Distribution Date
to the Holders of each Class of Class A Certificates allocable to
interest, separately identified;
(iii) the Overcollateralized Amount, the Overcollateralization
Release Amount, the Overcollateralization Deficiency Amount and the
Overcollateralization Target Amount as of such Distribution Date for each
Class of Class A Certificates and the General Excess Available Amount for
each related Loan Group for such Distribution Date;
(iv) the aggregate amount of servicing compensation received by the
Master Servicer during the related Due Period and such other customary
information as the Trustee deems necessary or desirable, or which a
Certificateholder reasonably requests,
81
to enable Certificateholders to prepare their tax returns and, separately
identified, the amount of compensation paid to the Special Servicer;
(v) the aggregate amount of Advances for the related Due Period;
(vi) the Pool Principal Balance and the Loan Group Balance for each
Loan Group at the Close of Business at the end of the related Due Period;
(vii) the number, weighted average remaining term to maturity and
weighted average Mortgage Rate of the Mortgage Loans as of the related Due
Date;
(viii) separately stated for each Loan Group, the number and
aggregate unpaid principal balance of Mortgage Loans (a) 30 to 59 days
past due on a contractual basis, (b) 60 to 89 days past due on a
contractual basis, (c) 90 or more days past due on a contractual basis,
(d) as to which foreclosure proceedings have been commenced and (e) in
bankruptcy as of the Close of Business on the last day of the calendar
month preceding such Distribution Date;
(ix) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number of such Mortgage
Loan, the Principal Balance of such Mortgage Loan as of the date it became
an REO Property;
(x) the book value of any REO Property as of the Close of Business
on the last Business Day of the calendar month preceding the Distribution
Date, and, cumulatively, the total number and cumulative principal balance
of all REO Properties as of the Close of Business of the last day of the
preceding due period;
(xi) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xii) the aggregate amount of Realized Losses incurred during the
related Due Period and the cumulative amount of Realized Losses;
(xiii) the aggregate amount of extraordinary Trust Fund expenses
withdrawn from the Collection Account for such Distribution Date;
(xiv) the Class Certificate Principal Balance of each Class of Class
A Certificates, after giving effect to the distributions made on such
Distribution Date;
(xv) the Interest Distributable Amount in respect of each Class of
Class A Certificates for such Distribution Date and the respective
portions thereof, if any, remaining unpaid following the distributions
made in respect of such Certificates on such Distribution Date;
(xvi) the aggregate amount of any Prepayment Interest Shortfalls and
the Unpaid Interest Shortfall Amount for such Distribution Date, to the
extent not covered by payments by the Master Servicer pursuant to Section
3.26;
82
(xvii) the aggregate Premium Amount to be paid to the Certificate
Insurer;
(xviii) the Group II Available Funds Cap Carryover Amount, if any,
for such Distribution Date and the amount remaining unpaid after
reimbursements therefor on such Distribution Date;
(xix) any Overcollateralization Deficiency Amount after giving
effect to the distribution of principal on such Distribution Date;
(xx) whether the Step Down Cumulative Loss Test, Step Down Rolling
Delinquency Test, Step Down Rolling Loss Test, Step Up Cumulative Loss
Test, Step Up Rolling Delinquency Test, Step Up Rolling Loss Test and/or
Step Up Spread Squeeze Test have been met, the cumulative realized losses
with respect to each Loan Group, as a percentage of the original Loan
Group Balance, the Delinquency Percentage and the Annual Loss Percentage;
(xxi) the Available Funds with respect to each Loan Group;
(xxii) the Pass-Through Rate for the Class A-2 Certificates for such
Distribution Date;
(xxiii) the Liquidation Report for such Distribution Date;
(xxiv) the aggregate Principal Balance of Mortgage Loans purchased
by the Master Servicer, Special Servicer or Seller during the related Due
Period and indicating the Section of this Agreement requiring or allowing
the purchase of each such Mortgage Loan;
(xxv) the aggregate amount representing (a) collections of
Prepayment Premiums during the related Prepayment Period to be distributed
to Holders of the Class P Certificates and (b) any amounts distributable
as principal to such Holders, on such Distribution Date; and
(xxvi) the X-1 Component Distributable Amount and X-2 Component
Distributable Amount for such Distribution Date and (a) the portion
thereof distributed on the current Distribution Date and the portion
thereof remaining unpaid on such Distribution Date, (b) any such amount
for any prior Distribution Date distributed on the current Distribution
Date and (c) any such amount for any prior Distribution Date remaining
unpaid after giving effect to the distributions on the current
Distribution Date, separately stated.
The Trustee shall forward such report concurrently with each distribution
to the Certificateholders, the Certificate Insurer (at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Surveillance Department) and the Rating
Agencies on the related Distribution Date. The Trustee may also make such
reports available each month to each party referred to in this paragraph via the
Trustee's website. The Trustee's website can be accessed at
▇▇▇▇://▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇. The Trustee's obligations pursuant to this
Section 4.03 are limited to the extent of its receipt of all necessary
information from the Master Servicer. The
83
Trustee may fully rely upon and shall have no liability with respect to
information provided by the Master Servicer.
In the case of information furnished pursuant to subclauses (i) through
(iii) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Cut-off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall, upon written request, furnish to each Person who at any
time during the calendar year was a Certificateholder of a Regular Certificate,
if requested in writing by such Person, such information as is reasonably
necessary to provide to such Person a statement containing the information set
forth in subclauses (i) through (iii) above, aggregated for such calendar year
or applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.
Section 4.04. Remittance Reports; Advances.
(a) No later than the second Business Day following each Determination
Date, the Master Servicer shall deliver to the Trustee by telecopy or electronic
mail (or by such other means as the Master Servicer and the Trustee may agree
from time to time) a Remittance Report with respect to the related Distribution
Date. Not later than the Close of Business New York time on the Master Servicer
Remittance Date, the Master Servicer shall deliver or cause to be delivered to
the Trustee in addition to the information provided on the Remittance Report,
such other information reasonably available to it with respect to the Mortgage
Loans as the Trustee may reasonably require to perform the calculations
necessary to make the distributions contemplated by Section 4.01 and to prepare
the statements to Certificateholders contemplated by Section 4.03. The Trustee
shall not be responsible to recompute, recalculate or verify any information
provided to it by the Master Servicer.
84
(b) The amount of Advances to be made by the Master Servicer for any
Distribution Date shall equal, subject to Section 4.04(d), the sum of (i) the
aggregate amount of Monthly Payments (net of the related Servicing Fee), due
during the related Due Period in respect of the Mortgage Loans, which Monthly
Payments were delinquent on a contractual basis as of the Close of Business on
the related Determination Date and (ii) with respect to each REO Property, which
REO Property was acquired during or prior to the related Due Period and as to
which REO Property an REO Disposition did not occur during the related Due
Period, an amount equal to the excess, if any, of the REO Imputed Interest on
such REO Property for the most recently ended calendar month, over the net
income from such REO Property transferred to the Distribution Account pursuant
to Section 3.23 for distribution on such Distribution Date. For purposes of the
preceding sentence, the Monthly Payment on each Balloon Mortgage Loan with a
delinquent Balloon Payment is equal to the assumed monthly payment that would
have been due on the related Due Date based on the original principal
amortization schedule for the such Balloon Mortgage Loan.
On or before the Close of Business New York time on the Master Servicer
Remittance Date, the Master Servicer shall remit in immediately available funds
to the Trustee for deposit in the Distribution Account an amount equal to the
aggregate amount of Advances, if any, to be made in respect of the Mortgage
Loans and REO Properties for the related Distribution Date either (i) from its
own funds or (ii) from the Collection Account, to the extent of funds held
therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.04, used by the
Master Servicer in discharge of any such Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Advances to be made
by the Master Servicer with respect to the Mortgage Loans and REO Properties.
Any amounts held for future distribution and so used shall be appropriately
reflected in the Master Servicer's records and replaced by the Master Servicer
by deposit in the Collection Account on or before any future Servicer Remittance
Date to the extent that the Available Funds for the related Distribution Date
(determined without regard to Advances to be made on the Master Servicer
Remittance Date) shall be less than the total amount that would be distributed
to the Classes of Certificateholders pursuant to Section 4.01 on such
Distribution Date if such amounts held for future distributions had not been so
used to make Advances. The Trustee will promptly provide notice to the Master
Servicer by telecopy in the event that the amount remitted by the Master
Servicer to the Trustee on such date is less than the Advances required to be
made by the Master Servicer for the related Distribution Date, as set forth in
the related Remittance Report.
(c) The obligation of the Master Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
Mortgage Loan is paid in full or until the recovery of all Liquidation Proceeds
thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance or Servicing Advance, if
made, would constitute a Nonrecoverable Advance, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the Depositor and the
Trustee.
85
Section 4.05. Pre-Funding Accounts and Capitalized Interest Accounts.
(a) The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained two separate accounts
denominated" Pre-Funding Accounts", which are and shall continue to be Eligible
Accounts in the name of the Trustee and shall be designated "Bankers Trust
Company, as Trustee of the United PanAm Mortgage Loan Trust 1999-1, Group I
Pre-Funding Account" and "Bankers Trust Company, as Trustee of the United PanAm
Mortgage Loan Trust 1999-1, Group II Pre-Funding Account". Each of the
Pre-Funding Accounts shall be treated as an "outside reserve fund" under
applicable Treasury regulations and shall not be part of the REMIC. Any
investment earnings on the Pre-Funding Accounts shall be treated as owned by the
Seller and will be taxable to the Seller.
The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained two separate accounts
denominated "Capitalized Interest Accounts", which are and shall continue to be
Eligible Accounts in the name of the Trustee and shall be designated "Bankers
Trust Company, as Trustee of the United PanAm Mortgage Loan Trust Series 1999-1,
Group I Capitalized Interest Account" and "Bankers Trust Company, as Trustee of
the United PanAm Mortgage Loan Trust Series 1999-1, Group II Capitalized
Interest Account". Each of the Capitalized Interest Accounts shall be treated as
an "outside reserve fund" under applicable Treasury regulations and shall not be
part of the REMIC. Any investment earnings on the Capitalized Interest Accounts
shall be treated as owned by the Seller and will be taxable to the Seller.
The amount on deposit in the Pre-Funding Accounts and the Capitalized
Interest Accounts shall be invested in Permitted Investments in accordance with
the provisions of Section 3.12 hereof.
(b) On the Closing Date, the Seller shall cause to be deposited in the
Group I Pre-Funding Account and the Group II Pre-Funding Account the amounts of
$7,690,328.68 and $37,546,898.85 respectively, and shall cause to be deposited
in the Group I Capitalized Interest Account and the Group II Capitalized
Interest Account the amounts of $9,073.15, and $494,966.50, respectively.
(c) On each Additional Transfer Date, upon satisfaction of the conditions
set forth in Section 2.10 hereof, the Trustee shall withdraw from the related
Pre-Funding Accounts an amount equal to 100% of the aggregate of the Cut-off
Date Principal Balances of the Additional Mortgage Loans sold to the Trust for
inclusion in Group I or Group II, as the case may be, on such Additional
Transfer Date and pay such amount to or upon the order of the Seller.
(d) On the Business Day prior to the Distribution Date immediately
following the Due Period in which the Pre-Funding Period ends, the Trustee shall
(i) withdraw the Unutilized Pre-Funding Amount, if any, from each of the
Pre-Funding Accounts, (ii) promptly deposit each amount in the Distribution
Account and (iii) distribute each amount to the related Certificate Group on
such Distribution Date pursuant to Section 2.11 hereof.
The amount deposited in the Distribution Account pursuant to the preceding
paragraph shall be net of any Pre-Funding Earnings.
86
(e) On the Business Day prior to each Distribution Date, through the
Distribution Date immediately following the Due Period in which the Pre-Funding
Period ends, the Trustee shall transfer from each Pre-Funding Account to the
Distribution Account the Pre-Funding Earnings, if any, applicable to such
Distribution Date and shall distribute such amount to the related Certificate
Group on such Distribution Date pursuant to Section 4.01 hereof.
(f) On the Business Day prior to each Distribution Date, through the
Distribution Date immediately following the Due Period in which the Pre-Funding
Period ends, the Trustee shall transfer from each Capitalized Interest Account
to the Distribution Account the related Capitalized Interest Requirement, if
any, for such Distribution Date and shall distribute such amount to the related
Certificate Group on such Distribution Date pursuant to Section 4.01 hereof.
(g) All amounts, if any, remaining in the Capitalized Interest Accounts on
the Distribution Date following the Due Period in which the Pre-Funding Period
ends shall be transferred to the Seller on such date. ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
Each of the Class A, Class P, Class X and Class R Certificates shall be
substantially in the forms annexed hereto as exhibits, and shall, on original
issue, be executed, authenticated and delivered by the Trustee to or upon the
order of the Depositor concurrently with the sale and assignment to the Trustee
of the Trust Fund. Each Class of the Class A Certificates shall be initially
evidenced by one or more Certificates representing a Percentage Interest with a
minimum dollar denomination of $50,000 and integral dollar multiples of $1,000
in excess thereof, except that one Certificate of each such Class of
Certificates may be in a different denomination so that the sum of the
denominations of all outstanding Certificates of such Class shall equal the
Class Certificate Principal Balance of such Class on the Closing Date. The Class
P and Class R Certificates are issuable only in minimum Percentage Interests of
25%. The Class X Certificate is issuable only as a single certificate in a
Percentage Interest of 100%.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee substantially in the form provided for
herein, and such authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Class A Certificates
shall
87
be Book-Entry Certificates. The Class P, Class X and Class R Certificates shall
not be Book-Entry Certificates.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Class R Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates in authorized denominations and the same aggregate Percentage
Interests, upon surrender of the Certificates to be exchanged at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute on behalf of the Trust and authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange shall (if so required by the Trustee or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer
satisfactory to the Trustee and the Certificate Registrar duly executed by, the
Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of such Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall for all
purposes deal with the Depository as representative of the Certificate Owners of
the Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners; and (vii)
the direct participants of the Depository shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Depository, and the Depository may be treated by the Trustee and its
agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
88
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement, the terms of this
Agreement shall control.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Termination, the Certificate Owners of each Class of Class A Certificates
representing Percentage Interests of such Classes aggregating not less than 51%
advises the Trustee and Depository through the Financial Intermediaries and the
Depository Participants in writing that the continuation of a book-entry system
through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Certificate Owners is no longer
in the best interests of the Certificate Owners. Upon surrender to the
Certificate Registrar of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall, at the Depositor's expense, in the case of (ii) above, or the
Seller's expense, in the case of (i) and (iii) above, execute on behalf of the
Trust and authenticate the Definitive Certificates. Neither the Depositor nor
the Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates, the Trustee, the
Certificate Registrar, the Master Servicer, any Paying Agent and the Depositor
shall recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
(d) Except with respect to the initial transfer of the Class P, Class X
and Class R Certificates by the Depositor, no transfer, sale, pledge or other
disposition of any Class P, Class X or Class R Certificate shall be made unless
such disposition is exempt from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and any applicable state securities
laws or is made in accordance with the 1933 Act and laws. In the event of any
such transfer, (i) unless such transfer is made in reliance upon Rule 144A (as
evidenced by the investment letter delivered to the Trustee, in substantially
the form attached hereto as Exhibit K under the 1933 Act, the Trustee and the
Depositor shall require a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to the
Trustee and the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall not be an expense of the Trustee or the Depositor or (ii) the Trustee
shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit M) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit K) acceptable to and in form and substance reasonably satisfactory to
the Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which investment letter shall not be an expense
89
of the Trustee or the Depositor. The Holder of a Class P, Class X or Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of a Class P, Class X or Class R Certificate shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Depositor, (such requirement is satisfied
only by the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit J hereto, as appropriate), to the effect
that such transferee is not an employee benefit plan or arrangement subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code, nor a person
acting on behalf of any such plan or arrangement nor using the assets of any
such plan or arrangement to effect such transfer or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60") and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Class P, Class X or Class R Certificate presented for registration
in the name of an employee benefit plan subject to ERISA or a plan or
arrangement subject to Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan or arrangement or using such plan's or arrangement's
assets, an Opinion of Counsel satisfactory to the Trustee which Opinion of
Counsel shall not be an expense of either the Trustee or the Trust, addressed to
the Trustee, to the effect that the purchase or holding of such Class P, Class X
or Class R Certificate will not result in the assets of the Trust being deemed
to be "plan assets" and subject to the prohibited transaction provisions of
ERISA and the Code and will not subject the Trustee to any obligation in
addition to those expressly undertaken in this Agreement or to any liability.
For purposes of clause (i) of the preceding sentence, such representation shall
be deemed to have been made to the Trustee by the transferee's acceptance of a
Class P, Class X or Class R Certificate (or the acceptance by a Certificate
Owner of the beneficial interest in any such Class P, Class X or Class R
Certificate) unless the Trustee shall have received from the transferee an
alternative representation acceptable in form and substance to the Depositor.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Class P, Class X or Class R Certificate to or on behalf of an employee benefit
plan subject to ERISA or to the Code without the delivery to the Trustee of an
Opinion of Counsel satisfactory to the Trustee as described above shall be void
and of no effect.
Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
90
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit L hereto from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent for any Person who
is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Class R Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation of
the provisions of this Section, become a Holder of a Class R Certificate,
then the prior Holder of such Class R Certificate that is a Permitted
Transferee shall, upon discovery that the registration of transfer of such
Class R Certificate was not in fact permitted by this Section, be restored
to all rights as Holder thereof retroactive to the date of registration of
transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section or for making
any distributions due on such Class R Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions
of this Agreement so long as the Trustee received the documents specified
in clause (iii). The Trustee shall be entitled to recover from any Holder
of a Class R Certificate that was in fact not a Permitted Transferee at
the time such distributions were made all distributions made on such Class
R Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such Class
R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right but
not the obligation, without notice to the Holder of such Class R
Certificate or any other Person having an Ownership Interest therein, to
notify the Depositor to arrange for the sale of such Class R Certificate.
The proceeds of such sale, net of commissions (which may include
commissions payable to the Depositor or its affiliates in connection with
such sale), expenses and taxes due, if any, will be remitted by the
Trustee to the previous Holder of such Class R Certificate that is a
Permitted
91
Transferee, except that in the event that the Trustee determines that the
Holder of such Class R Certificate may be liable for any amount due under
this Section or any other provisions of this Agreement, the Trustee may
withhold a corresponding amount from such remittance as security for such
claim. The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee and it shall not be
liable to any Person having an Ownership Interest in a Class R Certificate
as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee upon receipt of reasonable
compensation will provide to the Internal Revenue Service, and to the
persons specified in Sections 860E(e)(3) and (6) of the Code, information
needed to compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations.
(vii) All rights of the Directing Holder under this Agreement shall
terminate immediately upon any transfer of the Class X Certificate to any
other Person, unless (i) the Special Servicer consents in writing to the
transfer of such rights and (ii) the Trustee is provided with a letter
from each Rating Agency to the effect that the transfer of the rights of
the Directing Holder to such transferee will not result in the
qualification, withdrawal or downgrade of the ratings then assigned to any
Class of Certificates.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
Transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause the REMIC hereunder to fail to qualify
as a REMIC.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Percentage Interest. Upon the issuance of any new
Certificate
92
under this Section, the Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee and the Certificate Registrar) in connection
therewith. Any duplicate Certificate issued pursuant to this Section, shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. Persons Deemed Owners.
The Master Servicer, the Depositor, the Trustee, the Certificate
Registrar, any Paying Agent and any agent of the Master Servicer, the Depositor,
the Certificate Insurer, the Certificate Registrar, any Paying Agent or the
Trustee may treat the Person, including a Depository, in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Master Servicer, the Trust, the Certificate Insurer,
the Trustee nor any agent of any of them shall be affected by notice to the
contrary.
Section 5.05. Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Certificateholders from
the Distribution Account pursuant to Section 4.01 and shall report the amounts
of such distributions to the Trustee. The duties of the Paying Agent may include
the obligation (i) to withdraw funds from the Collection Account pursuant to
Section 3.11(a) and for the purpose of making the distributions referred to
above and (ii) to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws of
the United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor and the Certificate Insurer.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee)
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent shall hold all sums, if any,
held by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree that it shall comply with all requirements of
the Code regarding the withholding of payments in respect of Federal income
taxes due from Certificate Owners and otherwise comply with the provisions of
this Agreement applicable to it.
ARTICLE VI
THE SELLER, THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Seller, the Master Servicer and the
Depositor.
The Seller and Master Servicer shall be liable in accordance herewith only
to the extent of the obligations specifically imposed upon and undertaken by the
Seller or Servicer, as the case
93
may be, herein. The Depositor shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Depositor.
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Seller, the Master Servicer or the Depositor.
Any entity into which the Seller, Master Servicer or Depositor may be
merged or consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Seller and Master Servicer or the Depositor shall be
a party, or any corporation succeeding to the business of the Seller and Master
Servicer or the Depositor, shall be the successor of the Seller and Master
Servicer or the Depositor, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor Servicer shall satisfy all the requirements of Section 7.02 with
respect to the qualifications of a successor Servicer.
Section 6.03. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Trust or the Certificateholders for any action taken or for refraining from the
taking of any action by the Master Servicer in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer or any such Person against any liability
which would otherwise be imposed by reason of its willful misfeasance, bad faith
or negligence in the performance of duties of the Master Servicer or by reason
of its failure to perform its obligations and duties hereunder; provided,
further, that this provision shall not be construed to entitle the Master
Servicer to indemnity in the event that amounts advanced by the Master Servicer
to retire any senior lien exceed Liquidation Proceeds (in excess of related
liquidation expenses) realized with respect to the related Mortgage Loan. The
preceding sentence shall not limit the obligations of the Master Servicer
pursuant to Section 8.05. The Master Servicer and any director or officer or
employee or agent of the Master Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Master Servicer and any director or officer
or employee or agent of the Master Servicer shall be indemnified by the Trust
and held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of its failure to perform its
obligations and duties hereunder. The Master Servicer may undertake any such
action which it may deem necessary or desirable in respect of this Agreement,
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, unless the Depositor or the Master
Servicer acts without the consent of the Certificate Insurer prior to an Insurer
Default or without the consent of Holders of Certificates entitled to at least
51% of the Voting Rights after an Insurer Default, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and the Master Servicer shall be
entitled to be reimbursed therefor only pursuant to Sections 4.01(a)(A)(viii)
and 4.01(a)(B)(viii). The Master Servicer's right to indemnity or
94
reimbursement pursuant to this Section shall be subject to the payment priority
described in Section 4.01(a) and shall survive any resignation or termination of
the Master Servicer pursuant to Section 6.04 or 7.01 with respect to any losses,
expenses, costs or liabilities arising prior to such resignation or termination
(or arising from events that occurred prior to such resignation or termination).
This paragraph shall apply to the Master Servicer solely in its capacity as
Servicer hereunder and in no other capacities.
Section 6.04. Servicer Not to Resign.
Subject to the provisions of Section 7.01 and Section 6.02, the Master
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of its obligations or duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it
or its subsidiaries or Affiliates, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer or its subsidiaries or Affiliates at the date of this Agreement or (ii)
upon satisfaction of the following conditions: (a) the Master Servicer has
proposed a successor servicer to the Trustee in writing and such proposed
successor servicer is acceptable to the Trustee and the Certificate Insurer; (b)
each Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor servicer stating that the proposed appointment of
such successor servicer as Servicer hereunder will not result in the reduction
or withdrawal of the then current rating of the Regular Certificates or the
ratings that are in effect without taking into account the Policy and (c) such
proposed successor servicer is acceptable to the Certificate Insurer, as
evidenced by a letter to the Trustee; provided, however, that no such
resignation by the Master Servicer shall become effective until such successor
servicer or, in the case of (i) above, the Trustee shall have assumed the Master
Servicer's responsibilities and obligations hereunder or the Trustee shall have
designated a successor servicer in accordance with Section 7.02. Any such
resignation shall not relieve the Master Servicer of responsibility for any of
the obligations specified in Sections 7.01 and 7.02 as obligations that survive
the resignation or termination of the Master Servicer. Any such determination
permitting the resignation of the Master Servicer pursuant to clause (i) above
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee.
Section 6.05. Delegation of Duties.
In the ordinary course of business, the Master Servicer, with the consent
of the Certificate Insurer at any time may delegate any of its duties hereunder
to any Person, including any of its Affiliates, who agrees to conduct such
duties in accordance with standards comparable to those set forth in Section
3.01. Such delegation shall not relieve the Master Servicer of its liabilities
and responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 6.04. The Master Servicer shall
provide the Trustee and the Certificate Insurer with 60 days prior written
notice prior to the delegation of any of its duties to any Person other than any
of the Master Servicer's Affiliates or their respective successors and assigns.
95
Section 6.06. Reserved.
Section 6.07. Inspection.
Each of the Seller and the Master Servicer shall afford the Certificate
Insurer, upon reasonable notice, during normal business hours, access to all
records maintained by the Seller and the Master Servicer, respectively, in
respect of its rights and obligations hereunder and access to officers of the
Master Servicer and the Seller responsible for such obligations. Upon request,
the Master Servicer and the Seller, respectively, shall furnish to the
Certificate Insurer its most recent publicly available financial statements and
such other information relating to its capacity to perform its obligations under
this Agreement.
ARTICLE VII
DEFAULT
Section 7.01. Servicer Events of Termination.
(a) If any one of the following events ("Servicer Events of Termination")
shall occur and be continuing:
(i) (A) The failure by the Master Servicer to make any Advance; or
(B) any other failure by the Master Servicer to deposit in the Collection
Account or Distribution Account any deposit required to be made under the
terms of this Agreement which continues unremedied for a period of one
Business Day after the date upon which written notice of such failure
shall have been given to the Master Servicer and the Certificate Insurer
by the Trustee or to the Trustee by the Certificate Insurer or by any
Holder of a Regular Certificate evidencing at least 25% of the Voting
Rights; or
(ii) The failure by the Master Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30
days, or the failure by the Master Servicer duly to observe or perform, in
any material respect, any other covenants, obligations or agreements of
the Master Servicer as set forth in this Agreement, which failure
continues unremedied for a period of 30 days, after the date (A) on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Master Servicer by the Trustee or to the Trustee by
the Certificate Insurer or by any Holder of a Regular Certificate
evidencing at least 25% of the Voting Rights or (B) actual knowledge of
such failure by a Servicing Officer of the Master Servicer; or
(iii) The entry against the Master Servicer of a decree or order by
a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership, readjustment
of debt, marshalling of assets and liabilities or similar proceedings, or
for the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 days;
or
96
(iv) The Master Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator or
similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to all or substantially all of its property; or
a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have remained
in force undischarged, unbonded or unstayed for a period of 60 days; or
the Master Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(v) The occurrence of an "event of default" under the Insurance
Agreement;
(b) then, and in each and every such case, so long as a Servicer Event of
Termination shall not have been remedied within the applicable grace period, (x)
with respect solely to clause (i)(A) above, if such Advance is not made by 2:00
P.M., New York time, on the Business Day immediately following the Master
Servicer Remittance Date, the Trustee shall at the direction of the Certificate
Insurer or may with the consent of the Certificate Insurer terminate all of the
rights and obligations of the Master Servicer under this Agreement and the
Trustee, or a successor servicer appointed in accordance with Section 7.02,
shall immediately make such Advance and assume, pursuant to Section 7.02, the
duties of a successor Servicer and (y) in the case of (i)(B), (ii), (iii), (iv)
and (v) above, the Trustee shall, at the direction of the Certificate Insurer or
the Holders of each Class of Regular Certificates evidencing Percentage
Interests aggregating not less than 51% (with the consent of the Certificate
Insurer), by notice then given in writing to the Master Servicer (and to the
Trustee if given by Holders of Certificates or the Certificate Insurer),
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement. Any such notice to the Master Servicer shall also be given
to each Rating Agency, the Depositor and the Seller. On or after the receipt by
the Master Servicer (and by the Trustee if such notice is given by the Holders
or the Certificate Insurer) of such written notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the
Certificates or the Mortgage Loans or otherwise, shall pass to and be vested in
the Trustee or another successor Master Servicer designated by the Certificate
Insurer pursuant to and under this Section; and, without limitation, and the
Trustee (or such other successor Master Servicer) is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents or otherwise. The Master
Servicer agrees to cooperate with the Trustee (or the applicable successor
Servicer) in effecting the termination of the responsibilities and rights of the
Master Servicer hereunder, including, without limitation, the delivery to the
Trustee (or such other successor Master Servicer) of all documents and records
requested by it to enable it to assume the Master Servicer's functions under
this Agreement within ten Business Days subsequent to such notice, the transfer
within one Business Day subsequent to such notice to the
97
Trustee (or the applicable successor Master Servicer) and the Certificate
Insurer for the administration by it of all cash amounts that shall at the time
be held by the Master Servicer and to be deposited by it in the Collection
Account, the Distribution Account, any REO Account or any Servicing Account or
that have been deposited by the Master Servicer in such accounts or thereafter
received by the Master Servicer with respect to the Mortgage Loans or any REO
Property received by the Master Servicer. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Mortgage Files to the successor Servicer and amending this Agreement to reflect
such succession as Master Servicer pursuant to this Section shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Trustee, the initial Master Servicer) upon presentation of reasonable
documentation of such costs and expenses.
(c) The Master Servicer hereby covenants and agrees to act as the Master
Servicer under this Agreement for an initial term, commencing on the Closing
Date and ending on June 30, 1999, which term may be extended by the Certificate
Insurer for successive terms of three calendar months thereafter, until the
termination of the Trust Fund pursuant to Article X. Each such notice of
extension (a "Servicer Extension Notice"), if any, shall be delivered by the
Certificate Insurer to the Trustee, the Depositor and the Master Servicer. The
Master Servicer hereby agrees that, upon its receipt of any such Servicer
Extension Notice, the Master Servicer shall become bound for the duration of the
term covered by such Servicer Extension Notice to continue as the Master
Servicer subject to and in accordance with the other provisions of this
Agreement. The Master Servicer agrees that if as of the fifteenth (15th) day
prior to the last day of any term of the Master Servicer the Master Servicer
shall not have received any Servicer Extension Notice from the Certificate
Insurer, the Master Servicer shall within five (5) days thereafter, give written
notice of such non-receipt to the Certificate Insurer, the Trustee and the
Depositor. The failure of the Certificate Insurer to deliver a Servicer
Extension Notice by the end of a calendar term shall result in the termination
of the Master Servicer.
Section 7.02. Trustee to Act; Appointment of Successor.
(a) From and after the date the Master Servicer (and the Trustee, if
notice is sent by the Holders) receives a notice of termination pursuant to
Section 7.01 or 6.04, or the Master Servicer fails to receive a Servicer
Extension Notice pursuant to Section 7.01(c), the Trustee (or such other
successor Master Servicer designated by the Certificate Insurer) shall be the
successor in all respects to the Master Servicer in its capacity as servicer
under this Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Master Servicer by the terms and provisions hereof arising
on and after its succession. As compensation therefor, the Trustee (or such
other successor Master Servicer) shall be entitled to such compensation as the
Master Servicer would have been entitled to hereunder if no such notice of
termination had been given (or in the case of a successor Master Servicer other
than the Trustee, such compensation as is agreed to by the Certificate Insurer
and such other successor Master Servicer). Notwithstanding the above, (i) if the
Trustee is unwilling to act as successor Master Servicer or (ii) if the Trustee
is legally unable so to act, the Trustee shall appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan servicer having a
net worth of not less than $50,000,000 as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities
98
of the Master Servicer hereunder; provided, that the appointment of any such
successor Master Servicer shall be acceptable to the Certificate Insurer, as
evidenced by the Certificate Insurer's prior written consent and, provided
further, will not result in the qualification, reduction or withdrawal of the
ratings assigned to the Certificates or the ratings that are in effect without
taking into account the Policy by the Rating Agencies as evidenced by a letter
to such effect from the Rating Agencies. Pending appointment of a successor to
the Master Servicer hereunder, unless the Trustee is prohibited by law from so
acting, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the successor shall be entitled
to receive compensation out of payments on Mortgage Loans in an amount equal to
the compensation which the Master Servicer would otherwise have received
pursuant to Section 3.18 (or such other compensation as the Certificate Insurer
and such successor shall agree). The appointment of a successor Servicer shall
not affect any liability of the predecessor Servicer which may have arisen under
this Agreement prior to its termination as Servicer to pay any deductible under
an insurance policy pursuant to Section 3.14 or to indemnify the Trustee
pursuant to Section 6.26), nor shall any successor Master Servicer be liable for
any acts or omissions of the predecessor Master Servicer or for any breach by
such Master Servicer of any of its representations or warranties contained
herein or in any related document or agreement. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor, including the Trustee, to the Master Servicer as master
servicer shall during the term of its service as master servicer continue to
service and administer the Mortgage Loans for the benefit of Certificateholders
and the Certificate Insurer, and maintain in force a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
Master Servicer hereunder and a Fidelity Bond in respect of its officers,
employees and agents to the same extent as the Master Servicer is so required
pursuant to Section 3.14.
Section 7.03. Waiver of Defaults.
The Certificate Insurer or the Majority Certificateholders may with the
consent of the Certificate Insurer, on behalf of all Certificateholders, waive
any events permitting removal of the Master Servicer as servicer pursuant to
this Article VII, provided, however, that the Majority Certificateholders may
not waive a default in making a required distribution on a Certificate without
the consent of the Holder of such Certificate. Upon any waiver of a past
default, such default shall cease to exist and any Servicer Event of Termination
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Trustee to the Rating Agencies.
Section 7.04. Notification to Certificateholders.
(a) Upon any termination or appointment of a successor the Master Servicer
pursuant to this Article VII or Section 6.04, the Trustee shall give prompt
written notice thereof to the Certificate Insurer, the Certificateholders at
their respective addresses appearing in the Certificate Register and each Rating
Agency.
99
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute a
Servicer Event of Termination for five Business Days after a Responsible Officer
of the Trustee becomes aware of the occurrence of such an event, the Trustee
shall transmit by mail to all Certificateholders notice of such occurrence
unless such default or Servicer Event of Termination shall have been waived or
cured. Such notice shall be given to the Certificate Insurer promptly after any
such occurrence.
Section 7.05. Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination of the
Master Servicer hereunder, any liabilities of the Master Servicer which accrued
prior to such termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of Termination
and after the curing of all Servicer Events of Termination which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination has
occurred (which has not been cured) of which a Responsible Officer has
knowledge, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
Trustee will not be responsible for the accuracy or content of any such
resolutions, certificates, statements, opinions, reports, documents or other
instruments. If any such instrument is found not to conform to the requirements
of this Agreement in a material manner the Trustee shall take such action as it
deems appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's satisfaction, the Trustee will provide notice thereof
to the Certificate Insurer and will, at the expense of the Seller, which expense
shall be reasonable given the scope and nature of the required action, take such
further action as directed by the Certificate Insurer.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(i) prior to the occurrence of a Servicer Event of Termination, and
after the curing of all such Servicer Events of Termination which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and
100
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or in accordance
with the direction of the Majority Certificateholders (with the consent of
the Certificate Insurer, so long as no Insurer Default exists) relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising or omitting to exercise any trust
or power conferred upon the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure
by the Master Servicer to comply with the obligations of the Master
Servicer referred to in clauses (i) and (ii) of Section 7.01(a) unless a
Responsible Officer of the Trustee at the Corporate Trust Office obtains
actual knowledge of such failure or the Trustee receives written notice of
such failure from the Master Servicer, the Certificate Insurer, or the
Majority Certificateholders.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine
and to have been signed or presented by the proper party or parties, and
the manner of obtaining consents and of evidencing the authorization of
the execution thereof by
101
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe;
(ii) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders or the
Certificate Insurer, pursuant to the provisions of this Agreement, unless
such Certificateholders and the Certificate Insurer shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; the right of the
Trustee to perform any discretionary act enumerated in this Agreement
shall not be construed as a duty, and the Trustee shall not be answerable
for other than its negligence or willful misconduct in the performance of
any such act;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of a Servicer Event of Termination and
after the curing of all Servicer Events of Termination which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or documents, unless requested in writing to do so by
the Certificate Insurer or the Majority Certificateholder (with the
consent of the Certificate Insurer, so long as no Insurer Default exists
and is continuing); provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such cost, expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer or, if paid by the
Trustee, shall be reimbursed by the Master Servicer upon demand. Nothing
in this clause (v) shall derogate from the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability
and makes no representation as to any acts or omissions hereunder of the
Master Servicer until such time as the Trustee may be required to act as
Master Servicer pursuant to Section 7.02 and thereupon only for the acts
or omissions of the Trustee as successor Servicer;
(vii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian; and
102
(viii) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Master Servicer, or for the use or application of any
funds paid to the Master Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Collection Account by the Master Servicer. The Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 7.02); the validity of the assignment of
any Mortgage Loan to the Trustee or of any intervening assignment; the
completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 7.02); the compliance by the Depositor, the Seller
or the Master Servicer with any warranty or representation made under this
Agreement or in any related document or the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery of
any non-compliance therewith or any breach thereof; any investment of monies by
or at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust
property that it may hold in its individual capacity; the acts or omissions of
any of the Master Servicer (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 7.02), any Sub-Servicer or any
Mortgagor; any action of the Master Servicer (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 7.02), or any
Sub-Servicer taken in the name of the Trustee; the failure of the Master
Servicer or any Sub-Servicer to act or perform any duties required of it as
agent of the Trustee hereunder; or any action by the Trustee taken at the
instruction of the Master Servicer (other than if the Trustee shall assume the
duties of the Master Servicer pursuant to Section 7.02); provided, however, that
the foregoing shall not relieve the Trustee of its obligation to perform its
duties under this Agreement, including, without limitation, the Trustee's duty
to review the Mortgage Files pursuant to Section 2.01. The Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder (unless the Trustee shall have
become the successor Servicer).
103
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights as it would have if it were not
Trustee and may transact any banking and trust business with the Seller, the
Master Servicer, the Depositor or their Affiliates.
Section 8.05. Trustee's Fees and Expenses.
The Trustee shall be entitled to the Trustee's Fee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by the Trustee in the exercise and
performance of any of the powers and duties hereunder. The Trustee shall
withdraw from the Distribution Account on each Distribution Date and pay to
itself the Trustee's Fee. The Seller will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Agreement
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or which
is the responsibility of Certificateholders or the Trustee hereunder. In
addition, the Seller covenants and agrees to indemnify the Trustee and its
officers, directors, employees and agents from, and hold it harmless against,
any and all losses, liabilities, damages, claims or expenses incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence of the Trustee in the performance of its
duties hereunder or by reason of the Trustee's reckless disregard of obligations
and duties hereunder. This section shall survive termination of this Agreement
or the resignation or removal of any Trustee hereunder.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be an entity duly organized and
validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of Baa3 by ▇▇▇▇▇'▇ and a short-term rating of at least A-1 by S&P,
and subject to supervision or examination by federal or state authority. If such
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section 8.06, the combined capital and surplus of such
entity shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time such
Trustee is appointed Trustee to the effect that the Trust will not be a taxable
entity under the laws of such state. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 8.06, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07.
Section 8.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer, the Certificate Insurer and
104
each Rating Agency. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor Trustee (approved in writing by the
Certificate Insurer, so long as such approval shall not be unreasonably
withheld) by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the successor
Trustee. If no successor Trustee shall have been so appointed and having
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Certificate Insurer of the Depositor, with the consent of the
Certificate Insurer (so long as no Insurer Default exists) or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor, the Certificate Insurer or the Master Servicer
may remove the Trustee. If the Depositor, Certificate Insurer or the Master
Servicer removes the Trustee under the authority of the immediately preceding
sentence, the Depositor shall promptly appoint a successor Trustee (approved in
writing by the Certificate Insurer, so long as such approval is not unreasonably
withheld) by written instrument, in duplicate, one copy of which instrument
shall be delivered to the Trustee so removed and one copy to the successor
trustee.
The Majority Certificateholders may, with the prior written consent of the
Certificate Insurer (so long as no Insurer Default exists and is continuing), at
any time remove the Trustee by written instrument or instruments delivered to
the Master Servicer, the Depositor and the Trustee; the Depositor shall
thereupon use its best efforts to appoint a successor trustee in accordance with
this Section.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 8.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 8.08.
Notwithstanding anything to the contrary contained herein, so long as no
Insurer Default exists, the Trustee may not be removed by the Depositor or the
Certificateholders without the prior written consent of the Certificate Insurer,
which consent shall not be unreasonably withheld.
Section 8.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor, the Certificate Insurer, the Master
Servicer and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective, and such successor Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee. The Depositor, the Master Servicer and the
predecessor Trustee shall execute and deliver such
105
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
8.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of the Regular Certificates
by either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 8.08, the successor Trustee shall mail notice of the appointment of a
successor Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency.
Notwithstanding anything to the contrary contained herein, so long as no
Insurer Default exists, the appointment of any successor Trustee pursuant to any
provision of this Agreement will be subject to the prior written consent of the
Certificate Insurer, which consent shall not be unreasonably withheld.
Section 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such entity shall be eligible under the provisions of Section 8.06 and
8.08, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Mortgaged Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Certificate Insurer to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Master Servicer and the Trustee
may consider necessary or desirable. Any such co-trustee or separate trustee
shall be subject to the written approval of the Master Servicer and the
Certificate Insurer (so long as no Insurer Default exists and is continuing). If
the Master Servicer and the Certificate Insurer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case a Servicer Event of Termination shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.06, and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required
106
under Section 8.08. The Master Servicer shall be responsible for the fees of any
co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Master Servicer and the Trustee, with the consent of the
Certificate Insurer (so long as no Insurer Default exists and is
continuing), acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee except that following the
occurrence of a Servicer Event of Termination, the Trustee acting alone
may accept the resignation or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor, the Certificate Insurer and the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
107
Section 8.11. Limitation of Liability.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by the Trust Agreement. Each of the
undertakings and agreements made on the part of the Trustee in the Certificates
is made and intended not as a personal undertaking or agreement by the Trustee
but is made and intended for the purpose of binding only the Trust.
Section 8.12. Trustee May Enforce Claims Without Possession of
Certificates.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit or the Certificateholders and the
Certificate Insurer in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Master
Servicer, the Certificate Insurer and each Certificateholder upon reasonable
notice during normal business hours, access to all records maintained by the
Trustee in respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties. Upon request, the Trustee shall furnish
the Depositor, the Master Servicer, the Certificate Insurer and any requesting
Certificateholder with its most recent financial statements. The Trustee shall
cooperate fully with the Seller, the Master Servicer, the Depositor, the
Certificate Insurer and such Certificateholder and shall make available to the
Seller, the Master Servicer, the Depositor, the Certificate Insurer and such
Certificateholder for review and copying such books, documents or records as may
be requested with respect to the Trustee's duties hereunder. The Seller, the
Depositor, the Master Servicer, the Certificate Insurer and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 8.13. Suits for Enforcement.
In case a Servicer Event of Termination or other default by the Master
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the Certificate Insurer, or may, with the consent of
the Certificate Insurer, may proceed to protect and enforce its rights and the
rights of the Certificateholders or the Certificate Insurer under this Agreement
by a suit, action or proceeding in equity or at law or otherwise, whether for
the specific performance of any covenant or agreement contained in this
Agreement or in aid of the execution of any power granted in this Agreement or
for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, and subject to the foregoing, shall deem most
effectual to protect and enforce any of the rights of the Trustee, the
Certificate Insurer and the Certificateholders.
108
Section 8.14. Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee post a bond or other surety with any
court, agency or body whatsoever.
Section 8.15. Waiver of Inventory, Accounting and Appraisal Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01. REMIC Administration.
(a) REMIC elections as set forth in the Preliminary Statement shall be
made by the Trustee on Form 1066 or other appropriate federal tax or information
return for the taxable year ending on the last day of the calendar year in which
the Certificates are issued. The regular interests and residual interest in the
REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of the
REMIC within the meaning of section 86OG(a)(9) of the Code.
(c) The Master Servicer shall pay any and all tax related expenses (not
including taxes) of the REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to the REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Master Servicer in fulfilling its duties hereunder (including
its duties as tax return preparer). The Master Servicer shall be entitled to
reimbursement of expenses to the extent provided in clause (i) above from the
Collection Account.
(d) The Trustee shall prepare, and the Trustee shall sign and file, all of
the REMIC's federal and state tax and information returns as the REMIC's direct
representative. The expenses of preparing and filing such returns shall be borne
by the Trustee.
(e) The Holder of the Class R Certificate at any time holding the largest
Percentage Interest thereof shall be the "tax matters person" as defined in the
REMIC Provisions (the "Tax Matters Person") with respect to the REMIC and shall
act as Tax Matters Person for the REMIC. The Trustee, as agent for the Tax
Matters Person, shall perform on behalf of the REMIC all reporting and other tax
compliance duties that are the responsibility of the REMIC under the
109
Code, the REMIC Provisions, or other compliance guidance issued by the Internal
Revenue Service or any state or local taxing authority. Among its other duties,
if required by the Code, the REMIC Provisions, or other such guidance, the
Trustee, as agent for the Tax Matters Person, shall provide (i) to the Treasury
or other governmental authority such information as is necessary for the
application of any tax relating to the transfer of a Residual Certificate to any
disqualified person or organization and (ii) to the Certificateholders such
information or reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Master Servicer and the Holders of Certificates shall
take any action or cause the REMIC to take any action necessary to create or
maintain the status of the REMIC as a REMIC under the REMIC Provisions and shall
assist each other as necessary to create or maintain such status. Neither the
Trustee, the Master Servicer nor the Holder of any Residual Certificate shall
take any action, cause the REMIC to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of the REMIC as a REMIC
or (ii) result in the imposition of a tax upon the REMIC (including but not
limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
and the Master Servicer have received an Opinion of Counsel (at the expense of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such status or result in the imposition of such a tax.
In addition, prior to taking any action with respect to the REMIC or the assets
therein, or causing the REMIC to take any action, which is not expressly
permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee and the Master Servicer, or their
respective designees, in writing, with respect to whether such action could
cause an Adverse REMIC Event to occur with respect to the REMIC, and no such
Person shall take any such action or cause the REMIC to take any such action as
to which the Trustee or the Master Servicer has advised it in writing that an
Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the REMIC by federal or state governmental authorities. To the
extent that such Trust taxes are not paid by a Residual Certificateholder, the
Trustee shall pay any remaining REMIC taxes out of current or future amounts
otherwise distributable to the Holder of the Residual Certificate in the REMIC
or, if no such amounts are available, out of other amounts held in the
Distribution Account, and shall reduce amounts otherwise payable to Holders of
regular interests in the REMIC, as the case may be.
(h) The Trustee, as agent for the Tax Matters Person, shall, for federal
income tax purposes, maintain books and records with respect to the REMIC on a
calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to the REMIC,
except as expressly provided in this Agreement with respect to eligible
substitute mortgage loans.
(j) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which the REMIC will receive a fee or other compensation for
services.
110
(k) On or before April 15 of each calendar year beginning in 2000, the
Master Servicer shall deliver to the Trustee and each Rating Agency an Officer's
Certificate stating the Master Servicer's compliance with the provisions of this
Section 9.01.
Section 9.02. Prohibited Transactions and Activities.
Neither the Depositor, the Master Servicer nor the Trustee shall sell,
dispose of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of the REMIC pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for the REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to the REMIC after
the Closing Date, unless it has received an Opinion of Counsel (at the expense
of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of the REMIC as a REMIC or of the interests therein other
than the Residual Certificates as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause the REMIC to be
subject to a tax on prohibited transactions or prohibited contributions pursuant
to the REMIC Provisions.
Section 9.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status. In the event that the REMIC fails to qualify as a REMIC, loses its
status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Master Servicer of its duties and
obligations set forth herein, the Master Servicer shall indemnify the Holder of
the related Residual Certificate against any and all losses, claims, damages,
liabilities or expenses ("Losses") resulting from such negligence; provided,
however, that the Master Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of such Residual Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Residual
Certificate on which the Master Servicer has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the Holder of such
Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Master Servicer
have any liability (1) for any action or omission that is taken in accordance
with and in compliance with the express terms of, or which is expressly
permitted by the terms of, this Agreement, (2) for any Losses other than arising
out of a negligent performance by the Master Servicer of its duties and
obligations set forth herein, and (3) for any special or consequential damages
to Certificateholders (in addition to payment of principal and interest on the
Certificates).
Section 9.04. REO Property.
(a) Notwithstanding any other provision of this Agreement, the Master
Servicer, acting on behalf of the Trustee hereunder, shall not, and shall, to
the extent provided in the applicable Servicing Agreement, not permit any
Subservicer to, rent, lease, or otherwise earn income on behalf of any REMIC
with respect to any REO Property which might cause such REO Property to fail to
qualify as "foreclosure" property within the meaning of section 860G(a)(8) of
the Code
111
or result in the receipt by any REMIC of any "income from non-permitted assets"
within the meaning of section 860F(a)(2) of the Code or any "net income from
foreclosure property" which is subject to tax under the REMIC Provisions unless
the Master Servicer has advised, or has caused the applicable Servicer to
advise, the Trustee in writing to the effect that, under the REMIC Provisions,
such action would not adversely affect the status of any REMIC as a REMIC and
any income generated for such REMIC by the REO Property would not result in the
imposition of a tax upon such REMIC.
(b) The Master Servicer shall make, or shall cause the Special Servicer to
make, reasonable efforts to sell any REO Property for its fair market value. In
any event, however, the Master Servicer shall, or shall cause the Special
Servicer to, dispose of any REO Property within three years of its acquisition
by the Trust Fund unless the Master Servicer or Special Servicer, as applicable,
on behalf of the Trust Fund has received a grant of extension from the Internal
Revenue Service to the effect that, under the REMIC Provisions and any relevant
proposed legislation and under applicable state law, each REMIC may hold REO
Property for a longer period without adversely affecting the REMIC status of
each REMIC or causing the imposition of a Federal or state tax upon each REMIC.
If the Master Servicer has received such an extension, then the Master Servicer
shall, or shall cause the Special Servicer to, continue to attempt to sell the
REO Property for its fair market value for such period longer than three years
as such extension permits (the "Extended Period"). If the Master Servicer has
not received such an extension and the Master Servicer or the Special Servicer
is unable to sell the REO Property within 33 months after its acquisition by the
Trust Fund or if the Master Servicer has received such an extension, and the
Master Servicer is unable to sell the REO Property within the period ending
three months before the close of the Extended Period, the Master Servicer shall,
or shall cause the Special Servicer to, before the end of the three year period
or the Extended Period, as applicable, (i) purchase such REO Property at a price
equal to the REO Property's fair market value or (ii) auction the REO Property
to the highest bidder (which may be the Master Servicer or the Special Servicer)
in an auction reasonably designed to produce a fair price prior to the
expiration of the three-year period or the Extended Period, as the case may be.
ARTICLE X
TERMINATION
Section 10.01. Termination.
(a) The respective obligations and responsibilities of the Seller, the
Master Servicer, the Depositor and the Trustee created hereby (other than the
obligation of the Trustee to make certain payments to Certificateholders after
the final Distribution Date and the obligation of the Master Servicer to send
certain notices as hereinafter set forth) shall terminate upon notice to the
Trustee upon the later of (A) the payment in full of all amounts owing to the
Certificate Insurer unless the Certificate Insurer shall otherwise consent and
(B) the earliest of (i) the Distribution Date on which the Certificate Principal
Balance of each Class of Class A Certificates has been reduced to zero, (ii) the
final payment or other liquidation of the last Mortgage Loan in the Trust, (iii)
the optional purchase by the Master Servicer or the Certificate Insurer of the
Mortgage Loans as described below and (iv) the Distribution Date in April 2029.
Notwithstanding the foregoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years
112
from the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the
late ambassador of the United States to the Court of St. James's, living on the
date hereof.
The Master Servicer or, if such option is not exercised by the Master
Servicer, the Certificate Insurer may, at its option, terminate this Agreement
on any date on which the aggregate of the Principal Balances of the Mortgage
Loans on such date is equal to or less than 10% of the aggregate of the Cut-off
Date Principal Balance of the Mortgage Loans, by purchasing, on the next
succeeding Distribution Date, all of the outstanding Mortgage Loans and REO
Properties at a price equal to the sum of the outstanding Stated Principal
Balance of the Mortgage Loans and accrued and unpaid interest thereon at the
weighted average of the Mortgage Rates through the end of the Due Period
preceding the final Distribution Date plus unreimbursed Servicing Advances; any
amount owed the Certificate Insurer under the Insurance Agreement, any unpaid
Servicing Fees allocable to such Mortgage Loans and REO Properties, and any
accrued and unpaid Group II Available Funds Cap Carryover Amount (the
"Termination Price").
In connection with any such purchase pursuant to the preceding paragraph,
the Master Servicer shall deposit in the Distribution Account all amounts then
on deposit in the Collection Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the Distribution
Account on the Determination Date before such Distribution Date of the
Termination Price and the delivery of an opinion of counsel in form and
substance acceptable to the Certificate Insurer that such termination is a
"Qualified Transaction" under Section 860F of the Code. The Master Servicer
shall indemnify the Certificate Insurer for any claims under the Policy due to
the Master Servicer's exercise of such option.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee upon the Trustee receiving notice of such date from the Master Servicer,
by letter to the Certificate Insurer and the Certificateholders mailed not
earlier than the 15th day and not later than the 25th day of the month
immediately preceding the month of such final distribution specifying (1) the
Distribution Date upon which final distribution of the Certificates will be made
upon presentation and surrender of such Certificates at the office or agency of
the Trustee therein designated, (2) the amount of any such final distribution
and (3) that the Record Date otherwise applicable to such Distribution Date is
not applicable, distributions being made only upon presentation and surrender of
the Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Holders of the Certificates on the Distribution
Date for such final distribution, in proportion to the Percentage Interests of
their respective Class and to the extent that funds are available for such
purpose, an amount equal to the amount required to be distributed to such
Holders in accordance with the provisions of Section 4.01 for such Distribution
Date. On the final Distribution Date, the Trustee will withdraw from the
Distribution Account and remit to the Certificate Insurer the lesser of (x) the
amount available for distribution on such final
113
Distribution Date, net of any portion thereof necessary to pay holders of Class
A Certificates pursuant to Section 4.01 and due and unpaid Monthly Advances and
Servicing Fees, (y) the unpaid amounts due and owing to the Certificate Insurer
pursuant to Section 4.01 and the Insurance Agreement.
(d) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate Servicing Account for
the benefit of such Certificateholders, and the Master Servicer (if the Master
Servicer has exercised its right to purchase the Mortgage Loans) or the Trustee
(in any other case) shall give a second written notice to the remaining
Certificateholders, to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within nine months after the
second notice all the Certificates shall not have been surrendered for
cancellation, the Class R Certificateholder shall be entitled to all unclaimed
funds and other assets which remain subject hereto, and the Trustee upon
transfer of such funds shall be discharged of any responsibility for such funds,
and the Certificateholders shall look to the Class R Certificateholder for
payment.
Section 10.02. Additional Termination Requirements.
(a) In the event that the Certificate Insurer or the Master Servicer
exercises its purchase option as provided in Section 10.01, the Trust shall be
terminated in accordance with the following additional requirements, unless the
Trustee shall have been furnished with an Opinion of Counsel to the effect that
the failure of the Trust to comply with the requirements of this Section will
not (i) result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or (ii) cause the REMIC
constituting part of the Trust Fund to fail to qualify as a REMIC at any time
that any Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the Trustee
shall adopt and sign a plan of complete liquidation of the REMIC meeting
the requirements of a "Qualified Liquidation" under Section 860F of the
Code and any regulations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Majority Class R
Certificateholder or the Master Servicer, as applicable, for cash pursuant
to the terms of the plan of complete liquidation; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Holders of each of the Class A
Certificates, the related Class Certificate Principal Balance, plus one
month's interest thereon at the applicable Pass-Through Rate and (B) to
the Certificate Insurer, all amounts owing to the Certificate Insurer
under this Agreement and the Insurance Agreement and the Trust shall
terminate at such time.
(b) By their acceptance of Certificates, the Holders thereof hereby agree
to appoint the Trustee as their attorney in fact to: (i) adopt such a plan of
complete liquidation (and the
114
Certificateholders hereby appoint the Trustee as their attorney in fact to sign
such plan) as appropriate or upon the written request of the Certificate Insurer
and (ii) to take such other action in connection therewith as may be reasonably
required to carry out such plan of complete liquidation all in accordance with
the terms hereof.
ARTICLE XI
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 11.01. Rights of the Certificate Insurer To Exercise Rights of
Class A Certificateholders.
Each of the Depositor, the Master Servicer, the Trustee, and, by accepting
its Certificate, each Class A Certificateholder, agrees that unless an Insurer
Default has occurred and is continuing, the Certificate Insurer shall have the
right to exercise all rights of the Class A Certificateholders under this
Agreement (except as provided in clause (i) of the second paragraph of Section
12.01) without any further consent of the Class A Certificateholders, including,
without limitation:
(a) the right to require the Seller to repurchase or substitute for
Mortgage Loans pursuant to Section 2.03;
(b) the right to give notices of breach or to terminate the rights and
obligations of the Master Servicer pursuant to Section 7.01;
(c) the right to direct the actions of the Trustee during the continuance
of a Master Servicer Event of Termination pursuant to Sections 7.01 and 7.02;
(d) the right to consent to or direct any waivers of Master Servicer
Events of Termination pursuant to Section 7.03;
(e) the right to direct the Trustee to investigate certain matters
pursuant to Section 8.02(a)(v); and
(f) the right to remove the Trustee pursuant to Section 8.07 hereof.
In addition, each Class A Certificateholder agrees that, unless an Insurer
Default has occurred and is continuing, the rights specifically set forth above
may be exercised by the Class A Certificateholders only with the prior written
consent of the Certificate Insurer.
Section 11.02. Trustee To Act Solely with Consent of the Certificate
Insurer.
Unless an Insurer Default has occurred and is continuing, the Trustee
shall not:
(a) agree to any amendment pursuant to Section 12.01; or
(b) undertake any litigation pursuant to Section 8.02(a)(iii);
115
without the prior written consent of the Certificate Insurer which consent shall
not be unreasonably withheld.
Section 11.03. Trust Fund and Accounts Held for Benefit of the Certificate
Insurer.
The Trustee shall hold the Trust Fund and the Mortgage Files for the
benefit of the Certificateholders and the Certificate Insurer and all references
in this Agreement (including, without limitation, in Sections 2.01 and 2.02) and
in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer. The Trustee shall cooperate in all
reasonable respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement and the Certificates.
The Master Servicer hereby acknowledges and agrees that it shall service
and administer the Mortgage Loans and any REO Properties, and shall maintain the
Accounts, for the benefit of the Certificateholders and for the benefit of the
Certificate Insurer, and all references in this Agreement (including, without
limitation, in Section 3.01) to the benefit of or actions on behalf of the
Certificateholders shall be deemed to include the Certificate Insurer. Unless an
Insurer Default has occurred and is continuing, the Master Servicer shall not
terminate any sub-servicing agreements without the prior consent of the
Certificate Insurer. Unless an Insurer Default has occurred and is continuing,
neither the Master Servicer nor the Depositor shall undertake any litigation
pursuant to Section 6.03 (other than litigation to enforce their respective
rights hereunder) without the prior consent of the Certificate Insurer.
Section 11.04. Claims Upon the Policy; Policy Payments Account.
(a) If, by the Close of Business on the third Business Day prior to a
Distribution Date, the Trustee determines that a Deficiency Amount for any
Distribution Date is greater than zero, then the Trustee shall give notice to
the Certificate Insurer by telephone or telecopy of the amount of such
Deficiency Amount. Such notice of such Deficiency Amount shall be confirmed in
writing in the form set forth as Exhibit A to the Endorsement of the Policy, to
the Certificate Insurer and the Fiscal Agent (as defined in the Policy), if any,
at or before 12:00 noon New York time on the second Business Day prior to such
Distribution Date. Following Receipt (as defined in the Policy) by the
Certificate Insurer of such notice in such form, the Certificate Insurer or the
Fiscal Agent will pay any amount payable under the Policy on the later to occur
of (i) 12:00 noon New York time on the second Business Day following such
receipt and (ii) 12:00 noon New York time on the Distribution Date to which such
deficiency relates, as provided in the Endorsement to the Policy.
(b) The Trustee shall establish a separate special purpose trust account
for the benefit of Holders of the Class A Certificates and the Certificate
Insurer referred to herein as the "Policy Payments Account" over which the
Trustee shall have exclusive control and sole right of withdrawal. The Trustee
shall deposit any amount paid under the Policy in the Policy Payments Account
and distribute such amount only for purposes of payment to Holders of Class A
Certificates of the Insured Payment for which a claim was made, and such amount
may not be applied to satisfy any costs, expenses or liabilities of the Master
Servicer, the Trustee or the Trust Fund. Amounts paid under the Policy shall be
transferred to the Distribution Account in
116
accordance with the next succeeding paragraph and disbursed by the Trustee to
Holders of Class A Certificates in accordance with Section 4.01(c) or Section
10.01, as applicable. It shall not be necessary for such payments to be made by
checks or wire transfers separate from the checks or wire transfers used to pay
the Insured Payment with other funds available to make such payment. However,
the amount of any payment of principal of or interest on the Class A
Certificates to be paid from funds transferred from the Policy Payments Account
shall be noted as provided in paragraph (c) below in the Certificate Register
and in the statement to be furnished to Holders of the Class A Certificates
pursuant to Section 4.02. Funds held in the Policy Payments Account shall not be
invested.
On any Distribution Date with respect to which a claim has been made under
the Policy, the amount of any funds received by the Trustee as a result of any
claim under the Policy, to the extent required to make the Insured Payment on
such Distribution Date, shall be withdrawn from the Policy Payments Account and
deposited in the Distribution Account and applied by the Trustee, together with
the other funds to be withdrawn from the Distribution Account pursuant to
Section 4.01(c) or Section 10.01, as applicable, directly to the payment in full
of the Insured Payment due on the Class A Certificates. Funds received by the
Trustee as a result of any claim under the Policy shall be deposited by the
Trustee in the Policy Payments Account and used solely for payment to the
Holders of the Class A Certificates and may not be applied to satisfy any costs,
expenses or liabilities of the Master Servicer, the Trustee, or the Trust Fund.
Any funds remaining in the Policy Payments Account on the first Business Day
following a Distribution Date shall be remitted to the Certificate Insurer,
pursuant to the instructions of the Certificate Insurer, by the end of such
Business Day.
(c) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Class A Certificate from moneys
received under the Policy. The Certificate Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and Fiscal
Agent of any proceeding or the institution of any action, of which a Responsible
Officer of the Trustee has actual knowledge seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any Insured Payment made with respect to
the Class A Certificates. Each Holder of the Class A Certificates, by its
purchase of such Certificates, the Master Servicer, and the Trustee hereby agree
that the Certificate Insurer (so long as no Insurer Default has occurred and is
continuing) may at any time during the continuation of any proceeding relating
to a Preference Claim direct all matters relating to such Preference Claim,
including, without limitation, (i) the direction of any appeal of any order
relating to such Preference Claim and (ii) the posting of any surety,
supersedeas or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Certificate Insurer shall be subrogated to the
rights of the Master Servicer, the Trustee, and each Holder of the Class A
Certificates in the conduct of any such Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim.
117
Section 11.05. Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect
to principal of or interest on any of the Class A Certificates which is made
with moneys received pursuant to the terms of the Policy shall not be considered
payment of such Class A Certificates from the Trust Fund and shall not result in
the payment of or the provision for the payment of the principal of or interest
on such Certificates within the meaning of Section 4.01. The Depositor, the
Master Servicer and the Trustee acknowledge, and each Holder by its acceptance
of a Class A Certificate agrees, that without the need for any further action on
the part of the Certificate Insurer, the Depositor, the Master Servicer or the
Trustee (a) to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on any Class A Certificates
to the Holders of such Certificates, the Certificate Insurer will be fully
subrogated to the rights of such Holders to receive such principal and interest
from the Trust Fund and (b) the Certificate Insurer shall be paid such principal
and interest but only from the sources and in the manner provided herein for the
payment of such principal and interest.
The Trustee and the Master Servicer shall cooperate in all respects with
any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement
without limiting the rights or affecting the interests of the Holders as
otherwise set forth herein.
Section 11.06. Notices to the Certificate Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Rating Agencies or
any of the Certificateholders shall also be sent to the Certificate Insurer.
Section 11.07. Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 11.08. Trustee to Hold the Policy.
The Trustee will hold the Policy in trust as agent for the Holders of the
Class A Certificates for the purpose of making claims thereon and distributing
the proceeds thereof. Upon the later of (i) the date upon which the aggregate
Certificate Principal Balance of the Class A Certificates has been reduced to
zero and all Insured Payments have been made and (ii) the date the Term of the
Policy (as defined in the Policy) ends, the Trustee, shall surrender the Policy
to the Certificate Insurer for cancellation. Each Holder of Class A
Certificates, by accepting its Certificates, appoints the Trustee as
attorney-in-fact for the purpose of making claims on the Policy.
118
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Amendment.
This Agreement may be amended from time to time by Seller, the Depositor,
the Master Servicer, the Special Servicer and the Trustee; and without the
consent of the Certificateholders, but only with the consent of the Certificate
Insurer, (i) to cure any ambiguity, (ii) to correct or supplement any provisions
herein which may be defective or inconsistent with any other provisions herein
or (iii) to make any other provisions with respect to matters or questions
arising under this Agreement or the Policy, as the case may be, which shall not
be inconsistent with the provisions of this Agreement; provided, however, that
any such action listed in clause (i) through (iii) above shall be deemed not to
adversely affect in any respect the interests of any Certificateholder, if
evidenced by (i) written notice to the Depositor, the Master Servicer and the
Trustee from the Rating Agencies that such action will not result in the
reduction or withdrawal of the rating of any outstanding Class of Certificates
with respect to which it is a Rating Agency or (ii) an Opinion of Counsel
delivered to the Master Servicer and the Trustee.
In addition, this Agreement may be amended from time to time by Seller,
the Depositor, the Master Servicer, the Special Servicer and the Trustee with
the consent of the Certificate Insurer with the consent of the Majority
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates or distributions
or payments under the Policy which are required to be made on any Certificate
without the consent of the Holder of such Certificate, (y) adversely affect in
any material respect the interests of the Holders of any Class of Certificates
in a manner other than as described in clause (x) above, without the consent of
the Holders of Certificates of such Class evidencing at least a 66% Percentage
Interest in such Class, or (z) reduce the percentage of Voting Rights required
by clause (y) above without the consent of the Holders of all Certificates of
such Class then outstanding. Upon approval of an amendment, a copy of such
amendment shall be sent to the Rating Agencies.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a tax on the REMIC constituting part of the Trust
Fund pursuant to the REMIC Provisions or cause the REMIC constituting part of
the Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding and that the amendment is being made in accordance with the terms
hereof.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is Seller or the Master Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to the
Master Servicer, the Certificate Insurer and each Rating Agency.
119
It shall not be necessary for the consent of Certificateholders under this
Section 12.01 to approve the particular form of any proposed amendment; instead
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to, enter into any amendment
pursuant to this 12.01 Section that affects its rights, duties and immunities
under this Agreement or otherwise.
Section 12.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Trust, but only upon direction of
Certificateholders or the Certificate Insurer accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
Section 12.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i) operate to
terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 days after
its
120
receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding. It is understood and
intended, and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of such Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, which priority or preference is not otherwise provided
for herein, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 12.03 each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 12.04. Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State
of New York, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws. With respect to any claim
arising out of this Agreement, each party irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in The City of New York, and
each party irrevocably waives any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating
hereto brought in any such courts, irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in any
inconvenient forum and further irrevocably waives the right to object, with
respect to such claim, suit, action or proceeding brought in any such court,
that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.
Section 12.05. Notices.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, or by express delivery service, to (a) in the
case of Seller and/or Master Servicer, Pan American Bank, FSB, ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: [ ], or such other address or
telecopy number as may hereafter be furnished to the Depositor and the Trustee
in writing by Seller, (b) in the case of the Trustee, Bankers Trust Company, ▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: UP9901, or such other
address or telecopy number as may hereafter be furnished to the Depositor,
Seller and the Master Servicer in writing by the Trustee, (c) in the case of the
Depositor, Financial Asset Securities Corp., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, (▇▇▇) ▇▇▇-▇▇▇▇ (telecopy number
(▇▇▇) ▇▇▇-▇▇▇▇), or such other address or telecopy number as may be furnished to
Seller, the Master Servicer and the Trustee in writing by the Depositor, (d) in
the case of the Special Servicer, Fairbanks Capital Corp., _________ Attention:
___________,and (e) in the case of the Certificate Insurer, Financial Security
Assurance Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Surveillance Department. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Master Servicer Default shall be given by telecopy and by certified mail. Any
notice so mailed within the time prescribed in this
121
Agreement shall be conclusively presumed to have duly been given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder shall also be mailed to the appropriate
party in the manner set forth above.
Section 12.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 12.07. Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
Section 12.08. Notice to the Rating Agencies and the Certificate Insurer.
(a) Each of the Trustee and the Master Servicer shall be obligated to use
its best reasonable efforts promptly to provide notice to the Rating Agencies
and the Certificate Insurer with respect to each of the following of which a
Responsible Officer of the Trustee or Servicer, as the case may be, has actual
knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Master Servicer Event of Termination that
has not been cured or waived;
(iii) the resignation or termination of the Master Servicer or the
Trustee;
(iv) the final payment to Holders of the Certificates of any Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Master Servicer pursuant
to Section 7.02 hereof, any event that would result in the inability of
the Trustee to make Advances.
(b) In addition, the Trustee shall promptly furnish to each Rating Agency
and the Certificate Insurer copies of each Statement to Certificateholders
described in Section 4.03 hereof; and
(i) the Master Servicer shall promptly furnish to each Rating Agency
copies of the following:
(A) each annual statement as to compliance described in
Section 3.20 hereof;
122
(B) each annual independent public accountants' servicing
report described in Section 3.21 hereof; and
(C) each notice delivered pursuant to Section 7.01(a) hereof
which relates to the fact that the Master Servicer has not made an
Advance.
Any such notice pursuant to this Section 12.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to ▇▇▇▇▇'▇
Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: MBS
Monitoring/United PanAm Mortgage Loan Trust 1999-1; and Standard & Poor's, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: Mortgage Surveillance Group.
Section 12.09. Further Assurances.
Notwithstanding any other provision of this Agreement, neither the Regular
Certificateholders nor the Trustee shall have any obligation to consent to any
amendment or modification of this Agreement unless they have been provided
reasonable security or indemnity against their out-of-pocket expenses (including
reasonable attorneys' fees) to be incurred in connection therewith.
Section 12.10. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders, the Certificate
Insurer and the parties hereto and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Section 12.11. Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing, and such action shall become effective when
such instrument or instruments are delivered to the Trustee, Seller and the
Master Servicer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "act" of the
Certificateholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee and the Trust, if made in the manner provided in this Section 12.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
123
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other action by any Certificateholder shall bind every future Holder of such
Certificate and the Holder of every Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Trustee or the Trust in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
124
IN WITNESS WHEREOF, the Depositor, the Seller and the Master Servicer and
the Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By:______________________________
Name:
Title: Vice President
PAN AMERICAN BANK, FSB
as Seller and Master Servicer
By:______________________________
Name:
Title:
FAIRBANKS CAPITAL CORP.
as Special Servicer
By:______________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Trustee
By:______________________________
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On the __th day of March, 1999 before me, a notary public in and for said
State, personally appeared ______________ known to me to be a Vice President of
Financial Asset Securities Corp., a Delaware corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the __th day of March, 1999 before me, a notary public in and for said
State, personally appeared ______________ known to me to be a
_______________________ of Pan American Bank FSB, a corporation that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the __th day of March, 1999 before me, a notary public in and for said
State, personally appeared _______________, known to me to be
____________________ of Bankers Trust Company, a national banking association
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the __th day of March, 1999 before me, a notary public in and for said
State, personally appeared _______________, known to me to be
____________________ of Fairbanks Capital Corp., a _________ corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------
Notary Public